Nucor Corporation Q1 2026 Earnings Call Transcript

Nucor Corporation (NYSE: NUE) Q1 2026 Earnings Call dated Apr. 28, 2026

Presentation

Operator

Good morning, and welcome to Nucor’s First Quarter 2026 Earnings Call. All lines have been placed on-mute to prevent any background noise and today’s call is being recorded. After the speakers’ prepared remarks, I will provide instructions for callers wishing to ask questions.

I would now like to introduce Chris Jacobi, Director of Investor Relations. You may begin your call.

Chris Jacobi — Director, Investor Relations

Thank you and good morning, everyone. Welcome to Nucor’s first-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 first-quarter earnings release and investor presentation to Nucor’s IR website. We encourage you to access these materials as we will 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 and disclosures along with a reconciliation of non-GAAP financial measures.

So, with that, let’s turn the call over to Leon.

Leon J. Topalian — Chair and Chief Executive Officer

Thanks, Chris.

And as always, I want to begin by recognizing our 33,000 teammates across the company for their continued commitment to working safely. Safety is and will always remain our most important value. And at Nucor, that means more than the physical safety of our team. It encompasses the mental health of all of our teammates as well. With May being mental health awareness month, it’s a great time to reinforce that commitment. And as we move through 2026, we are firmly focused on making this the safest year in Nucor’s history.

Before turning to our financial performance, I’d like to briefly highlight a few leadership updates. Effective March 1, Jack Sullivan was promoted to Chief Financial Officer, Treasurer and Executive Vice-President. Since joining Nucor in 2022, Jack has demonstrated strong leadership, deep financial acumen and a clear understanding of Nucor’s culture and how to create long-term value for our shareholders. Congratulations, Jack. We also announced that Dan Needham, our Executive Vice-President of Commercial, will retire in June after 26 years with Nucor. I want to thank Dan for all his sacrifice and leadership during this time in which he and his family the very best-in retirement.

Turning to Nucor’s first-quarter financial results, we generated EBITDA of approximately $1.5 billion and earned $3.23 per share. This is an excellent start to the year and a significant increase compared to the 4th-quarter, driven by strong performance across all three of our operating segments. Consistent with our capital allocation framework, we returned $254 million to Nucor shareholders through dividends and share buybacks during the quarter, while also reinvesting $661 million into the business. Roughly 40% of capex in the quarter went towards our new sheet mill in West Virginia.

Operationally, our team has performed incredibly well during the quarter. One of the clearest indications is the record shipments our steel mills achieved for the quarter. At 7 million tons, this was the highest quarterly shipment volume in Nucor’s history, reflecting strong execution across our 26 steel mills and growing contributions from recently-completed projects. Equally encouraging is the momentum evident in our backlogs. At the end-of-the first-quarter, our steel mills backlog was up to 4.7 million tons, a 20% increase from year-end and the highest-level we’ve seen since the second-quarter of 2021.

In Steel Products, our backlog grew 9% from year-end with increases across all major product groups. I want to thank our operating and commercial teams for a strong start to 2026 and for putting Nucor in a position to deliver even better second-quarter results for our customers and our shareholders.

Turning to trade policy, the combination of Section 232 steel tariffs and trade remedy orders have been effective at reducing imports with that trend accelerating in the second-half of ’25 and continuing in the first-quarter of 2026. Import share of the US finished steel market declined from over 22% in the first-quarter of 2025 to approximately 15% this quarter. More recently, we were pleased to see the administration reaffirm the 50% 232 tariff on steel and implement important changes to how derivative steel products are treated specifically applying tariffs to the full value of those products. This action simplifies administration and enforcement while closing a key loophole that had allowed for undervaluation and circumvention.

Taken together with existing trade remedies, these measures are working to ensure a more level-playing field for domestic producers. We appreciate the administration’s recognition of the importance of a healthy and competitive American steel industry. That said, we remain vigilant and there is still work to be done as USMCA discussions continue, there is an opportunity to address ongoing challenges, including steel subsidies provided by the Canadian government and the use of North American channels as back doors to our domestic markets, putting US manufacturers at a competitive disadvantage. We also continue to advocate for policies that prioritize the use of American-made steel in critical sectors such as energy, infrastructure, defense and shipbuilding.

With that, I’ll turn it over to Steve for an update on the growth initiatives and market outlook. Steve?

Stephen D. Laxton — President and Chief Operating Officer

Thank you, Leon, and thank you all for joining us this morning.

Our team continues to make great progress on our new sheet mill project in West Virginia, and we’ll see key milestones achieved in 2026. We’re entering the final phases of construction and will be sequencing commissioning of operations throughout the year, beginning with the pickle line in the second-quarter. By the end-of-the year, we expect commissioning, inspecting and testing of all equipment across the mill to be complete.

Following commissioning, our priority will be to operate safely and reliably as commercial shipments begin ramping-up in early 2027. We will be increasing production and advancing product development throughout 2027 and ’28, with capacity utilization and product offerings building steadily over-time. Once fully ramped, Nucor West Virginia will supply some of the cleanest and most advanced sheet steel in North-America with expanded capabilities to better service automotive and consumer durable markets. This positions Nucor to grow market-share in the Midwest and Northeast, two large sheet consuming regions where Nucor is relatively underweighted today.

In addition to West Virginia, we have several major capital projects under-construction or ramping-up and we’re making meaningful progress across all of them. Starting with projects under-construction. In our Towers and structures business, we’re building two new utility towers facilities, one in Indiana and one in Utah. In Indiana, we expect to be fully operational in the 3rd-quarter of this year. And in Utah, we expect to reach full production by mid-2027. We are also advancing the construction of a second galvanizing line at our Berkeley County Sheet steel mill in South Carolina. Once complete, this line will expand our ability to service automotive customers in the Southeast. Equipment commissioning is planned for the middle of the year and we expect production to begin in the fall.

In addition to projects under-construction and commissioning, we have recently-completed several growth projects that are advancing their strategic and commercial plans as expected. In the Bar Group, our new micro mill in Lexington, North Carolina and our new melt shop in Kingman, Arizona were both EBITDA-positive in March. In the Sheet Group, our new galvanizing line at Crawfordsville, Indiana was also EBITDA-positive in March and we expect to commission the paint line later this year. Finally, our Alabama Towers and Structures facility is expanding its customer-base, improving production and on-track to reach EBITDA-positive run-rates by the end-of-the summer.

Before I turn the call over to Jack, let me share how we’re thinking about the current market environment and place in these markets. Already the established industry-leader, producing roughly one out of every four tons of steel in the United States and having unparalleled range of product offerings in our downstream businesses, Nucor continues to find ways to grow. After achieving approximately 6% growth of shipments in 2025, we expect shipments to grow by more than 5% in 2026. A confluence of factors are enabling this. First, consistent with our comments on Nucor’s 4th-quarter earnings call in January, overall demand remains relatively stable.

There are pockets of strength such as data centers, energy, border fence and infrastructure. And there are some markets that have remained softer for now, including consumer cyclicals, traditional office, heavy equipment and agriculture. Taken as a whole, we expect domestic steel consumption to be stable with overall demand remaining flat-to-up 2% for 2026. Second, as Leon highlighted, enforcement of trade laws is stabilizing what might have happened in the past where patterns of flooding dumped imports shocked the supply picture.

And third, execution by our team with the investments we’ve made. Nucor is well-positioned with the portfolio we’ve developed to service market segments exhibiting particular strength right now. A few examples include, we can supply 95% of the steel needed to build a data center. We’re the leading manufacturer of HSS structural tubing that are the primary building materials for large sections of the border fence. Our industry-leading pre-engineered metal buildings and insulated metal panels offering help to accelerate our customers’ speed-to-market, which is increasingly valued in today’s landscape.

And as a leading domestic producer of beams, plate and bar, we are an essential material supplier and enabler for the construction of pipelines, LNG terminals, bridges, manufacturing facilities and power generation and transmission infrastructure. Nucor’s national reach, coupled with our strength in raw materials, steel-making and downstream products provides supply-chain integration, improved reliability and operating efficiencies that no other North American producer can match. We have the right capabilities and team for this moment, and we’re always looking ahead to assure Nucor remains well-positioned as markets evolve.

With that, I’ll turn it over to Jack for a closer look at our first-quarter financial results and our outlook for the second-quarter. Jack?

Jack Sullivan — Chief Financial Officer, Treasurer and Executive Vice President

Thanks, Steve, and good morning, everyone.

In the first-quarter, Nucor generated net earnings of $743 million or $3.23 per share, exceeding the midpoint of our guidance range by nearly $0.50. The beat was largely due to higher volumes and higher-margin product mix. After some weather-related shipping delays early in the quarter, the, the team delivered a very strong March with our sheet, plate and rebar groups all setting quarterly shipment records, while structural steel shipments reached levels not seen since 2021. Turning to the segment level results for the first-quarter, the Steel mills segment generated $1.1 billion of pre-tax net earnings, more than double the prior quarter.

Volumes and average selling prices increased across all four product groups with Sheet and structural being the largest drivers. Metal spreads also expanded across all formats. In Steel Products, we generated pre-tax earnings of $285 million, up 24% from the 4th-quarter. Volumes increased 13% on stable pricing with our Tubular group setting a new quarterly shipment record. Strong demand related to the border fence was a significant contributor and we expect that to continue for the next several years. We did see some margin compression due to higher steel input costs flowing through, but we expect this to ease as the year progresses and realized pricing catches up.

And in our raw materials segment, we generated pre-tax earnings of approximately $45 million compared to $24 million in the prior quarter, reflecting higher DRI production following two planned outages in the fall. Pre-operating and start-up costs totaled $108 million for the quarter. As a reminder, we expect these costs to trend higher as we work our way further into 2026 and toward the completion of our West Virginia sheet mill.

Moving to the balance sheet, our strong investment-grade credit profile is the foundation of our capital allocation framework. It allows us to execute our strategy of disciplined investment to grow our business while still providing meaningful cash returns to shareholders. We ended the quarter with approximately $2.5 billion in cash and liquidity of $3.2 billion. Total debt as a percentage of capital sits at 24% and our credit ratings remain the strongest of any US-based steel producer. Capital expenditures totaled $661 million for the quarter, and we remain on-track with our $2.5 billion capex estimate for the full-year.

While this level of investment remains elevated as we finish several remaining growth projects, it is moderating compared to recent years. And as our capex is trending down, our cash from operations is moving up. That combination produced a meaningful increase in free-cash flow for the quarter and we expect this trend to continue. We also returned over $250 million to shareholders in the form of dividends and share repurchases or roughly 34% of quarterly net earnings. Consistent with our long-term track-record, we remain committed to returning at least 40% of net earnings to shareholders on an annual basis.

Looking ahead, Nucor’s financial strength, highly variable-cost structure and business diversification position the company to invest in growth, reward our shareholders and navigate through economic cycles. Turning to our second-quarter outlook, we expect higher consolidated earnings with improvement across all three operating segments. In Steel mills, we expect stable volumes and increasing metal margins. The margin improvement reflects higher realized pricing, partially offset by rising raw-material costs. Within the segment, we expect our sheet and plate businesses to be the largest contributors in the sequential increase.

In Steel products, we expect higher volumes and stable pricing in some of our longer lead-time products like fabricated rebar and and deck, margins have been impacted by rising substrate costs, but are poised to improve as we work-through backlogs and start to realize higher average selling prices. In raw materials, we expect higher earnings driven primarily by improved realized pricing for DRI. Taken as a whole, the earnings uplift across all of our operating segments will be partially offset by higher corporate and intercompany profit eliminations upon consolidation.

As we look further into 2026, we continue to expect that Nucor’s earnings and cash-flow will trend significantly higher than 2025 as we benefit from strong non-residential construction and infrastructure demand and begin to see returns from the investments we’ve been making these past few years. With the hard work and dedication of the Nucor team, we are confident in our ability 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.

Question & Answers

Operator

Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally.

Our first question comes from Bill Peterson from J.P. Morgan. Your line is now open. Please go-ahead.

Bill Peterson — Analyst, J.P. Morgan

Yeah, hi, good morning. Congratulations on strong quarter. Congrats to the new management appointees and thanks for the details thus far. On the West Virginia sheet mill, which you provided some granularity, I was hoping to get a bit more color on the phasing of commissioning, the strategy through year-end and maybe what to expect for the next few years. I guess specifically, how long do you expect the commission phases to be complete? When do you expect the construction of the galv line to be complete? And I guess, how should we think about when you’re going to start production as well as the customer qualifications? And then any sort of thoughts on utilization in the next few years as well? Appreciate that.

Leon J. Topalian — Chair and Chief Executive Officer

All right, Bill. Well, good morning and thank you for the question. I’m going to kick it off and maybe just stay at a high-level and then ask Steve Laxton or Noah to jump in with some more of the details around the commissioning of that mill.

But look, I want to begin with the backdrop of our most important value, which is the safety, health and well-being of the entire Nucor 33,000 team member family. Today, we sit at 65 of our divisions are reportable free at this point. It is an amazing accomplishment and I want to thank each and every one of our teams who are delivering exceptional results and you will see and continue to see those amazing results continue as we push into the quarter. More specifically, Bill, as we think about West Virginia and we touched on it in the opening remarks, I and our team could not be more excited about the capability set that mill will bring for Nucor for our customers, our shareholders, the value that’s going to be generated and created in the largest sheet consuming region of the United States.

Johnny Jacobs, who is our Vice-President, GM and his team have done an incredible job. And as you know, the work that’s just behind the scenes during construction and startup is tireless, it’s thankless and it’s a — it is a — just a really, really challenging environment. And those individuals have done an amazing job. So thank you to our entire West Virginia team. And again, I’ll let Steve and Noah maybe update some more on the details.

Stephen D. Laxton — President and Chief Operating Officer

Yeah, happy to do that. Thanks for the question, Bill. And I’ll just echo what Leon said about the team in West Virginia, they’ve had a remarkable safety record. I’ll lead off with that. They’ve only had one reportable in all the years of that project. So outstanding safety culture and leadership in that team. And in terms of the specifics of your question, right now, Bill, we’re about 85% of the way through construction. So we still have work to do on the construction side. Having said that, we’re starting right now with some of the commissioning and we’ll be sequencing that throughout the year.

And so, we’ll start with the pickle line and then we’ll bring up the cold mill and proceed through one of the galv lines, the automotive quality galv line will be the next thing we start-up after that in commissioning. Ultimately, we’ll get to commissioning the melt shop and in hot mill later in the year. By the end of this year, we’ll be done with all the commissioning. We’re on-track to hit that milestone and then we’ll start moving up through production and ramp-up in ’27. And Bill, what you’ll see there is a very intentional and deliberate plan from that team and our entire Sheet Group, Noah and our team in the Sheet Group have really designed an excellent plan to bring that mill up in a very, very constructive and coordinated and intentional way. And so by the time we get to the end of 2027, you asked about utilization rates and markets are going to dictate some of that.

So, I might hedge here just a little bit, it will depend on-market conditions somewhat, but we’ll be operating somewhere near that 50% of capacity by the end of next year. And so that team is poised. We’re going to make great progress over the next year and a half and into 2028 even with product development and continued penetration of the markets. Anything you want to add?

Noah Hanners — Executive Vice President, Sheet Products

No, thank you. You’re all over it. Thank you.

Bill Peterson — Analyst, J.P. Morgan

Great. Thanks for that. And Steve, obviously, we’ve been working with you as a CFO and now we have Jack, so congrats on for both of you. Maybe the next question for Jack is your new role in CFO, how should investors think about any potential shifts in strategy relative to recent years or anything you would continue anything you would change or just any sort of insights on how you’re considering your new role?

Jack Sullivan — Chief Financial Officer, Treasurer and Executive Vice President

Yeah. Thanks, Bill. I appreciate that. I step into this role with a lot of humility and gratitude to serve this great company and the 33,000 teammates who make it such a special place. Preceding me in the role are four highly accomplished Nucor CFOs. And really my goal is just to carry-on their long-standing tradition of doing three things really well, maintaining a healthy balance sheet, investing for the future and generating attractive returns for our shareholders. And Steve Laxton, who is sitting right here to my right, did a terrific job during his four-year tenure, funding $15 billion in growth investments, returning $9 billion to our shareholders and improving our credit profile along the way.

So, that’s a pretty impressive trifecta right there. And as the old saying goes, if it ain’t broke, don’t fix it. So Bill, no major shifts from that winning strategy. But what I would say is, I think I bring a fresh set of eyes, a strong understanding of this business and how we make money and just a lot of excitement to accelerate what is already one of the most compelling stories in American manufacturing.

Bill Peterson — Analyst, J.P. Morgan

Thanks for that everyone, and congrats again on the quarter.

Jack Sullivan — Chief Financial Officer, Treasurer and Executive Vice President

Thanks, Bill.

Operator

Thank you. Our next question is from Alex Hacking from Citi. Your line is now open. Please go-ahead.

Alex Hacking — Analyst, Citi

Good morning, guys. Thanks for the call. A couple of questions. I’ll ask them together, if that’s okay. Firstly, on the sheet side, the new slow and steady approach to price hikes in this cycle that we’re seeing right now. Could you maybe discuss the rationale a little bit there and how the customer feedback has been. I mean, I hear only good things from customers, but I’m curious. And then secondly, on structurals, demand are very, very strong. Imports are down, but don’t seem to be down that much. Is there any particular sub-segments that’s driving structurals to be so good. Thanks a lot.

Leon J. Topalian — Chair and Chief Executive Officer

Yeah, I’ll kick it off, Alex, and good morning, and thanks for the question. And again, keep it a little broader base. But the question you ask around sheet is an important one, and there’s some very deliberate strategies there that I’ll ask Noah to kind of walk us through because again, I think it’s an important context as you know you overlay the backdrop of the current sheet market and demand today versus ’21 and ’22. And again, Noah can touch on that. You mentioned the structural side. And again, having spent three years at Nucor-Yamato, our Nucor-Yamato team and our Berkeley B mill continue to deliver excellent performance, both from a safety standpoint as well as from a just net earnings. They are absolutely on fire. Their backlogs are at historic levels. Their customers — customers are busier than anything that I’ve seen in again my 30-year career.

So, where-is that going? Man, it’s obviously the non-res data centers, energy, structural side and infrastructure around energy and chips, chip plants and facilities, warehousing and you know in an area that you’re going to continue to see expanded into the military complex in the years to come for Nucor. So I would tell you it’s hitting on all cylinders. And while data centers are white-hot, everyone is looking to participate, if you pulled out all of the data center backlog from Nucor, and it only takes that down about 10%. So the historic backlogs we’re seeing are really, really spread-out incredibly well across the enterprise that gives — give me great confidence that not only as we indicated, Q2 will be better, but I think 2026 is going to be a very strong year for Nucor or for Nucor. And so with that, Noah, why don’t you walk-through a little bit of the sheet strategy and where we sit today?

Noah Hanners — Executive Vice President, Sheet Products

Thanks for the question, Alex. We like slow and steady and our customers are liking slow and steady. And let’s take a little time to unpack that. The fundamentals supporting pricing right now are really strong. And I would say the rally we’re in is probably the strongest kind of fundamentals we’ve seen for some time. Maybe to give you some context for how we see the rest of ’26, let’s step-back to the last inflection point in the market, which was Q4 of last year-on the low-side of pricing in Q4 of last year.

And to think about how our strategies work differently this year. You recall that historically, what would have happened in that low-point, that trough in the market is we would have had opportunistic speculative buyers overloading their order books to try to time the market. And the result, if you think about traditional behavior in Q4, would have been that we would have overbooked on the mill side, lead times would have jumped significantly, prices would have jumped significantly and we would have really overshot basic market fundamentals. So then due to the spreads and the lead times, we then inevitably create the surge of imports that arrive a few months later, similar to what we saw in the back-half of ’24. And that’s what usually happens.

We’ve seen this time-and-time again in the sheep world. But this time our trajectory and our behavior has been markedly importantly different in this cycle. We didn’t chase the market down in Q4. We managed our order book to match what we saw as true underlying demand. And you saw this reflected in our steady, I would Call-IT, modest consistent approach with pricing in CSP, consistent modest increases that were supported by underlying demand. And then this is one factor that we believe has help keep imports low. If you think back to ’24 and you saw imports that were probably — that were 9 million-ish tons. This year, we’re tracking 4 million or under. So there’s a 5 million tonne window of serviceable market for domestic suppliers, that’s a huge impact to the positivity with which we see the market today.

And then as importantly, the supply-chain is really healthy right now. Inventory levels are modest, which just tells you we haven’t seen the speculation that traditionally drives the volatility we would see in this market. A couple of other notes just on the strength of the current market, while we have a pretty positive outlook, we have some key markets that are starting to show signs of positive outlook. Service center shipments are starting to move-up. They’re trending up. We’ve heard from HVAC customers recently that are really in the — non-residential construction space about a really strong second-half there.

So, there’s some tailwinds there in non-res construction that yield some strength as well. And then you already heard mention of the border defense, which is 1 million, 1.5 million tons over this year and next. So all that together, we believe supports a strong operating environment through ’26 and then into potentially next year.

Alex Hacking — Analyst, Citi

Thanks, Noah. Really appreciate the context and thanks to the rest of the team as well.

Leon J. Topalian — Chair and Chief Executive Officer

Thanks, Alex.

Operator

Thank you. Our next question comes from Timna Tanners from Wells Fargo. Your line is now open. Please go-ahead.

Timna Tanners — Analyst, Wells Fargo

Yeah, hey, good morning, everyone. I wanted to follow-up if I could on the guidance comments. So the 5% year-over-year volume increase would seem to imply that this level that we saw in the first-quarter year-over-year is not sustainable. So I’m just curious about what’s driving that expectation. And I conclude just looking at the values that perhaps the bigger driver into Q2 could be price catching-up with the market rather than volumes. Is that a fair conclusion? And if you could comment a little bit more about the moving parts, that would be great.

Leon J. Topalian — Chair and Chief Executive Officer

Yeah, Timna, look, I think both are true. I think you’re going to see volumes. And again, Nucor’s operating rate is about 87% right now, utilization across-the-board, some groups being a little higher, some a little lower. So we have room. And again from a contract standpoint, you think about sheet market and the things Noah just walked through, we remain and have tons available in a very, very strong market. So we’ve maintained some discipline in not booking all of those tons through contracts. So we have spot tons to offer. But again, we have — we still have availability. And again, I think you’re going to see that continue to move-up. The demand drivers. And again, I’m not going to underplay this.

I’ve been in this business a long-time. I’ve been in our longs product businesses or She Group and from a lung’s perspective, our customers that I’m talking to today are busier than anything they’ve ever seen in their history. So when I tell you the demand driver drivers today are, odd, it’s like ’21, ’22 or even beyond in some cases depending on the product group. So it is an incredible market. So I do think you’re going to see some improvements in volume to your point on the 5%. Yeah, I think you’re right. I think it’s much more likely that it pushes closer to double-digits. Again, I’m ready to say it’s going to be at or above 10%, but we — I think it will strongly be above that 5% mark. So you’re going to see that move-up as well. So I think that answered the two questions you were going on. Did I miss anything there, Timna?

Timna Tanners — Analyst, Wells Fargo

I think that’s fair. I think I just — it would be always helpful to get a little bit more color on how to think about some of the lags in pricing if you want, that’d be great. And then I guess the second question I was going to ask us to do with costs. And obviously, we all track scrap really closely and that’s a key one. But I just wondered if you could elaborate on some of the cost pressures that you alluded to earlier in the script, that would be great.

Leon J. Topalian — Chair and Chief Executive Officer

Yeah. Steve, I actually want to take both. I mean, the cost as well as the lag effect on which again I think is playing through, but will play through very positively as we head into Q2.

Stephen D. Laxton — President and Chief Operating Officer

Yeah, yeah, sure, Timna. The lag effect, just to elaborate on that just a little bit on the prior question. You know, you know this, but for the other listeners on the call, you know, 20% of our volume goes to our downstream business and that gets in our financial results backed out through intercompany ELM. So you see that impacting financial results for us, but also with over 70%, 80% of our business in sheet being contract in some other businesses that have a lag effect to the pricing.

As pricing trends move-up, it does — there is this catch-up effect that takes time. And so to the heart of the question you were asking just a minute ago about Q2, you’ll see some volume pickup. We had weather effect, particularly some of the downstream products. You’ll probably see a little bit more volume pickup relative to pricing in our products group. But on the sheet side — excuse me, steel side, you’re going to see it the other way around where the pricing is catching-up with or catching-up with the trends that you’re seeing today in the marketplace. That’s sort of putting a little bit finer point on your comment about the lag effect. And with regards to cost, new course costs have been down year-over-year and quarter-over-quarter. I think that’s important to note.

And a lot of that has to do with utilization. Our utilization is up and — but also supplies and services are down on a few other little details. The one area that is up that might be on investors’ mind is energy, but I think it’s important to note that energy is around 10% of the cost in steelmaking and it probably has a far less pronounced impact than some investors might be thinking because of what some of our integrated competition has in terms of their cost. So our profile is simply different there. We hedge — we typically forward by anywhere between 40% to 50% of a year’s worth of natural gas heading into it. And most of our cost, 80% of our energy cost is related to power anyway. So we don’t have quite the same degree of exposure to near-term moves and costs on that front.

Timna Tanners — Analyst, Wells Fargo

Very helpful. Thanks to you both.

Leon J. Topalian — Chair and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Lawson Winder from BofA Securities. Your line is now open. Please go-ahead.

Lawson Winder — Analyst, BofA Securities

Thank you very much, operator, and good morning, Leon and team. Could I ask about the capital return? So in recent years, Nucor has exceeded the 40% net income return. I mean, last year it was like just under 70%. Is there room to push that higher in 2026? And how are you thinking about that? And then the to that would be, looking at the investment opportunity set, are you seeing any new opportunities in which to invest in the business that could compete for that free-cash flow versus capital return? Thank you.

Jack Sullivan — Chief Financial Officer, Treasurer and Executive Vice President

Yeah. Hey, Lawson, it’s Jack. Thanks for the question. In terms of share, you know, returns to shareholders, I think over the past five years, we’ve trended close to 60% of net earnings over that time. Starting out the first-quarter, a touch under that 40% target, and that was really the result of our earnings beat. So as we work our way further into the — into the year, you should expect us to continue to close that gap and potentially exceed it. But when it comes to actual returns to shareholders, it’s sort of that balancing act between staying true to our long-standing targets of roughly 40% recently higher, but also being opportunistic about other areas to create value for shareholders. And a lot of that is through reinvestment. So we’ll continue to do just that, balance reinvestment opportunities as they come along, maintain a healthy balance sheet along the way and make-good on our commitment to shareholders.

Lawson Winder — Analyst, BofA Securities

Okay. That’s quite clear. And Jack, congratulations on the promotion. If I could ask a follow-up questions related to Joyce Deck. You noted that pricing is expected to recover to help offset some of the higher substrate costs going-forward in 2026. Can you just speak to some of the strength and weakness that you’re seeing in the underlying market for that business?

John J. Hollatz — Executive Vice President, Fabricated Construction Products

Yeah. This is John. I’ll take that question, Lawson. So really the biggest market for the Joist and deck business is the warehouse market. That’s really in a steady-state. It’s certainly not what it was in ’21 or ’22, but leveled off to a good position. The data center market continues to be really strong for us. That’s where we’re seeing a lot of our price increasing and our backlog pricing has — has benefited from that and will continue to over the course of the year. So we feel-good about where we are in that part of the business.

Lawson Winder — Analyst, BofA Securities

Yeah. Okay. Thank you guys very much.

Leon J. Topalian — Chair and Chief Executive Officer

Thanks, Lawson.

Operator

Thank you. The next question comes from Katja Jancic from BMO. Your line is now open. Please go-ahead.

Katja Jancic — Analyst, BMO

Hi, thank you for taking my questions. Earlier you mentioned the recent change to Section 232 tariffs impacting derivative products. Have you since then seen an increase in inquiries from manufacturers that could potentially try to reduce the impact or do you expect that to happen?

Leon J. Topalian — Chair and Chief Executive Officer

Katja, I want to make sure I understand the question with the — with the 232, are we seeing our customers look to basically shore up their supply chains domestically? Is that…

Katja Jancic — Analyst, BMO

Right. Or even the nearshoring because there is an ability for them to reduce the tire from 25% to 10% if they use 100% US steel so I’m just wondering if you’re seeing any inquiries…

Leon J. Topalian — Chair and Chief Executive Officer

Yeah, we absolutely are and again I think what you’ve seen with Trump 2.0 and the trade things that he’s implemented both from Aneo and 232 is to create a long-term level fair playing field. And so again, we’re seeing import levels trend down to 15%, which is certainly the lowest I’ve seen in my entire career at Nucor. So it’s at a healthy and what I believe is a very sustainable level for the US industry. But yes, to your answer your question, and it’s something that we will certainly support in the melted Made in America provisions of any trade policy that gets enacted. And so yeah, our customers are certainly aware of that and looking to see how they can control their cost and output. And so yeah, the domestic industry is healthy, it’s strong and again, Nucor’s best days are still in front of us.

Katja Jancic — Analyst, BMO

And maybe going back to the energy side, I understand that it’s only 10%, but maybe looking more longer-term, given that there is this expectation data centers are going to consume more energy and power costs are going to be moving higher. How are you thinking about your power costs longer-term or are you thinking in any way to potentially look at longer-term contracts or how should we think about it?

Leon J. Topalian — Chair and Chief Executive Officer

Yeah, Katja, look, this is something we’ve talked about for a long, long-time. In fact, very early days from when I became CEO in 2020, we’ve taken small positions, but financial positions in things like NuScale power, which is the small module reactor technology because we need all the power that we can get, not just in solar and wind, which are good. We’re suppliers to both of those industries, but it’s simply not enough. We’ve got to reembrace or we believe Nucor believes we’ve got to reembrace nuclear power in this country. It is the cleanest, most sustainable always-on demand-driven tower that we can we can bring to the grid. So you saw us invest in NuScale, you saw us invest in Helion that we’re incredibly excited about.

But those investments also tied to being able to build those facilities, whether it’s nuclear or fission and/or fusion behind-the-meter, so that we could generate our own supply, any excess then would go to the grid. So to your point, the demand profile and what the US economy is not doing to keep up with supply has been an issue and something we’ve thought about for a very long period of time at Nucor. So we’ve made those positions. But Steve mentioned it earlier as well, part of the reason why we hedge our natural gas buys. It’s part of the reason we got into drilling wells on our own to begin with. It’s the reason why we have a great relationship in every state that we’re in that we have a steel mill in with the utility so that we maintain long-term uninterruptible power contracts that are very, very efficient and cost-effective.

So do I expect in the years to come that will get a lot of pressure? Absolutely, 100%, as you know, the data centers aren’t pushing 200, 300, 400 megawatts. Now they’re pushing gigawatts. These facilities are massive and they are massive power consumers. And so we’ve been thoughtful about it. We continue to be thoughtful about it and we will continue to invest in the things not because we want to make electrons, but we recognize that this nation has to reembrace nuclear. Today, China is building 46 new nuclear facilities. The US is building zero. We’ve got to change that. And again, I think it’s a it’s one of the clearest ways that we remain a superpower in cloud computing AI and the things that are going to transform and revolutionize the US economy.

Katja Jancic — Analyst, BMO

Thank you.

Leon J. Topalian — Chair and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Carlos De Alba from Morgan Stanley. Your line is now open. Please go-ahead.

Carlos de Alba — Analyst, Morgan Stanley

Yeah. Thank you. Good morning, everyone. So a couple of questions that are basically follow-ups from prior inquiries. One is on return money to shareholders. As your capex starts to peak and you get the benefit of the new projects. And would you have any preference between incremental buybacks or special dividends? Or are you agnostic to those two choices?

Jack Sullivan — Chief Financial Officer, Treasurer and Executive Vice President

Yeah. I think it — thanks for the question, Carlos. With respect to the best way to return cash to shareholders, traditionally, our preference has been through buybacks. There have been very few instances over decades in which we’ve contemplated a special dividend. Not taking that entirely off the table. It’s just our traditional practice has been through buybacks and sort of dollar-cost averaging our way through the year.

Carlos de Alba — Analyst, Morgan Stanley

Thank you, Jack. And then the other question is related to imports. The administration recently put out procedures for submissions by steel or aluminum producers that will be committed to new capacity in the US and this is related to the proclamation 10984 on imports of medium and heavy-duty vehicles and vehicle part. How do you think this could impact potentially the announcement of new capacity in the US steel capacity in the US. So I think because it could imports from 50% — sorry, not imports, but the tires from 50% to 25%.

Leon J. Topalian — Chair and Chief Executive Officer

Well, look, Carlos, I think it’s a fair question. And look, we’ve seen it. We’ve seen the interest from overseas. We’ve seen Nippon Steel come in by the US steel assets and that company no longer exists, right? It’s now owned and operated by a Japanese company. You’re seeing similar results in Louisiana with Hyundai building their sheet mill there and when I think there are drivers to that, not just trade policy, but when you’re the strongest economic situation in the world, people want to come here and build things. Certainly, there are some incentives for them to do that. But Ben, maybe just touch on some more specifics to Carlos’ question?

Benjamin M. Pickett — Executive Vice President, Business Services

Yeah, Carlos. I appreciate the question. We’re obviously aware of that to EO. We’ve studied as well. I would not add much more actually than Leon did, right? We continue to study that. I think that a lot of people are always going to tend to move towards the US market as strong as it is. However, we’re still in a wait-and-see approach on that EO along with many other things that are coming out right now.

Carlos de Alba — Analyst, Morgan Stanley

All right. Great. Thank you very much.

Leon J. Topalian — Chair and Chief Executive Officer

Thanks, Carlos.

Operator

Thank you. Our next question is from Nick Cash from Goldman Sachs. Your line is now open. Please go-ahead.

Nick Cash — Analyst, Goldman Sachs

Hi, thank you so much team for taking the question. I just wanted to double-click on Timna’s question in response from earlier. Second, the guide from 4Q was about 5% volume growth and now it sounds like Nucor is expecting more than 5% volume growth for the year. You sound pretty positive and constructive on that in the environment. So I’m just trying to — any more color on what specifically has changed over the past, I guess, two to three months, are you more positive on the end-markets? And does that give you conviction in heading into the back-half of the year or are certain end-markets seeing stronger-than-anticipated rate of change over the past two months. Imports weaken and thought or what you’re seeing potentially even across the backlog? Any additional color would be helpful. Thank you.

Leon J. Topalian — Chair and Chief Executive Officer

Yeah, Nick, look, I appreciate the question. And I think you’re seeing a trifecta come to fruition. So I think it’s all the above. So I’ll unpack it in three categories. One, I think in our core businesses, we’re seeing an incredible demand, incredible growth. Our longs products groups are from rebar, MBQ, our structural backlogs are beyond numbers that we’ve ever seen. Our customers, customers in the non-res, the structural fabricators are incredibly busy. There is a demand picture today that is incredibly robust that I think is a part of that driver. The second piece of that is our expand beyond businesses that are continuing to ramp-up.

When we talk about insulated metal panels, our doors and door technologies. The towers and structures, greenfield plants that we’re building that, again, we are incredibly excited about what they’re bringing to the table. And then the enclosures and data center spaces all are going to be contributing to a much healthier bottom-line for Nucor and our shareholders, not just this quarter, not just in the coming quarters, but year-over-year, you’re going to see it. And then the third and last and probably the most important point. You know, Nick, we spent nearly $20 billion since I took over the company as CEO and our teams have done an incredible job of A, you know, implementing that cash and projects safely. They’ve worked tirelessly to bring those projects through construction commissioning, startup, you’re beginning now to see some of those — in that planting and that toiling and just nurturing come to harvest.

So for, again, years of working towards and building out, you’re now beginning to see the harvest starting to hit the balance sheet and that’s only going to continue. The pent-up tsunami of earnings power that Nucor has invested is still yet to hit the balance sheet. It is why I am so incredibly optimistic and looking at where our share price closed last night, the opening this morning. We’re just getting warmed up. And so Nucor’s best days, weeks, months and years are still in front of it and I couldn’t be more optimistic.

So those three factors combined bring to me what’s going to generate the healthiest returns Nucor shareholders have ever experienced and ever seen and higher lows than Nucor has ever experienced by balancing out the M&A portfolio with countercyclical companies and product ranges that are in different end-markets that, again, just stabilize the earnings portfolio through the balance sheet. So again, I couldn’t be more optimistic. And that — those three pieces really are why we feel very confident about 2026 and beyond.

Nick Cash — Analyst, Goldman Sachs

Awesome. Thank you. I’ll pass it on.

Leon J. Topalian — Chair and Chief Executive Officer

Thank you, Nick.

Operator

We currently have no further questions. So I’d like to hand back to Leon Topalian, Chair and CEO, for any closing remarks.

Leon J. Topalian — Chair and Chief Executive Officer

Well, thank you all for joining us on today’s call. And before I conclude, I wanted to once again thank our team for delivering a strong start to our year and also for your unwavering commitment to becoming the world’s safest steel company. I’d also like to thank our customers for the trust that you place in us each and every day. And finally to our investors for your continued confidence in our long-term strategy. Thank you, and have a great day. Thank you.

Operator

Thank you. This now concludes today’s call. Thank you all for joining. You may now disconnect your lines.