Nucor Corporation (NUE) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to Nucor's Second Quarter 2026 Earnings Call. [Operator Instructions] Today's call is being recorded. [Operator Instructions] I would now like to introduce Chris Jacobi, Director of Investor Relations. You may begin your call.

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

Thanks, Chris. And before discussing the quarterly results, I want to begin with the most important measure of our performance and our greatest value safety. Earlier this year, we launched our safest summer ever initiative because we know that the summer months can present additional risks. As we move into August, I'm pleased to say that we're on pace to not only make this the safest summer in Nucor's history, but also the safest year as well. While I'm proud of our progress, our job isn't finished. Let's remain focused and make sure every one of our teammates goes home safely at the end of every shift. Turning to our financial results. Nucor delivered another strong quarter with improved earnings across all 3 operating segments. We generated approximately $2 billion of EBITDA and earned $5.04 per share, excluding a noncash benefit of $0.20 adjusted earnings were $4.84 per share. During the quarter, we returned $479 million to Nucor's shareholders through dividends and share buybacks, representing 41% of our net earnings. Capital expenditures totaled $571 million in the quarter, and we still expect to reinvest approximately $2.5 billion for the year, with about 60% of that allocated towards growth projects. Moving to our operational performance. Demand for steel and steel products remain strong across most of our key end markets, and our teams continue to execute exceptionally well. In the steel mills, quarterly shipments reached an all-time high of 7.1 million tons. This is the second straight quarter we've set a new record. We're seeing strength across all of our product categories and are benefiting from the investments we've made to grow our core steelmaking capabilities over the past few years. In particular, I want to recognize our team at Brandenburg, which shipped more than 230,000 tons this quarter, leading to another quarterly shipment record in plate. In Steel Products, shipments were up 11% versus Q1 with growth across all major products in the portfolio. This performance was led by our Tube group which posted a second consecutive quarterly shipment record and strong earnings. And even as our shipments grow, our backlogs continue to build, this reflects the business momentum we are seeing from our customers across a broad set of sectors in the economy. Our team is executing at a very high level right now. Execution is critical, but so is having a level playing field. While we saw an increase from the first quarter, finished steel imports are down 25% year-over-year due to the strengthening of the 232 program, along with antidumping and countervailing duties on corrosion-resistant steel and other steel products. The impacts are real, and they are measurable. Vigorous enforcement of our trade laws is helping level the playing field for domestic producers by curtailing the flood of unfairly traded steel into the U.S. market. Earlier this month, as expected, the Trump administration announced it has opted not to renew the USMCA trade agreement unless changes are made. This decision triggers an annual review process that provides a real opportunity to improve demand for the North American content while closing loop holes that operate to the detriment of the American industry. One important change we hope to see is a requirement that all steel used in any steel or steel intensive products must be melted and poured in North America to qualify as USMCA compliant. We also believe the North American steel purchasing requirement for automotive products should be increased with a melted and poured requirement effective immediately. Finally, a renewed agreement should require Canada and Mexico to take additional steps to prevent excess capacity from non-USMCA economies, particularly China from entering North American supply chains and undermining our industries and workers. Beyond USMCA, the U.S. Trade Representative is currently conducting investigations under Section 301. We support the administration and use of tools like these to level the playing field for American manufacturers and achieve balanced trade. We also commend the administration's decision to act consistently with Section 232 program and exempt vital steelmaking inputs and raw materials from the final action in the Brazil and forced labor 301 investigations. We urge the administration to do the same in all other 301 investigations. These are more than simply trade policy priorities, their investments in America's long-term industrial strength. With our nation recently celebrating its 25th anniversary, it's worth remembering that America's success has been built not only on freedom, but also on the ingenuity, resilience and productive capacity of American manufacturing, a robust industrial base has always been essential to our economic prosperity and our national security. For generations, steel has been the backbone of America's growth, security and prosperity and it will remain essential for generations to come. At Nucor, we are proud to help build the bridges, buildings energy infrastructure, manufacturing facilities and defense capabilities that keep our country strong. 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. Our team is continuing to make great progress at our new sheet mill project in West Virginia. We remain on time and on budget with continued excellent safety performance. The team has achieved several important milestones over the past 2 months. In June, we ran our first coil through the pickle line. And earlier this month, we began commissioning of the melt shop in both the automotive and construction galv lines. Later this year, we will expand that to the cold mill and hot mill, keeping us on track to complete commissioning inspection and testing of equipment across the mill by the end of the year. Our startup plan is unchanged. Following commissioning, our priority will be to operate safely and reliably as commercial shipments begin to ramp in early 2027, and capacity utilization and product offerings will be building steadily throughout 2027 and into 2028. In addition to West Virginia, we're making steady progress across our other major capital projects that are either under construction or ramping up. On the construction front, we expect to complete our Berkeley galv line, the full range of our Crawfordsville coating operation and Indiana Towers and structures facility later this year. We also expect our Utah Towers and structures facility to reach full production by mid-2027. Turning to our recently completed growth projects. We continue to advance their strategic and commercial plans. Many of these projects, including our Lexington micromill and our Kingman melt shop reached EBITDA positive run rates during the first quarter, while others like our Alabama Towers and Structures facility are expected to reach EBITDA positive later this year. Across these projects, performance has improved steadily throughout the year, and we expect that trend to continue as they ramp to their full run rates. Leon spoke earlier about the operational results in our steel mill and our steel products segment Building on that, I'd like to share how we're thinking about the current market environment and outlook for each of our businesses. Overall, the strength we see across the broad set of end markets is very encouraging. We now expect shipment growth to finish closer to the higher end of our previously suggested 5% to 10% range for 2026. Beginning with flat products, we've seen double-digit shipment growth in both our sheet and plate groups in the first half of the year. Within sheet, underlying demand is strong, and we expect that to continue into 2027, led by energy, advanced manufacturing and data centers. In plate, although domestic consumption has moderated from the 2025 levels, demand remains healthy across many important end markets, while imports have fallen significantly. That backdrop, combined with our expanded plate capabilities, positions us well heading into the second half of the year. Moving to Long Products, our Bar and Structural mills have also seen a meaningful step-up in shipments year-to-date. In our bar group, rising rebar demand reflects a sustained multiyear construction cycle with energy, infrastructure, advanced manufacturing and data centers more than offsetting softness in residential construction. In structural, domestic consumption has increased approximately 15% this year, fueled by data centers and other mega projects. While higher imports have absorbed some of that incremental demand, our backlogs are up significantly compared to prior years. And we expect that strength to carry into next year. Nucor is unparalleled in its geographic reach, product diversity and size. These factors are allowing our team to optimize at scale to more effectively and more efficiently meet customer needs. Finally, our steel products segment represents one of the broadest and most diverse portfolio of steel construction products in North America. Throughout these businesses, we're seeing many of the same demand drivers as in our steel mill segment with order visibility extending into 2027 for many products. Looking to the second half of the year, we expect continued momentum across our Steel Products group, along with further margin expansion over time as higher realized pricing more than offsets higher steel input cost. With that, I'll turn it over to Jack for a closer look at our second quarter financial results and our outlook for the third quarter. Jack?

Thanks, Steve, and good morning, everyone. In the second quarter, Nucor generated net earnings of $1.2 billion or $5.04 per share exceeding the midpoint of our guidance range by $0.29. Excluding a noncash benefit of $0.20 related to an increase in the value of our Helion investment, adjusted earnings were $4.84 per share. The beat relative to our mid-quarter guidance was largely due to better-than-anticipated results in our steel mills segment. with many divisions outpacing their June forecast. Steel products and raw materials segments also came in ahead of forecast. Let me now review our second quarter performance by segment. The steel mills segment generated $1.6 billion of pretax earnings, an increase of more than 35% from the prior quarter. Higher average selling prices, especially in our sheet and plate groups, were the largest drivers of the quarterly increase. And even with 3 few calendar days compared to the prior quarter, Q2 shipments for the steel mills segment grew slightly. The results also reflect $130 million of cash refunds associated with prior period raw material procurement costs primarily related to pig iron. Turning to Steel Products. We generated pretax earnings of $353 million, up more than $75 million from the first quarter. Volumes increased 11% on stable pricing with the volume growth occurring across all of our major product lines. And in our raw materials segment, we generated pretax earnings of $146 million compared to $45 million in the prior quarter reflecting higher volumes and improved margins. Our DRI operations benefited from a higher transfer price as we base internal DRI sales on pig iron pricing, which has risen over the past several months on strong demand in the U.S. We also saw improved performance in our scrap processing operations. Preoperating and start-up costs totaled $120 million for the quarter. We expect these costs to remain elevated through the rest of 2026 and throughout '27 as we complete construction and ramp up production at our greenfield sheet mill in West Virginia. Turning to the balance sheet and capital allocation. Our strong investment-grade credit profile has long been central to Nucor's success, enabling us to consistently invest in growth while delivering meaningful returns to shareholders. We ended the quarter with approximately $2.7 billion in cash and liquidity of $3.4 billion. Total debt as a percentage of capital sits at 23%, and our credit ratings remain the strongest of any North American steel producer. During the quarter, we generated $829 million in free cash flow, our strongest quarter since 2023 as higher earnings drove improved cash from operations and CapEx moderated to $571 million. We also returned $479 million to shareholders through dividends and share repurchases, an increase of more than $200 million from the first quarter and representing 41% of quarterly net earnings. Consistent with our capital allocation framework, we remain committed to returning at least 40% of net earnings to shareholders on an annual basis. Year-to-date, we've returned over $730 million to shareholders and deployed approximately $1.2 billion in CapEx, with most of that going towards growth projects. Taken together, more than 75% of the capital we've allocated this year has gone directly to shareholder returns and growth investments. Looking forward, we expect free cash flow to continue to inflect higher as these growth projects come online and CapEx moderates. Turning to our third quarter outlook. We expect higher consolidated earnings. For the steel mills segment, in contrast to the second quarter we do not expect any further cash refunds to materially benefit us in the third quarter or beyond. Even without that benefit, we expect higher third quarter segment earnings from expanding metal margins and stable volumes. The margin improvement reflects higher realized pricing across all product groups. In Steel Products, we expect increased earnings from higher volumes and higher average realized pricing. In raw materials, we expect lower earnings, primarily due to lower margins resulting from lower expected realized scrap pricing and elevated iron ore costs due to the idling of some pellet capacity in the Middle East. As we look to the second half of 2026, we're encouraged by strong demand across key end markets, growing contributions from our recent investments and federal policies that support a healthy domestic steel sector with the broadest range of capabilities in the North American steel market, the Nucor team is well positioned to create value 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.

Very nice to hear from you all, and thank you for today's update. If I could, I'd like to start off with your view on flat rolled benchmark pricing and the CSP, it was up another $10 yesterday as per your report continuing to extend the gap versus import parity pricing, just given that the U.S. still is a net importer of steel, to what do you contribute to continued willingness of customers to buy domestic despite the import price advantage.

Lawson, it's Leon. I'll kick this off and then maybe ask Noah Hanners, who's over our sheet group to touch on it because I think there's a lot to unpack there in your question. Look, I also want to begin with thanking our team for the safest start to any summer in the history of Nucor. And so it's the men and women of this entire company that derive every result we're going to talk about today and how they execute and continue to execute it and becoming the world's safest steel company is our most important value. With all that said, the demand drivers across the spectrum are incredible. And so as we look specifically to sheet and your question and the relative balance on imports. We saw a tick up Q-over-Q in imports in primarily in beans and some in sheet. But the reality is it's not a pricing delta that's driving that. It is a demand picture that we're seeing, the robust demand almost in every product group area that we have is either at or near record backlog, record order entry rates and is driving a again, healthy returns for our shareholders. So again, this isn't where -- we saw in '21 or '22, where you had a really rapid spike of HRC and kind of knew it wasn't sustainable or for very long. It is a very different condition today. And again, I think part of that comes in what Noah and his team have done regarding CSP, but no, why don't you unpack that and then dive a little deeper to his question.

Yes, Lawson, to build on what Leon shared about demand and why we see it so strong now and continuing into first, let's back out and talk about just the broader demand picture for she. Imports, while a little elevated in Q2 remained very low. So if you back up to 2024, we saw sheet imports at 9 million tons. Today, we look forward, we see probably 4.5 million tons this year. So 4.5 million tons of additional addressable market for domestic suppliers. You add on to that what we believe is a couple of million tons of increase in ADC. So 6.5 million tons of addressable market for domestic suppliers strong market for us to participate in. So talking about the significance of some of those demand drivers, Leon mentioned a few in the opening, but Board defense, energy, data centers. These things are all consuming millions of tons, and they are not projects that are one-off in 2026. We expect multiyear demand out of some of these drivers. The other thing I'll share with you is we're starting to see some reshoring driving new demand for us. And the reshoring looks different than you may expect. It's things like auto and consumer durables that maybe consumption here in the U.S. isn't going up, but we've seen our customers restoring their production here to utilize existing capacity. So we're supplying more into auto, for example. Our auto shipments are up 6% Q2 over Q1. The last thing I'd share on the demand side is we're seeing -- finally seeing service center demand during the quarter. Service center shipments were up 10% in June year-over-year, and we expect that trend to continue with really moderate to low inventories throughout the supply chain. So all that together, we think, looks like a very strong demand picture for us in '26 going into '27. But I want to take a minute and talk to you about CSP for a second because that's the other thing that feels so unique about this market. It's not just demand but it's how pricing has moved over the last 6 months to a year. And we believe our discipline and our approach around CSP is markedly change in volatility in this market. So these extreme -- we've seen these extreme swings in sheet for decades and we're providing our customers with this transparent hot-rolled pricing every week. And what we're seeing out of them is we do not see the speculation we typically would have seen at this point in the cycle before. We're seeing buying that is reflective of supply in demand, not speculation. So -- and we also think this has contributed another contributing factors to imports remaining low because customers are able to buy what they want when they need it. So we see a really strong demand picture. We are confident in our approach with CSP, and we have the best steelmaking team in the world hitting at a really high level right now. So we feel good about '26 going into 2027.

I really appreciate that detail, guys. That's really, really helpful. If I could, just a follow up. Thank you very much for providing the shipment tonnages for Brandenburg. It suggests the capacity utilization around 75% and I mean would you push back on us putting 75% capacity utilization in our models for that asset going forward.

Yes. Lawson, this is Brad. I'll tackle that one. As you mentioned, the team had an awesome quarter. Brandenburg producing record volumes and record earnings. I'd expect that number to continue to creep up, right? The investments we've made over the last 18 months in product development is really paying dividends. It's nearly 1/3 of the shipments out of Brandenburg in Q2 were grades and sizes that were previously unavailable from the new core plate group prior to Brandenburg. Things like API line pipe, where we're fully qualified, we're producing net shipping now. We expect that to be as much as 25 million tons in 2027. Armor grades for our nation's military, we continue to qualify and expect to be a larger participant in the future. ABS grades for shipbuilding, wide and long place bridge applications and on down the list. In addition, it opens up doors for companion tons for our plate group. Obviously, that was reflected in our record shipments, backlog and market share in Q2. So I'd expect additional upside, not just out of Brandenburg, but out of the plate group into the future.

I wanted to try to drill down a little bit more on some of the projects progress if we could. So definitely seems like collecting on like ramp-up of some of these projects that you've been talking about for a while. Can you help us put a finer point on the how to quantify the benefit of some of these towers and structures and galv lines ramping up? And the Q3 benefits, could that help Q4? And could Q4 with all this demand see an offset to typical seasonality?

Well, look, Tim, I'll kick it off and maybe let Jack or Steve jump in or any of the product group folks. But look, if we go back to Lexington, for example, the Lexington micromill, EBITDA positive already contributing. So again, they're launched in on their own and again, contributing cash to the operations. Our Kingman, Arizona facility is doing the same thing. Brandenburg, as you now heard Brad just mentioned, is also profitable. And so they're ramping up very, very quickly. The towers and structures facilities, yes, you're going to see additions come in into the back half of the year positively to the balance sheet and our cash flow. And really, as we think about Berkley's galv line, which is going to come on later Q3, it's probably end of the year or early Q1 because, again, demand drivers are so strong there. that before we see that cash positive, but that's going to come very, very quickly. Again, it's a line that they know. It's their second galvanizing line, a product we know customer base, we know well. So this isn't going to be a slow ramp up. We should be able to ramp up that facility very quickly. Same in Crawfordsville. The things that will carry into '27 before we see some likely positive contribution will be the third towers and structures, greenfield facility in Utah that will come on in Q1 of next year. But again, it will take a little bit of time to ramp up. And I would expect by the end of the year that is contributing very nicely. And if we think about the towers and structures group as a whole, as you know, it was an area we looked really hard in trying to do that in M&A. It didn't work out. So we built -- bought a small facility Summit facility in Pennsylvania and now we're building out 3, 2 are operational. The third, again, and we'll start up next year. We've mentioned probably several calls ago that we were going to generate $150 million of EBITDA through that group. And so what I would tell you is the order book the backlog, the relationships with the utilities that is being built by that team and I hope that's a really low number. I think there's upside potential to that number. And obviously, we got to get there. But I would tell you that to -- our team is one of the most exciting high-growth megatrends that are going to continue for decades to come because all those utilities are specific engineering geographic and geological engineered. And again, we're ramping that up very, very quickly. You'll see in the coming weeks, some things that will come to fruition that we can be detailed in that backlog that's coming. But look, this team is firing on all cylinders. So again, this all culminates to with West Virginia facility that will start up later this year. I would tell you '27 will be that ramp-up year. I'm not sure they're going to contribute in '27. But certainly, as we get they're going to find their footing and that will not only contribute then. But for the next 2, 3, 4 decades, continue to ramp up Nucor's overall earnings profile well beyond the $6.7 billion that we rolled out in 2022 from a through cycle standpoint. And finally, I would just tell you the drivers that I've seen as I celebrate my 30 years in Nucor I would tell you, create a profile on a demand picture unlike I've ever seen in my career. Again, in almost every area across the spectrum, not only is the market demand drivers, but Nucor's capability set is the broadest and most diverse it's ever been. There are a bunch of things we don't talk about a lot on these calls, border walls, grating. UIG gases, Nucor fasteners, our tube group, tower structures insulated metal panels, Nucor data systems, they are all contributing at a really high level in executing it at a really high level. And so I couldn't be more optimistic in the back half of this year. But as we head into '27, I think '27 could be a very special year, not just for Nucor, but this industry.

Okay. If I could -- congrats on your 30 years as well. But if I could follow up on the 2027 outlook and you've been intimating the CapEx is rolling off, of course. And a lot of interest in kind of what Nucor's next plans are for cash use. So could you just give us any more color on how you're seeing the landscape with build versus buy in the downstream side and if that's still your focus for growth.

Yes, absolutely, Tim. So look, almost 7 years ago when I became CEO, our mission statement was really simple to grow the core, expand beyond and live our culture. Culture, obviously, is how we care for the 33,000 men and women of this incredible family of ours. The core is just that the steelmaking, the king and the galvanizing lines, the prepaint the Lexington micro mills, Brandenburg, West Virginia. But the expand beyond is the area where we purchased CHI overhead doors and now Ridetech and couldn't be more excited about what they're doing and the value proposition that they're going to bring not just to our shareholders, but to also provide our customers, again, with a very differentiated standpoint. So it leads to your question, which is, okay, that tied up a lot of cash. Where is that cash going to go because we're going to continue to generate a lot of money. Well, it's going to go into the expand beyond bucket. And what I would tell you is you can think about a few things. One, it's going to come in and around the mega trend area. So as we think about towers and structures, as we think about the downstream areas that we can bring value in enclosures, energy, energy infrastructure. those types of areas are the things that I would tell you, our M&A and BD teams are looking really hard at identifying those companies that I obviously can't get into. But again, I want to provide a little more color for you so that you can understand where that's going to go. The one caveat that I think is really -- well, maybe 2, that's really important to note, as Nucor's vision back then and now wasn't a pivot because our models broke. In fact, I would tell you, we're the safest, cleanest, most profitable steel company in the world. I would rival that us against anyone. So we don't have to pivot away from a broken model. It's, in fact, the best it's ever been. So we get to tweak that. We get to reinvest in our operating divisions to make them more efficient. We get to use AI and tools like that, and automation to create safer outcomes and higher return outcomes. The other side is we're going to be incredibly disciplined with our capital because we don't have to pivot, there's no urgency in money burning a hole in our pocket. So you're going to see Nucor be incredibly -- continue to be incredibly disciplined about the M&A growth and how we approach that. If it's not accretive. If we can't find pathways to being the market leader and do it way better than our cost of capital, if not double our cost of capital. We're just not going to do it. So if we don't, then you're going to see a lot of money coming back in the form of dividends and share repurchases back to our shareholders. And as we always have and as Jack spoke to earlier, we're going to commit to 40% of our net earnings. But I would tell you in the next several years, you can expect there's some incredible growth opportunities for Nucor that we're going to move into in the expand beyond bucket.

Thanks for all the color and nice job on the quarterly execution. Based on your comments on expectations to be at the higher end of the range, 5% to 10% for the mills, I guess taking into account backlog, presuming longer lead times, low inventory, the channel and so forth. How should we think about seasonality in the back half of the year including in the fourth quarter, which I believe you might have less shipping days, but can you help us understand just the profile in the back half, that would be helpful.

Bill, this is Steve. I'll take this one. Yes, we'll be closer to that high end of the previously guided range of 5% to 10%. And you know our business really well. There is seasonality. So you should expect a little bit of that in the fourth quarter. But as Leon, Brad, Noah have all already addressed, the demand drivers are extremely robust right now. They're very -- they're multiproduct. It's across all the spectrum that we have. So we're pretty bullish on the back half of the year. That doesn't mean there won't be seasonality, there always is, but it's a relative move down, I guess, I would say, because there's still so much strength in the marketplace.

And Bill, to your question about the fiscal days in the fourth quarter, we'll have 91 days in the third and 89 days in the fourth.

Okay. Great. That's helpful. And then maybe drilling down to the borderwall opportunity, can you give us a sense of the ship and opportunity into 2028 and any color you can provide on your share expectations?

Bill, this is John Hollatz. I appreciate you bringing up that border wall. That is a mega trend that I think needs to get a lot of attention. I appreciate Noah bringing it up earlier in his commentary. And I think you've got to keep in mind that Nucor is the only company with the raw materials, the sheet, the tube capacity and the logistics team to keep up with the demand for this border wall. We're shipping thousands of tons every week to multiple locations along the border and that is expected to continue well into 2028. If you look at the volumes that are going through our tube group, it will show you the increase that you've seen year-over-year, and that's on top of an already strong demand for our traditional HSS products and leading to a lot of the improved earnings that we expect in the second half of 2026.

The first is on the raw materials division that had a very strong quarter, while I don't know, it looks like pretty -- should have been a relatively steady slightly up quarter. So I was wondering if you could provide some visibility on what drove the performance? And I mean, the strength of the past year has been pretty noticeable. So if you can if the margin trends we've seen for that division should carry forward? That would be my first question.

Yes. Thanks, Tristan. This is Al Behr. I'll take that one. I appreciate you asking the question because I'm really proud of our raw materials team and just how that whole team performed during the quarter, and I think the results speak for themselves. Our -- that segment includes a handful of businesses and -- but I'll share some thoughts on maybe a top of mind on a couple of the bigger pieces. One of them is our recycling yards and the other is our DRI operations. For the recycling yards, it's a simple story of strong volumes with higher margins. So we see saw strong margins in the quarter, both on the shredded metals as well as on the recovered metals, the nonferrous metals that we sell as a byproduct coupled with just really consistent strong performance commercially and operationally within those businesses. On the DRI side, also a great quarter. We set a quarterly production record as rising pig iron allowed us to lean into DRI as an alternative supply for our mills and our DRI teams really rose to the occasion and super proud of what they did. What I think is important about that, Tristan, is it's just another example of how our strategy of building flexibility into our raw material supply chain is a way to drive value for the organization. And so we believe there's always a winning play in the market, and we've got the depth and the breadth to be able to find those plays and run them. All right.

That's very clear. My second question is actually a quick one. Just if you could provide some update on the CapEx guidance and you had some big use of working capital in H1. How do you think the H2 should look like?

Yes. Thanks, Tristan, it's Jack. I'll take CapEx first. Earlier this year, we guided to $2.5 billion for 2026, materially down from the prior year. Halfway into the year, we're right at about 50% of that. And so we remain on target with that $2.5 billion estimate that we said earlier in the year. With respect to working capital, yes, we did see a bit more of a build in Q2 primarily related just to with the higher backlog comes some higher inventory at higher valuations. And so both inventories and receivables did tick up some got to get a lot of credit though to the team in terms of how we're managing inventory, how we're managing cash conversion. So I think operationally, we're working through a really strong demand environment with shareholder interest in mind there with respect to cash flow. Looking into the second half of the year, likely expect some moderation in working capital as we get into the sort of the fall months, but it could be some slight source of cash in the back half of the year.

I just have 1 follow-up here. I just wanted to drill in a little bit on the shipment mix you mentioned sheet is going to be -- or see continued strength through 2027 volumes were just a little bit softer in 2Q quarter-over-quarter. So I mean the first question was, was the softness due to, I guess, just some softness in the order book? Or was there an outage or are you starting to see any, I guess, import products coming back in on the flat side. And then on the contrary, your bar shipments have continued to accelerate despite long product imports ticking back up in 2Q. What would you attribute that market share capture to? And how should we think about that going forward?

And Nick, this is Noah. I'll start with sheet. You talked about Q2 versus Q1 shipments. We actually -- we broke up another production record in Q2. What you saw in the beat in Q1 from a shipment standpoint as we came into the quarter with some inventory we were able to ship, but we actually converted more efficiently in Q2, and we expect that level of production and shipment to continue.

Yes. Nick, this is Randy Spicer. Certainly, the team has performed tremendously in the second quarter, and we certainly saw that in our performance and driven by a lot of the very same things that have been talked about today. We continue to see growth in the infrastructure investment, the manufacturing reshoring. And then again, this continued growth in data center. And then also just to echo what we've seen in both sheet and tube from John, we've also been a very active participant in border fence as well. So all of those factors, along with our newer assets that are coming online have truly allowed us to take advantage of this growth in the second quarter and instead of well, year as we move into the second half.

Maybe starting on the demand outlook more broadly. So you talked about a couple of tailwinds that could last for the next few years, what, in your view, would be a reasonable assumption for underlying demand growth over the next 2 to 3 years?

Katja, this is Steve. I'll go ahead and take this one. I think the backdrop for the demand picture is, again, it's broad enough and strong enough in enough channels, and it's driven by some fundamental reshoring, fundamental of the capital investment cycles that are probably multiyear in nature, things like Leon highlighted earlier with energy investment. That's not necessarily going to slow down over the next few years. So this year, we would put an estimate somewhere around 2% up on demand overall. That's all products. Nucor's portfolio is positioned a little bit more strongly to some of the stronger areas of the market. So that's just a general comment about the market, not Nucor. And we see strength at least for the next couple of years in that same band or more. So the parts of the market that are weak right now have to do with consumer-oriented activities, I think HVAC. Noah has commented about automotive, it's a fair one, automotive consumption is down, but the reshoring patterns might mean that steel consumption in automotive could be up for us. And so the parts that are weaker and could be more interest rate sensitive, for example, are already down. So if anything, you may skew some of that to potential upside if you saw uptick in consumer behavior. But the backdrop right now should continue for multiple years of demand with what we see.

Okay. And then maybe on the West Virginia mill, can you just remind us about how to think about the utilization rates over the next 2 years? And will the demand outlook change how the ramp-up progresses.

Katja, this is Noah. We've shared previously that we expect to be at about 50% utilization by the end of year 1. And really, our focus throughout -- from now through 2027 is just getting on being safe, getting reliable and getting consistent production on the mill. So I think you can draw a straight line from January to December and expect that we'll be at 50% by the end of that -- end of the year. And as we move forward into 2028, then we'll be focused on growing volume, but then moving into qualifications that get us into the higher quality items, the consumer durables, the auto that West Virginia is capable of. So yes, absolutely. We're going to make sure that we are making good financial decisions with the tons we put in that mill. But one of the strengths we have is we bring up an asset like West Virginia is that we're able to shift tons around from our other mills to support that, those opportunities to run that mill, especially in 2027. And we're able to take our downstream pull through. We ship about 2 million to 2.5 million tons internally and we're able to place that most appropriately. And that's really supportive of a strong ramp for West Virginia.

The other comment, Katja, I would make is, look, we've done this for a long time. We know how to do this. We know the markets we've started mills up in great environments and we've started mills up in some very difficult markets. And so when you ask about the demand potentially changing and the ramp-up, look, most recently, and Brandenburg did not start up any wonderfully robust demand drivers like we're seeing today. But look, Brad and the team and the play group balance that out very nicely, just like Noah described, right? We have multiple assets where we're able to utilize and balance some tons. However, West Virginia couldn't be starting up at a better time. So they've run their first coil through the pick a line last month as Noah indicated, and it's going to ramp up through the rest of this year. So again, from a demand picture to have the pull-through that way, while you're starting up at mill is obviously ideal. But look, we we've balanced that. We've seen it on both sides of the equation, and we know our customers, we know how to balance this. And again, what I would expect as we go into '27, those demand drivers are going to still be very robust and just create a much better platform for this mill, it finds its way up to 50%, 60%, 70% utilization.

I wonder if you could provide maybe a little bit more color on the raw material pricing. I think you mentioned, if I understood correctly, that you price your DRI based on pig iron, could you maybe elaborate on any lag on that reference pricing? And what that maybe specific iron price you're looking at, you see the imported pig iron pricing in the U.S. Is it the exported price from Brazil. Anything would help us given the material increase in profitability on that same.

Yes. Carlos, I'll take that one. This is Al Behr. We don't typically talk about the direct correlation between our transfer price and pig iron. But as you said, it is influenced by the price of pig iron. So think our prices go up, our DRI transfer price goes up, and that was a benefit to us in the quarter. In terms of the lag, I mean, certainly, there is a lag. It's a long sales cycle from when we buy iron ore pellets and we convert them to DRI and get them to our mills. I really don't want to quantify that for you because it varies a lot based on inventory positions all through that supply chain, but there is a lag. Help me out too. I want to make sure I cover what you're asking. Was there any piece of that, that you would like more color on?

No. Maybe just when you price your DRI, you look at what specific index for pig iron? Is it the imported price in the U.S. or perhaps in the exported price from Brazil.

It's influenced by the price of big. I think I'd leave it at that, Carlos, the transfer price is influenced by the price of pig and it will flow correlated to the price of big I really don't want to elaborate more deeply on the mechanisms for it other than to share with you its influence. And as it goes up, you can assume that our transfer price will go up.

Fair enough. And another question I had is related to the import of beans and rebars. Recently, they are picking up. you flagged that in your presentation. I wonder if you can elaborate as to what you think may be behind this particularly being happy is quite significantly. And what actions could the company or the industry pursue in order to limit these businesses?

Yes, Carlos, I'll kick that off. And look, it's actually pretty positive story. While we don't want to see imports up and we saw a spike of about 50-plus percentage points and beams coming in Q-over-Q. It's a demand picture. And so again, when we think about our beam business at Nucor Yamato Steel and Berkeley beam they're sitting on backlogs today, unlike we've ever seen in the history of history of that facility. The demand drivers are so strong that it's creating a demand profile that volume is needed and it's coming in. And so that's -- that's why you're seeing the picture. It's not a lack of demand or you're seeing U.S. pricing versus rest of the world pricing reach some gap that the importers are willing to take that risk. Look, again, I have the opportunity to spend 3 years at that facility and lead that team. When you start measuring backlogs, not in hundreds of thousands of tons but millions it changes the profile. And I would tell you that, that team is executing. The utilization rates are incredibly high. And again, every moment in the beam group and just about every other product group for us matters. So how our teams are executing today, yes, it's probably going to create some opportunity. At the same time, if you asked me 5 years ago, would I take 16% overall imports into the U.S., all day long. All freaking day long, right? Because in the last 20 years, we've wrestled with 22%, 23%, 24% ,25%, 26%, 27% of the overall apparent domestic market being flooded by illegally dumped and subsidized imports. So again, even with those spikes, it is an incredibly robust demand picture and one we see continuing well into '27.

If I may squeeze one more very quickly. I think last quarter, you mentioned that you saw steel demand in the U.S. growing around 2% to 2.5% this year. Has that changed? And if so, what is the new number?

Yes, Carlos, we would just reaffirm that we're about 2% growth probably this year as an industry. So you're right on the numbers.

Well, thank you for joining us today. And before I wrap up, I want to once again recognize our team for delivering an outstanding second quarter and for your commitment that you demonstrate every day as we work towards our goal of becoming the world's safest steel company, your dedication to serving our customers, operating safely and executing our strategy continues to set Nucor part. I also want to thank our customers and our shareholders for the trust that you place in us we remain incredibly optimistic about the opportunities in the future ahead of Nucor and believe we are positioned to continue to have the best days that will be in front of us. Thank you all, and have a great day.

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