Nucor Financial Model

• Total assets: Approximately $35 billion.
• Key asset categories: Property, Plant and Equipment (PP&E) makes up over 50% of total assets. Inventory is the second largest category.
• Goodwill & intangibles as % of total assets: Approximately 15%, reflecting recent downstream acquisitions.
• Working capital profile:
• Days Sales Outstanding (DSO): 35 to 45 days.
• Days Inventory Outstanding (DIO): 60 to 80 days.
• Days Payable Outstanding (DPO): 30 to 40 days.
• Net working capital as % of revenue: 15% to 20%.
• Working capital is a massive use of cash during commodity upcycles (inventory and receivables inflate) and a massive source of cash during downcycles.
• PP&E: Consists of mini-mills, processing facilities, and DRI plants. Useful lives range from 15 to 40 years for buildings and equipment.
• Right-of-use assets / operating leases: Immaterial relative to the overall balance sheet.

• Capex as % of revenue: 5% to 8% historically, currently elevated due to major growth projects.
• Maintenance capex vs. growth capex: Approximately 40% maintenance and 60% growth during the current investment cycle.
• Major capex programmes underway or planned: West Virginia sheet mill, North Carolina micro-mill, and various galvanising lines.
• Capitalised software / development costs: Immaterial.
• M&A pattern: Historically a bolt-on acquirer, but recently executed transformational acquisitions in the Steel Products space.
• Typical acquisition multiple paid: 8x to 10x EBITDA for downstream products companies.

• Total debt: Approximately $7 billion, with net debt often near zero or slightly positive due to high cash balances.
• Debt/EBITDA ratio: Typically below 1.0x, reflecting a highly conservative balance sheet.
• Credit rating: A- (S&P), Baa1 (Moody's).
• Key debt instruments: Unsecured senior notes with staggered maturities.
• Maturity profile: Very long-dated, with average maturities exceeding 10 years and minimal near-term refinancing risk.
• Interest rate profile: Almost entirely fixed-rate debt.
• Covenants: Standard interest coverage and leverage ratios, none of which are currently restrictive.
• Share repurchase programme: Highly active. Nucor routinely retires 3% to 5% of its outstanding shares annually using excess free cash flow.
• Dividend policy: Base dividend grows steadily (Dividend Aristocrat), supplemented by occasional special dividends. Payout ratio targets 40% of net income when combining dividends and repurchases.

• Operating cash flow conversion: OCF to Net Income typically ranges from 0.8x to 1.5x, heavily skewed by working capital movements.
• Free cash flow margin: 5% to 15% depending on the cycle.
• Major non-cash items that bridge net income to OCF: Depreciation and amortisation, deferred income taxes, and stock-based compensation.
• Working capital cash flow impact: Counter-cyclical. Cash is consumed when steel prices rise and generated when steel prices fall.
• Capex intensity: High. Steelmaking requires continuous reinvestment to maintain efficiency and environmental standards.
• Cash tax rate vs. GAAP effective tax rate: Cash taxes generally track the effective rate closely, though accelerated depreciation for new mills provides temporary cash tax benefits.

1. Summary: Dashboard containing key scenarios, share price target, and summary charts of EBITDA and Free Cash Flow.
2. Assumptions: Hardcoded inputs for macroeconomic drivers, segment volumes, pricing, and cost ratios.
3. Revenue & Margin Build: Detailed calculation of tons shipped, price per ton, and gross margin by segment (Steel Mills, Steel Products, Raw Materials, and Intercompany Eliminations).
4. Income Statement: Consolidated P&L from revenue down to net income and EPS.
5. Balance Sheet: Assets, liabilities, and shareholders' equity.
6. Cash Flow Statement: OCF, CFI, and CFF, linking net income to the ending cash balance.
7. Working Capital Schedule: Calculation of receivables, inventory, and payables based on days outstanding metrics.
8. PP&E & Intangibles Schedule: Capex, depreciation waterfall, and goodwill tracking.
9. Debt Schedule: Tranche-by-tranche debt balances, interest expense, and mandatory repayments.
10. Shareholders Equity: Retained earnings roll-forward, dividend payments, and share repurchases.
11. DCF Valuation: Unlevered free cash flow calculation, WACC build, terminal value, and implied share price.

1. Steel Mills Revenue = Steel Mills Outside Shipments (Tons) x Steel Mills Average Sales Price per Ton.
2. Steel Products Revenue = Steel Products Outside Shipments (Tons) x Steel Products Average Sales Price per Ton.
3. Raw Materials Revenue = Raw Materials Outside Shipments (Tons) x Raw Materials Average Sales Price per Ton.
4. Total Sales to External Customers = Steel Mills Revenue + Steel Products Revenue + Raw Materials Revenue.
5. Intercompany Eliminations = Estimated internal transfer volume x Market price (must be subtracted from segment gross revenues to reach consolidated revenue).
6. Steel Mills Gross Margin = Steel Mills Revenue - (Steel Mills Tons Produced x Average Scrap Cost per Ton) - Conversion Costs.
7. Profit Sharing Expense = Pre-tax Earnings before Profit Sharing x Profit Sharing Percentage (historically around 10% to 15%).
8. Accounts Receivable = (Total Revenue / 365) x Days Sales Outstanding.
9. Inventory = (Total COGS / 365) x Days Inventory Outstanding.
10. Accounts Payable = (Total COGS / 365) x Days Payable Outstanding.
11. Interest Expense = Average Debt Balance x Weighted Average Interest Rate.
12. Share Count = Prior Period Share Count - (Share Repurchase Amount / Average Share Price).

The Assumptions sheet feeds the Revenue & Margin Build and the Working Capital Schedule. The Revenue & Margin Build generates the top line and COGS for the Income Statement. Net Income from the Income Statement flows to the top of the Cash Flow Statement and into the Shareholders Equity schedule. The Working Capital Schedule calculates the change in working capital, which flows into the Cash Flow Statement. The PP&E & Intangibles Schedule calculates depreciation, which feeds both the Income Statement and the Cash Flow Statement. The Debt Schedule calculates interest expense for the Income Statement and ending debt balances for the Balance Sheet. The Cash Flow Statement determines the ending cash balance, which plugs into the Balance Sheet to ensure Total Assets equal Total Liabilities plus Equity.

• Revenue, volume, and pricing metrics are positive.
• Expenses (COGS, SG&A, Interest, Taxes) are entered as negative numbers in the Income Statement to allow for simple summation.
• In the Cash Flow Statement, cash inflows are positive and cash outflows (including Capex, dividends, and share repurchases) are negative.
• Balance Sheet asset, liability, and equity balances are positive.
• Contra-asset accounts (like Accumulated Depreciation) are negative.

• Failing to model intercompany eliminations correctly. Nucor's segments sell heavily to one another, and summing segment revenues without eliminations will drastically overstate consolidated revenue.
• Misunderstanding working capital cash flows. In a commodity upcycle, Nucor will report record net income but working capital will consume billions in cash. The model must link inventory and receivables directly to price assumptions.
• Treating SG&A as a fixed cost. Nucor's profit-sharing model means SG&A drops significantly during industry downturns. Modelling SG&A as a fixed percentage of revenue will understate trough margins.
• Extrapolating peak margins. Steel is highly cyclical. Assuming recent peak HRC prices will persist in perpetuity will result in a wildly inflated DCF valuation.
• Ignoring the changing business mix. The Steel Products segment is now a much larger portion of the business than it was five years ago, which structurally raises the floor for consolidated gross margins.
• Double-counting capital expenditures. Ensure that major announced projects (like the West Virginia mill) are captured in the overall capex forecast without adding them on top of a historically high baseline percentage.
• Overestimating interest expense. Nucor's debt is mostly fixed-rate and long-dated. Applying a floating rate assumption to the entire debt stack will misstate earnings.
• Miscalculating share repurchases. Nucor uses a significant portion of free cash flow for buybacks. Failing to reduce the share count will understate EPS in the outer years of the forecast.

• Consolidated EBITDA margin should cycle between 10% and 28%. Flag if it remains above 25% for more than two consecutive years.
• Net working capital should remain between 15% and 20% of revenue.
• OCF to Net Income conversion should drop below 1.0x during years of rapid revenue growth and exceed 1.0x during revenue contractions.
• Debt to EBITDA should remain below 1.5x in all modelled scenarios.
• Total Assets must equal Total Liabilities plus Shareholders Equity in every single period.
• Intercompany eliminations should roughly equal 15% to 20% of total gross segment revenues.
• Effective tax rate should remain between 22% and 24%.
• Capex should exceed D&A by at least $500 million annually due to ongoing growth investments.

• SEC EDGAR: Nucor (NUE) 10-K and 10-Q filings for historical segment data and exact wording of revenue lines.
• Nucor Investor Relations: Quarterly earnings presentations for capacity utilisation rates and project capex updates.
• Key Peers: Steel Dynamics (STLD), Cleveland-Cliffs (CLF), United States Steel (X), and Reliance, Inc. (RS).
• Industry Data: Fastmarkets AMM or S&P Global Platts for historical hot-rolled coil (HRC) and ferrous scrap pricing indices.
• Consensus Estimates: FactSet or Bloomberg for near-term revenue and EBITDA benchmarking.

• Nucor Corporation Annual Report on Form 10-K for the most recent fiscal year.
• Nucor Corporation Quarterly Reports on Form 10-Q.
• Nucor Investor Day Presentations and Earnings Call Transcripts (available via the Nucor Investor Relations website).
• US Federal Reserve Economic Data (FRED) for macroeconomic indicators related to non-residential construction.