# Nucor (NUE) Financial Model Free Excel 3-statement financial model and company analysis for Nucor. - Canonical: https://finamodel.com/companies/nucor - Industry: Materials - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/NUE.xlsx ## Model Purpose This model provides a full three-statement forecast and discounted cash flow valuation to help an equity analyst determine the intrinsic value of Nucor Corporation across various macroeconomic and commodity cycle scenarios. ## Company Overview Nucor Corporation is the largest steel producer and recycler in North America. The company operates primarily through electric arc furnace (EAF) mini-mills, which melt scrap steel and direct reduced iron to produce new steel products. The business operates through three reported segments: Steel Mills (approximately 65% of outside sales), Steel Products (approximately 28% of outside sales), and Raw Materials (approximately 7% of outside sales). Nucor operates predominantly in the United States, with minor operations in Canada and Mexico. The business model is highly asset-heavy but benefits from a highly variable cost structure because EAFs can be easily powered down during demand slumps, unlike traditional blast furnaces. Nucor holds a dominant competitive position in the North American market and competes primarily with Steel Dynamics, Cleveland-Cliffs, and United States Steel. Over the last three years, Nucor has aggressively expanded its Steel Products segment through acquisitions, such as C.H.I. Overhead Doors, to capture higher and more stable margins downstream. ## Revenue Deep Dive ### Steel Mills - Segment name: Steel Mills - Revenue driver formula: Outside Shipments (Tons) x Average Sales Price per Ton - Historical growth rate: Highly cyclical, ranging from negative 20% to positive 60% year-over-year depending on hot-rolled coil (HRC) pricing. - Key growth levers and headwinds: US non-residential construction demand, automotive production, infrastructure spending, and cheap steel imports. - Pricing dynamics: Heavily dependent on spot market commodity prices (HRC, plate, and rebar indices) with some contractual volumes tied to trailing spot indices. - Revenue recognition notes: Recognised upon transfer of control, typically at shipment. - Seasonality: Q1 and Q4 are typically slightly weaker due to winter weather impacting construction activity. ### Steel Products - Segment name: Steel Products - Revenue driver formula: Outside Shipments (Tons) x Average Sales Price per Ton - Historical growth rate: 10% to 25% CAGR recently, heavily boosted by acquisitions. - Key growth levers and headwinds: Non-residential construction, warehouse building, and integration of acquired businesses. - Pricing dynamics: Less volatile than Steel Mills. Prices are generally sticky and provide a natural hedge when raw steel prices fall. - Revenue recognition notes: Recognised at shipment or delivery. - Seasonality: Follows the construction season, peaking in Q2 and Q3. ### Raw Materials - Segment name: Raw Materials - Revenue driver formula: Outside Shipments (Tons) x Average Sales Price per Ton - Historical growth rate: 5% to 15% cyclical growth. - Key growth levers and headwinds: Global scrap availability, direct reduced iron (DRI) production uptime, and natural gas prices. - Pricing dynamics: Tied directly to global scrap metal indices. - Revenue recognition notes: Recognised upon shipment. - Seasonality: Scrap collection can be hindered by severe winter weather, slightly reducing Q1 volumes. ## Cost Structure ### Variable Costs / COGS - COGS primarily consists of metallic raw materials (scrap steel, pig iron, DRI), energy (electricity and natural gas), alloys, consumables, and freight. - Gross margin range: 12% at the cycle trough to 32% at the cycle peak, averaging around 18% to 22% over a full cycle. - Key input costs and commodity exposures: Ferrous scrap is the largest single cost. Electricity and natural gas are also highly material. - How COGS scales with revenue: Highly variable. The EAF model allows Nucor to scale down raw material purchases and energy consumption immediately when demand drops. ### Operating Expenses - R&D: Negligible as a percentage of revenue. - SG&A: Typically 3% to 5% of revenue. A massive component of Nucor's compensation is profit-sharing, which scales directly with pre-tax earnings, making SG&A highly variable. - Depreciation & Amortisation: Typically 4% to 6% of revenue, heavily weighted towards tangible PP&E depreciation. - Stock-Based Compensation: Less than 0.5% of revenue. - Restructuring / one-time charges: Infrequent, though occasional impairment charges occur on underperforming raw material assets. ### Margin Profile - Gross margin: 12% to 32%. - EBITDA margin: 10% to 28%. - Operating margin: 8% to 25%. - Net margin: 5% to 20%. - Margin trend: Structurally higher over the last five years due to a shift towards value-added Steel Products and consolidation in the US steel industry. - Segment-level margins: Steel Products typically commands the highest and most stable margins, while Raw Materials operates at low single-digit margins for outside sales. ## Balance Sheet Structure - 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. ## Capital Expenditure & Investment - 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. ## Debt & Capital Structure - 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. ## Cash Flow Characteristics - 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. ## Sheet Structure 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. ## Key Financial Relationships 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). ## Cross-Sheet Dependencies 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. ## Sign Convention - 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. ## Things Most Likely to Go Wrong - 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. ## Validation Checks - 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. ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Steel Mills Outside Shipments | 18,500 | Thousands of Tons | Based on recent historical averages and current capacity utilisation. | | Steel Mills Average Price | 1,050 | $ per Ton | Normalised mid-cycle pricing for hot-rolled coil and related products. | | Steel Products Outside Shipments | 4,800 | Thousands of Tons | Reflects recent acquisitions and steady non-residential demand. | | Steel Products Average Price | 2,800 | $ per Ton | Value-added products command a significant premium over raw steel. | | Raw Materials Outside Shipments | 2,000 | Thousands of Tons | Steady-state external scrap and DRI sales. | | Raw Materials Average Price | 450 | $ per Ton | Normalised global scrap pricing. | | Intercompany Revenue Elimination | -6,500 | $ Millions | Historical run-rate of internal transfers between segments. | | Consolidated Gross Margin | 20.0 | % | Mid-cycle average reflecting the improved product mix. | | SG&A as % of Revenue | 4.5 | % | Captures base overhead plus normalised profit-sharing expense. | | Days Sales Outstanding (DSO) | 40 | Days | Historical average. | | Days Inventory Outstanding (DIO) | 70 | Days | Historical average, reflecting scrap and finished goods holding periods. | | Days Payable Outstanding (DPO) | 35 | Days | Historical average. | | Capex as % of Revenue | 6.5 | % | Elevated slightly above historical average due to current growth projects. | | Effective Tax Rate | 23.0 | % | Standard US corporate rate plus state taxes, net of minor credits. | | Annual Share Repurchases | 1,000 | $ Millions | Conservative estimate based on recent capital allocation frameworks. | | Base Dividend per Share | 2.16 | $ per Share | Current annualised run-rate. | | Weighted Average Cost of Capital | 9.5 | % | Reflects cyclical risk premium and current interest rate environment. | | Terminal Growth Rate | 2.0 | % | Long-term GDP growth proxy. | ## Data Sources & Benchmarks - 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. ## Sources - 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. --- ## Frequently asked questions ### What is Nucor Corporation's primary business model? Nucor Corporation is North America's largest steel producer and recycler, primarily operating electric arc furnace (EAF) mini-mills. These mills melt scrap steel and direct reduced iron to produce new steel products across its Steel Mills, Steel Products, and Raw Materials segments. ### How does Nucor generate revenue across its business segments? Nucor generates approximately 65% of its outside sales from its Steel Mills segment, 28% from Steel Products, and 7% from Raw Materials. Its revenue is influenced by steel demand, commodity cycles, and its dominant competitive position in the North American market. ### What is Nucor's capital expenditure strategy? Nucor's capital expenditure has historically been 5% to 8% of revenue, currently elevated due to major growth projects. During the current investment cycle, approximately 60% of capex is allocated to growth initiatives like new sheet and micro-mills, with the remaining 40% for maintenance. ### What is the assumed revenue growth rate for Nucor in the financial model? The financial model assumes a revenue growth rate of approximately 11.34% for Nucor. This growth rate is a key input for forecasting the company's future financial performance through the FY2026–FY2030 forecast horizon. ### What are the main components of Nucor's balance sheet relevant for valuation? Nucor's balance sheet totals approximately $35 billion, with Property, Plant and Equipment (PP&E) making up over 50% of total assets. Net working capital is also a significant factor, acting as a major use or source of cash depending on commodity cycles. ### What is the purpose of the downloadable Nucor financial model? The downloadable Excel model provides a full three-statement forecast and discounted cash flow valuation for Nucor Corporation. It helps equity analysts determine the intrinsic value of the company across various macroeconomic and commodity cycle scenarios. [Interactive forecast calculator](https://finamodel.com/companies/nucor/forecast)