Nucor Q2: Shipments up 8% and sales rise, but earnings, margins and cash drop amid heavy capex

Nucor Corporation (NYSE: NUE) - Quick read

Snapshot
- Report: Form 10‑Q for quarter ended July 5, 2025 (unaudited).
- Business: Vertically integrated steel producer (steel mills, steel products, raw materials).

Key facts & statistics (selected, all figures from the 10‑Q)
- Net sales (three months ended July 5, 2025): $8,456 million vs $8,077 million (Q2 2024).
- Net earnings attributable to Nucor stockholders (Q2 2025): $603 million, $2.60 diluted EPS vs $645 million, $2.68 diluted EPS (Q2 2024).
- Six months to July 5, 2025: Net earnings $759 million vs $1,490 million (YTD 2024).
- Gross margin (Q2 2025): $1,220 million (14%) vs $1,190 million (15%) Q2 2024; six months: $1,830 million (11%) vs $2,720 million (17%).
- Segment earnings (Q2 2025): Steel mills $843m; Steel products $392m; Raw materials $57m; Corporate/elims (393m); Total earnings before tax & NCI $899m.
- Net sales by segment (Q2 2025): Steel mills $5,253m; Steel products $2,657m; Raw materials $546m.
- Shipments (Q2 2025): ~6,820,000 tons to external customers (+8% YoY); average sales price/ton Q2 2025 $1,240 (-3% YoY).
- Inventories: $5,462 million (July 5, 2025). Cash & cash equivalents: $1,946 million (down from $3,558m at 12/31/24). Short‑term investments: $537m.
- Total assets: $34,217 million; Total liabilities: $12,725 million; Nucor stockholders' equity: $20,389 million.
- Cash from operations (six months): $1,096 million vs $1,945 million (prior year). Capital expenditures (six months): $1,813 million. Cash used in investing (six months): $1,723 million.
- Debt moves: Issued $500m 4.65% notes due 2030 and $500m 5.10% notes due 2035 (net proceeds $997m); redeemed $1.0b of 2025 notes. Revolver capacity increased to $2.25b (matures March 11, 2030).
- Share repurchases YTD (six months): $500 million; remaining buyback authorization available ~$606 million. Quarterly dividend: $0.55 per share (209th consecutive quarterly dividend).
- Effective tax rate Q2 2025: 21.5% (vs 20.7% Q2 2024). Credit ratings: S&P A‑; Fitch A‑; Moody's Baa1.

What's happening inside the company
Nucor is increasing volumes across its mills and product businesses (shipments +8-10% in key segments) while average selling prices per ton have softened. The steel mills segment recovered margin performance in Q2 driven by higher metal margins and volume - that offset weaker results at many steel products businesses where prices and margins compressed (notably joist & deck). The company is investing heavily: material capex on new sheet/plate mills and tower facilities is driving higher capital spending and pre‑operating/start‑up costs (~$136m in Q2; $306m YTD). Cash balances fell as investment and working capital (inventories and receivables) consumed cash; management replaced near‑term maturing debt with longer‑dated bonds and increased revolver capacity to preserve liquidity.

Income statement - positives
- Sales growth in Q2: net sales up 5% YoY and shipments up 8% (demand resilient).
- Steel mills segment delivered stronger margins and segment earnings (Q2 steel mills earnings $843m vs $645m prior year).
- Raw materials (DRI & scrap operations) improved profitability and contributed positively to margins.
- Company maintains strong balance sheet metrics and high credit ratings while funding capex and redemptions through issuance of new notes and revolver capacity increase.
- Continued capital discipline: share repurchases continue ($500m YTD) alongside consistent dividend policy.

Income statement - negatives / risks
- Earnings down YoY: Q2 net earnings to common $603m vs $645m; YTD drop steeper ($759m vs $1,490m).
- Gross margin compression YTD (11% vs 17% prior year) driven by lower average selling prices and higher conversion/pre‑op costs.
- Average price/ton declined (Q2 -3%, YTD -8%); pressure on steel products margins persists.
- Heavy capex and start‑up costs (capex $1.81b six months; pre‑op/start‑up $306m YTD) are weighing on cash flow and current profitability.
- Operating cash flow down materially (six months $1,096m vs $1,945m prior year) due to lower earnings and working capital outflows (AR and inventory increases).
- Cash balance declined to $1,946m and interest income fell (lower investment balances / rates); reliance on capital markets for flexibility increased despite solid ratings.
- Corporate/elimination drag remains large: corporate costs reduced earnings vs segments (Q2 corporate/elims $(393)m).

Near‑term outlook & catalysts
- Management expects Q3 2025 earnings to be nominally lower than Q2 due to anticipated margin compression in steel mills despite resilient backlogs.
- Key drivers to watch: average selling prices per ton, scrap and DRI input costs, utilization ramp at new mills, conversion costs, and working capital trends (AR/inventory).
- Capital spending cadence and start‑up execution (West Virginia sheet mill, Kentucky plate mill, towers expansion) will determine near‑term cash flow and margin recovery.

Bottom line: Nucor is scaling production and investing for long‑term capacity while facing short‑term margin headwinds from lower realized prices, higher start‑up costs and working capital build. The balance sheet and credit profile give the company room to fund projects, but watch cash flow, capex execution and price/margin trends over the next two quarters.