ニューコア（NUE）2026年第3四半期決算説明会：過去最高の出荷量と堅調な第4四半期見通し

ニューコア（Nucor）の2026年第3四半期決算説明会では、過去3年以上で最強の四半期業績、製鉄所の過去最高出荷量、およびダウンストリーム部門のマージン改善が強調されました。経営陣は、季節的な出荷量の押し下げ圧力や立ち上げコストの増加にもかかわらず、第4四半期の利益は第3四半期と同等かそれをわずかに上回ると予想しています。

主要なポイント

• ニューコアの第3四半期の純利益は13億ドル（1株当たり5.80ドル）、EBITDAは約23億ドルとなりました。経営陣によると、製鉄所の出荷量と販売価格が予想を上回ったことで、EPSは会社側見通しの中央値を約3.5%上回りました。
• 製鉄所の出荷量は720万トンを超え、3四半期連続で四半期としての過去最高を更新しました。ニューコアは2026年通期の出荷成長率について、5%〜10%の予想範囲の上限近くになると見込んでいます。
• フリーキャッシュフローは第3四半期に16億ドル、年初来で約27億ドルに達しました。ニューコアは当四半期中に配当と自社株買いを通じて6億2900万ドルを株主に還元しました。
• 鋼材製品部門（Steel Products）の税引前利益は前四半期比で1億1200万ドル増加し、4億6500万ドルとなりました。平均販売価格が7%上昇したことで、同セグメントのEBITDAマージンは約200ベーシスポイント拡大しました。
• 経営陣は第4四半期の連結利益について、第3四半期と同等かそれをわずかに上回ると予想しています。価格改善とセグメント間利益相殺額の減少が、季節要因による出荷量減少とコスト増加を補うと見込まれています。
• 同社は大型プロジェクトの完成が近づくにつれ、2027年の設備投資額が減少すると見込んでいます。経営陣は、堅調な需要、成長プロジェクトからの追加的寄与、および支援的な連邦政府政策により、ニューコアは2027年に向けてより強固な業績を上げる好位置につけていると考えています。

主要財務データ

事業および操業実績

製鉄所部門（Steel Mills）

薄板および形鋼製品が牽引し、出荷量が2%増加するとともに平均販売価格が改善したため、製鉄所部門の税引前利益は18億ドルに増加しました。なお、前四半期比での比較には、前四半期の売上原価を押し下げていた1億3000万ドルの現金還付が当四半期にはなかったことが一部影響しています。

厚板グループ（Plate Group）は再び出荷量の最高記録を更新しました。ブランデンブルク工場は約24万トンを出荷し、同グループの出荷量の約3分の1を占めました。棒鋼グループ（Bar Group）も四半期出荷量の過去最高を達成しました。

レキシントンのマイクロミルは3月にEBITDAがプラスとなった後、稼働率が約80%に達しました。経営陣はまた、キングマン、フロストプルーフ、セダリア、および能力増強を行ったカンカキー工場での好調な業績を挙げました。

鋼材製品部門（Steel Products）

鋼材製品部門の出荷量は前四半期比で6%増加し、平均販売価格は7%上昇しました。ダウンストリームの実効価格設定が鋼材原材料コストの上昇に追いつき始め、セグメントのEBITDAマージンは約200ベーシスポイント拡大しました。

大梁（ジョイスト）およびデッキプレートの出荷量は約20%増加し、実効価格は1トン当たり110ドル上昇しました。経営陣によると、鋼材製品部門全体の受注残高は約25%増加しており、価格改善は2027年まで続く見通しです。

タワー・構造物事業の受注残高は2026年初めから2倍以上に拡大し、2028年初頭まで及んでいます。ニューコアはディケーター工場が10月にEBITDAプラスに転じると見込んでおり、クロウフォービル工場は第3四半期中にフル生産を開始しました。ブリガムシティ工場は2027年半ばまでにフル生産に達する予定に変更はありません。

インディアナ州およびアラバマ州の施設に対する1億6500万ドルの追加投資を受け、経営陣はタワー・構造物事業の長期的な年間EBITDA目標を従来の1億5000万ドルから約2億ドルへと引き上げました。

成長プロジェクトとエンドマーケット

ウェストバージニア州の薄板工場は9月に初の出湯（ファーストヒート）を行い、10月には酸洗ラインからのコイル出荷を開始しました。ニューコアは12月までに熱延、冷延、および建築用亜鉛めっきラインに最初のコイルを通し、2027年初頭に増産を開始する予定です。同社は2027年末までに稼働率50%を目指しています。

サウスカロライナ州バークリーでは、新しい自動車用亜鉛めっきラインが10月に稼働を開始しました。経営陣は2027年第2四半期に稼働率50%に達し、2027年末までにフル稼働に達すると見込んでおり、これにより年間50万トンの亜鉛めっき能力が追加されます。

データセンターはニューコアの全社受注残高の約15%を占めています。形鋼製品内に限ると、その比率は約30%〜35%に達します。経営陣はまた、インフラ、製造業の国内回帰（リショアリング）、工場建設、公益事業、LNGターミナル、パイプライン、自動車を主要な需要ドライバーとして挙げました。

国境の壁に関しては、ニューコアは一次および二次あわせて約1,400マイルの壁が未建設のままであり、1マイル当たり約1,500トンの鋼材を必要とすると試算しています。同社は関連する出荷が2027年、さらには2028年まで続くと予想しています。

経営陣による業績見通し（ガイダンス）

• 第4四半期連結利益：2026年第3四半期と同等か、それをわずかに上回る見込み。
• 製鉄所部門：平均販売価格の上昇が季節的な出荷量減少とコスト増加を補い、利益は安定して推移する見込み。
• 鋼材製品部門：価格上昇が出荷量減少を補い、セグメント利益は安定して推移する見込み。
• 原材料部門：主に直接還元鉄の実効価格下落により、利益はわずかに減少する見込み。
• 全社および相殺：セグメント間利益相殺額の減少により、第3四半期と比較して費用が減少する見込み。
• 2026年製鉄所出荷量：成長率は同社の予想範囲5%〜10%の上限近くになると見込まれる。
• 2026年設備投資額：当初予想の25億ドルと同等か、それをわずかに下回る見込み。
• 2027年設備投資額：大型プロジェクトの建設支出ピークが過ぎるため、さらに減少する見込み。
• ウェストバージニア工場の立ち上げコスト：経営陣は2027年のコストが2026年と同等かそれ以上の高い水準にとどまると予想。

リスクと注視すべき事項

消耗品費、運賃、エネルギー費、サービス費、残業代の増加に伴い、第3四半期中に加工コスト（コンバージョンコスト）が上昇しました。また、計画休止により固定費の回収率が低下しました。経営陣は、第4四半期中に加工コストが前四半期比でわずかに増加すると予想しています。

会計カレンダーおよび祝日の影響により、第4四半期は第3四半期よりも実質的な出荷日数が5〜6日少なくなります。いくつかの大型工場での計画休止や冬季の悪天候の可能性が出荷量の不確実性を高めています。経営陣は、計画上の有用な前提として、過去の第3四半期から第4四半期への出荷量減少率約7%を挙げました。

ニューコアが従業員を増員し2027年の増産に向けて準備を進める中、ウェストバージニア工場での立ち上げ費用は増加します。同社はまた、この規模のプロジェクトの試運転には高額なコストがかかると注意を促しました。

鋼材製品の輸入量は前年同期比で13%以上減少し、2024年比では24%減少しましたが、経営陣は通商拡大法232条に基づく関税にもかかわらず韓国からの急増を含む輸入量が最近増加していると言及しました。

アナリストとの質疑応答の要点

• 2027年の需要：経営陣は、データセンター、半導体・テクノロジー関連プロジェクト、天然ガス発電所、LNGターミナル、原子力発電施設、製薬、造船、防衛、家電、HVAC（空調機器）などを挙げ、需要環境は広範に及んでいると説明しました。
• 自動車分野の拡大：ニューコアは、電炉技術を用いて外板品質（exposed-quality）の亜鉛めっき鋼板を製造できると述べました。ウェストバージニア工場は自動車分野での最大の成長機会であり、経営陣は将来的に同工場から約10万トンの外板用鋼板を含む約100万トンの自動車用鋼板の出荷を目指しています。
• 薄板契約：ニューコアは、過去の80%〜85%という水準をわずかに上回る契約比率で2027年を迎えると予想しています。経営陣は、割引の縮小、エキストラ（サイズ・品質加算金）の引き上げ、数量振れ幅の縮小を通じて契約の質が向上したと述べました。固定価格契約は薄板契約の約5%〜7%、会社全体では1桁台前半の比率を占めています。
• データセンター向け需要：形鋼製品が最も高い集中度を示していますが、経営陣は一般形鋼、ジョイストおよびデッキ、金属製建物、その他のダウンストリーム事業全般にわたって需要があると報告しました。
• 一般形鋼および異形棒鋼（鉄筋）：経営陣は両市場ともに出荷量が増加していると述べました。ニューコアの柔軟な工場ネットワークにより、地域の需要やマージンに基づいて鉄筋、一般形鋼、特殊棒鋼、線材の間で生産をシフトすることが可能です。
• 資本配分：ニューコアは、年間純利益の少なくとも40%を株主に還元するというコミットメントを維持しています。経営陣は、余剰キャッシュは規律ある成長投資に向けられるか、配当および自社株買いを通じて還元されると述べました。

決算説明会全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, and welcome to Nucor's Third Quarter 2026 Earnings Call. [Operator Instructions] And 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.

Chris Jacobi

Thank you, and good morning, everyone. Welcome to Nucor's third 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 third quarter earnings release and investor presentation on 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 a reconciliation of non-GAAP financial measures.

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

Leon Topalian

Thanks, Chris. I want to begin by recognizing our 33,000 teammates from making that summer of 2026, our safest summer ever. Summer brings added safety challenges and our team met them with focus and determination that's something to be proud of, and it reflects our commitment to the most important value we have safety. And as we finished the year, let's keep looking out for one another and make sure every one of our team members goes home safely at the end of every shift.

Turning to our third quarter financial results. Nucor delivered its strongest quarter in more than 3 years with approximately $2.3 billion of EBITDA and earnings of $5.80 per share. Jack is going to unpack our results in more detail, but many of the themes we've highlighted throughout the year continued this quarter, strong demand across key end markets, growing contributions from recent investments and federal policies that support a healthy domestic steel sector. And with the capital spending moderating as major projects near completion, that strength is increasingly showing up in Nucor's free cash flow. We also remain committed to meaningful shareholder returns, returning $629 million in dividends and buybacks during the quarter, bringing our year-to-date total to nearly $1.4 billion. Operationally, the Nucor team is executing exceptionally well across each of our business segments.

In our steel mills, quarterly shipments exceeded 7.2 million tons, setting another shipment record for the third consecutive quarter. This would not be possible without the investments we've made over the past 6 years, many of which are now online and contributing to our results. For example, the Play Group set another quarterly shipment record, Brandenburg shipped approximately 240,000 tons or roughly 1/3 of the group's total shipments. The team has done an amazing job bringing the mills full capabilities online and advancing customer qualifications. The bar group also set another quarterly shipment record. Our Lexington micro mill has had a very successful ramp-up since coming online last year. The team became EBITDA positive in March and is built on that progress, reaching a utilization rate of nearly 80% in the third quarter, we've also seen very strong results from Kingman, Arizona and our micro mills at Frostproof and Sedalia as well as our upgraded Kankakee mill helped to deliver our best merchant bar quarter in several years.

In Steel Products, we saw a significant improvement in quarterly earnings, higher shipments and a notable inflection in pricing led to margin expansion across most of our major product groups. Joist and deck had a standout quarter with shipments up about 20% and realized pricing increasing by $110 a ton. And the raw materials, our Louisiana DRI plant has begun capturing CO2 emissions for transport and storage through a project with ExxonMobil. The project is designed to capture and store up to 800,000 tons of CO2 annually, supporting our greenhouse gas emissions reduction goals and strengthening Nucor's position as one of the world's cleanest steel producers. Congratulations to our entire team in Louisiana on this achievement.

The strength we are seeing in today's domestic steel market is being driven by healthy economic conditions and broad-based investment across key end markets. Nucor is benefiting from these conditions because trade policy improvements over the past decade have created more level playing field, in particular, vigorous trade law enforcements and strengthening Section 232 measures are allowing us to realize a greater share of the strong demand environment in the U.S. finished steel imports are down more than 13% year-over-year and down 24% compared to 2024. Fair trade support strong markets, unfair trade distorts them. However, import volumes have been increasing in recent months, including a massive surge from South Korea, despite the Section 232 tariffs. From decades of experience fighting for a level playing field, we know we must always stay vigilant. Therefore, we will work closely with the administration to ensure trade measures remain robust and effective. But make no mistake, demand is very healthy. Even as imports have crept higher this year, domestic shipments have risen in each of the past three quarters, strong market fundamentals and favorable trade policies will continue to support a positive outlook for the domestic steel industry.

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

Stephen Laxton

Thank you, Leon, and thank you all for joining us this morning. We're in the final stages of construction at our new sheet mill project in West Virginia, and we're commissioning equipment across the site. I want to thank the team in West Virginia for their hard work and excellent safety performance throughout the multiyear construction phase. They've kept the project on time and on budget while reaching several important milestones. In September, the melt shop produced its first heat. And in October, we started shipping coils from the pickle line to our downstream new core divisions. And by December, we expect to run our first coils through the hot mill, cold mill and construction-grade galv lines. As we complete commissioning, the team is preparing to ramp production in early 2027, and our priority will be to operate safely and reliably, while steadily increasing production toward our 50% utilization target by the end of 2027.

Our sheet mill network provides an important advantage as production begins. By gradually shifting baseload tons from other Nucor sheet mills to West Virginia, we can provide the new mill a steady base of orders to support a successful ramp through 2027 and '28. As with any project of the scale and complexity, we expect start-up costs to remain elevated in 2027 at levels similar to or higher to those in 2026.

Turning to our Berkeley, South Carolina sheet mill. Our new automotive grade galvanizing line began production early this month. We expect utilization rates for the new galv line to reach 50% in the second quarter of next year, on its way to full run rate by the end of 2027. At full production, this new line will add 500,000 tons of annual galvanizing capacity. Taken together, our investments in West Virginia and South Carolina enhance Nucor's ability to serve the automotive market where we are relatively underweighted today. As both projects ramp and complete customer qualifications, we will build on the strong relationships we already have in place with many of North America's leading automakers, but we are not simply waiting for these investments to ramp. While North American automotive production is essentially unchanged year-to-date, Nucor's flat-rolled shipments to automotive customers are up 4%.

And as we grow our automotive shipments, we're expanding what we can offer with the capabilities we have in place today. Recently, we commercialized exposed-quality galvanized steel for the exterior panel of an SUV platform. We accomplished this using thin-slab casting demonstrating Nucor's innovation in EAF steelmaking. And as new growth projects come online, we'll have even more opportunities to expand our position in the automotive market.

Moving to our Towers and Structures business. We're encouraged by how each of our facilities is progressing and the strength of our customer demand. Our Decatur, Alabama facility is on track to be EBITDA positive this month, while our Crawfordsville, Indiana facility began full production in the third quarter and is expected to follow a similar path toward profitability. Our Brigham City, Utah facility remains on track to reach full production by mid-2027. We are now qualified with more than 30 utilities with additional customer qualifications underway, and we've entered into multiyear agreements with several of the largest utilities in the United States. That momentum is reflected in our order backlog, which has more than doubled since the start of the year and extends into early 2028. Based on the strength of customer demand, we recently announced a combined $165 million of investments to increase the capacity of our Indiana and Alabama facilities by about 50%. As a result, we now expect our long-term annual EBITDA contribution from our Towers and Structures business to reach approximately $200 million, up from the $150 million previously forecast.

Turning to our demand outlook. Nucor continues to expect steel mill shipments growth to finish closer to the higher end of our 5% to 10% range for 2026, supported by several durable underlying drivers. Let me touch on a few of these. First, infrastructure. While the IIJA was passed about 5 years ago, the infrastructure investment activity, [indiscernible] is still accelerating. State level decision-making and permitting have, in many cases, taken years to complete, extending construction activity over a longer period of time. Today, many projects are underway, but new ones are still being approved, and over $135 billion of funding has yet to be spent as of August.

In addition, steel requirements for the border wall are substantial, and stadium construction shows no signs of slowing. Second, reshoring and digital infrastructure. The COVID pandemic highlighted the fragility of our domestic supply chain and underscored the need to manufacture more in the U.S. In support of federal actions on tax, trade and regulatory fronts have helped stimulate considerably higher levels of manufacturing construction. This is broader than the chip fab activity first encouraged by the CHIPS Act and now includes sectors like pharmaceuticals, automotive, appliance and electrical components. And data center construction activity has gone from a small niche to a significant driver of nonresidential building construction activity.

Finally, energy. Rising demand aging infrastructure and the need to strengthen the grid are driving substantial investment in the power sector. Utilities plan to spend nearly $1.4 trillion over the next 5 years with steel intensive investments ranging from generation and substations to transmission upgrades. Beyond power, we're seeing strong demand across the oil and gas sector, including LNG terminals and pipeline construction and growing domestic production of oil country tubular goods. We see these trends as durable, and we believe Nucor is incredibly well positioned with our world-class manufacturing team and broad portfolio to meet the needs of our customers across these diverse applications.

With that, let me turn the call over to Jack. Jack?

Jack Sullivan

Thanks, Steve, and good morning, everyone. In the third quarter, Nucor generated net earnings of $1.3 billion or $5.80 per share. This exceeded the midpoint of our guidance range by roughly 3.5%, primarily due to higher-than-expected shipments and higher average selling prices in our steel mills segment.

Let me now review our third quarter performance by segment. The steel mills segment generated $1.8 billion of pretax earnings, an increase of $232 million from the prior quarter. As Leon mentioned, we set another quarterly shipment record, with volumes up 2%. Average selling prices rose across the segment led by our sheet and structural groups. These increases were partially offset by higher costs. As a reminder, the second quarter benefited from $130 million in cash refunds that reduced cost of goods sold, and that benefit did not recur in the third quarter.

Turning to Steel Products. We generated pretax earnings of $465 million, an increase of $112 million from the prior quarter. Volumes increased 6% and average selling prices rose 7%. The improvement in pricing was particularly encouraging as realized pricing in our downstream businesses is catching up with the higher steel input costs that compressed margins earlier this year. As a result, the EBITDA margin for our Steel Products segment increased approximately 200 basis points from the second quarter. And in our raw materials segment, we generated pretax earnings of $105 million compared to $146 million in the prior quarter, reflecting lower pricing and shipments. Pre-operating and start-up costs totaled $124 million compared to $120 million in the prior quarter.

Turning to capital allocation and the balance sheet. We generated $1.6 billion of free cash flow in the third quarter, bringing our year-to-date total to nearly $2.7 billion. Cash from operations has grown from $900 million in the first quarter to over $2.2 billion in the third as we benefit from healthy market conditions and growing contributions from our recent investments. At the same time, capital spending is moderating as our major projects near completion. We deployed just under $1.9 billion in CapEx year-to-date, with the majority going towards growth projects. For the full year, we expect our capital expenditures to finish at or slightly below our original $2.5 billion estimate. Our free cash flow supports meaningful returns to shareholders.

During the quarter, we returned $629 million through dividends and share repurchases, up approximately $150 million from the second quarter. Year-to-date, we've returned nearly $1.4 billion or 42% of net earnings. We remain committed to returning at least 40% of net earnings to shareholders on an annual basis. All of this is underpinned by our strong balance sheet and investment-grade credit profile. We ended the quarter with approximately $3.6 billion in cash and liquidity of $4.3 billion. Total debt as a percentage of capital was 23%, and our credit ratings remain the highest of any North American steel producer.

Looking ahead, we expect our CapEx to decline further in 2027, extending the step down from peak spending in '24 and '25. We'll share more detail on our 2027 capital allocation plans on our year-end call in January.

Turning to our fourth quarter outlook. We expect consolidated earnings to be in line with or modestly higher than the third quarter results. In steel mills, we expect stable earnings as higher average pricing across all product groups is offset by seasonally lower volumes and higher costs. The cost increase reflects lower fixed cost absorption and higher start-up spending at West Virginia as we add teammates and prepare to ramp production.

In Steel Products, higher pricing is expected to offset the impact of lower volumes, resulting in stable earnings for the segment. In raw materials, we expect slightly lower earnings, primarily due to lower realized DRI pricing.

Finally, we expect to benefit from lower intersegment profit eliminations that should reduce corporate and elimination expense relative to the third quarter. And as 2026 draws to a close, we're excited about Nucor's earnings prospects for 2027. Healthy durable demand across key end markets another step-up in contributions from new growth projects and supportive federal policy all position us for another strong year. And with the broadest range of capabilities in the North American steel market, we're confident -- the Nucor team will deliver on that opportunity 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.

Operator

[Operator Instructions] Your first question comes from the line of Nick Cash with Goldman Sachs & Co.

質疑応答

Nicklaus Cash

The first question I have is you've been running at record shipment levels this year and suggesting it will be closer the 10% range, driven by strength in demand over the past few quarters as well as backlog visibility. I just wanted to know, as you think in the '27, how much further organic volume growth do you think Nucor's existing system can generate before considering contribution from West Virginia? And then which end markets give you the most confidence in another year of growth.

Leon Topalian

Hi, Nick, it's Leon, I'll kick this off, and I want to begin with something I shared in the opening. Nucor's just come through the safest summer ever. And if we look back at our history, the months of June, July and August have historically been the most dangerous and the most opportunity for injuries across our entire enterprise. Our team set out a very audacious goal to target [ bill ] injuries for those 3 months. And while we didn't meet that, we ended up with the safest three months in the history of Newport and now are putting those efforts towards the safest fall. The thing to really remember in all of that is every one of those numbers that we track has a name, every name as a family and every family deserves to be complete. Our greatest responsibility as leaders in this company is to the men and women of this amazing company of ours. And so thank you, team, for what you do, and how you take care of our customers and for working safe each and every day. And Nick, as you talk, look, as we came off the highs of '21 and '22, '23 was an okay here. '24 and '25 were very tepid. But look, our investment strategies, our capital allocation philosophy has been to invest for the long term. And so over the last 6.5 years, you've seen Nucor deploy about $19 billion worth of capital, half in organic growth and the other half in M&A. And so it's the ultimate strategy of playing where the puck is going to be. Now where it's at understanding our customer demand, understanding the capability sets that are needed by our customers in building and creating those opportunities to win, and that is exactly what you're seeing Nucor do to date, executing on an incredibly strategic plan to grow the core, expand beyond and live our culture. And so we've had the best quarter in 3 years. We're on the track to have the safest year in all of our entire history. '26 is shaping up to be the third best financial year in the history of our company, and we fully expect that '27 will be even stronger. But where is that coming from? And the end market probably that gets more attention in the entire economy as data centers. And while that's a major part in some of our product groups, it represents about 15%, 1-5 percent, of our entire backlog and as an enterprise. But it's a strong end market. But -- so as chips and technology and hardware, natural gas power plants, LNG export terminals, nuclear utilities, pharma, heavy equipment is coming back in gangbuster shipbuilding, military and defense spending, appliance and HVAC. And so I would tell you, my 31 years in Nucor, Nick, we are seeing -- I am seeing early the strongest demand environment across the breadth of Nucor's products, coupled that with the investments that we've made in West Virginia, Brandenburg, Lexington, our micromill in Lexington, Kingman, Arizona, Crawfordsville's pole line, Berkeley's galvanizing line and Brandon Bergs plate mill are all now firing where, again, as Steve mentioned just a minute ago, West Virginia will fully commission this year and begin its full ramp in we are at the tip of the spear of the greatest economic growth in our nation, and I couldn't be more optimistic about what 2027 and beyond is going to bring. Finally, I would tell you with the last part of all of that is that CapEx unwinds of our spend into 2027, it skyrockets the free cash flow on top of the margins that we're earning on top of the contributions that the new investments are are already having and will continue to ramp into '27. It means we're fueled for growth -- disciplined growth, just like we have over the last 6 years, that money is not burning a hole in our pocket. And if we don't have a great use for it, you're going to get it back. Over the last 16 years, we've returned nearly $15 billion to our shareholders through dividends or share buybacks, and we will continue to focus on that. However, I can tell you there are massive areas of growth for our company that we're targeting now, mostly in the expand beyond categories. But we are just getting warmed up. I couldn't be more optimistic about 2027 and beyond in the future of Nucor.

Nicklaus Cash

That is all really fantastic color. I really appreciate it. And then just one quick follow-up. I mean you mentioned just on the cost side. costs were a little bit higher than expected. I think Mills margins were a little bit lighter than expected, acknowledging the $130 million tailwind from last quarter. You provide any further color on any inflationary pressures you might be experiencing? I know you mentioned some lower fixed cost absorption, but any other impacts experienced in the quarter? And then for the 4Q guide of flat earnings, can you provide any additional color on how these impacts or how these costs could impact margin trajectory in the year-end?

Jack Sullivan

Yes, Nick. Good morning. This is Jack. You're right. Conversion cost did tick up some in Q3, but I think we need to put a few things into perspective here. Nucor's EBITDA margin expanded to over 20%, and that's our highest level in the past 3 years. So we continue to see margin expansion even with some of that conversion cost per ton creep. But in terms of specifics and where we saw that, I'd point you to certain consumables, freight, certainly energy and just some other services, but keep in mind, when you're running at high utilization rates, particularly in hot demand environments like we're seeing right now, you do tend to see some costs creep up just to keep operations running. Maybe that's overtime pay or some higher energy costs when in softer markets, we may have chosen to to curtail and higher energy cost environments. But -- and you pointed out correctly, we also didn't benefit from the tariff refunds that occurred in Q2. The other thing unique to Q3 when you're comparing it to Q2, we did have more planned outages in the quarter. And of course, that led to some lower fixed cost absorption. So I'd say your last question about looking ahead to Q4, I think you could expect a modest uptick in conversion costs Q-over-Q. And again, we do have some outages in Q4. We've got -- we've pointed to some gradual increase in preoperating start-up costs as we get West Virginia closer to ramp up. And yes, those would be the -- I think those would be the things I'd point to.

Operator

Your next question comes from the line of Bill Peterson with JPMorgan.

William Peterson

I'd like to unpack the shipment guidance in 4Q. You're still not being towards the high end of the range, which would be like 10% year-on-year growth. But I guess if you ran it through and imply around down 10% quarter-on-quarter, which would be more like 2021, 2022 as compared to the last few years, which were below that in terms of seasonality, like maybe you have two less shipping days. Are you taking account other things like holidays? And maybe you can characterize how much downtime you're expecting? Or just trying to get a sense of candor upside to this number.

Jack Sullivan

Yes. Hi, Bill. It's Jack. All good questions. You're right. We do have two fewer fiscal days in Q4 and compared to Q3, 89 versus 91. But also to your point, there are 4 additional non-shipping days really just due to Q4 holidays when you think of Veterans Day, Thanksgiving, a few days around Christmas eve and New Year's. So in aggregate, you're talking 5 or 6 fewer days of shipping compared to the prior quarter, plus the added risk of some winter weather in certain regions. Q4 planned outages, I just mentioned, some of those outages are at our largest mills, and so planned downtime relative to Q3 actually has a few more days. So keep that in mind, but I think it's also important to recognize we're coming into Q4 off of a record high Q3 shipment quarter. So I think sometimes it's easier to ship through outage season during softer markets, a little bit harder to do so when the mills are already operating at such a high level. There's just less slack in the system. But I think if you look historically, quarterly shipments, Q3 to Q4 have trended down about 7%. And so that may be a useful planning assumption as you're looking to fine-tune your models. I think the silver lining here, though, Bill, is we've guided you to steel mills earnings having relatively flat quarter-over-quarter. And really, that's just for all the obvious reasons, we're going to see some volume softness due to seasonality in the outages, but stronger pricing outlook sort of neutralizes that impact. Rest assured, our goal is to ship every ton possible.

William Peterson

No, that's terrific color. Earlier, I think you said that your data center was something around 15%. I'm not sure if that's a mill statement or a product statement, but I'm trying to get a sense for how big that opportunity I guess is for you, as we think about 2026. And do you expect that to grow? And then the second one you called out was the border wall, and you characterized it tons per mile. I was trying to figure out how much border wall needs to get built, but like to get a sense on how you see the border opportunity this year and also for next year, would you expect that to grow again?

Leon Topalian

Yes, Bill, I'll touch on. You can remember now, I got the second part of your question. The first part was on data centers, right. Look, if we step back, most of the forecast and analysts are talking massive numbers, multitrillion dollars worth of spend over the next 5, 6, 7 years. And so Nucor's entrance into this isn't like weeks or months old. This is something going back 2 or 3 years that we have been, again, readying ourselves to be where the puck is going to be at. And so today with the acquisitions of Southwest Data Products, our Nucor warehouse systems are capability set in our buildings plate, structural to group all are now combining where today, Nucor make or supply roughly 95% of all the steel required and outside of a data center today. So we are really, really capable of providing most of what the hyperscalers need today. Our relationship build with them over the last 4, 5, 6 years has been incredible. There's a high level of trust there. We earn a lot of that business. And so to your question, do we anticipate that growing into 2027? Yes. And again, as we think about growth in fueling Nucor's expand beyond growth, you can expect that some of those areas of growth will be in that space and the continued build-out of our data center offering to our customers. As we get to the border wall, I'll ask John Hollatz, maybe to comment on that. It's been lighting rot for us. And again, another end market that we've been really very well prepared and capable to supply that need. But John, maybe giving some framing around the volumes.

John Hollatz

Hi, Bill. On the border wall, we estimate there's about 1,400 miles of new wall to be built. That's primary and secondary role. And there's around 1,500 tons of steel in there per mile. And we have been shipping thousands of tons every week to the border. You can see it in the increased volumes in our Tubular group, and that's going to continue all the way through 2027 and well into 2028. And again, we're the only company with the raw materials, the sheet supply, the tube capacity and the logistics team to keep up with the demand for the border. And for the two group, it's not just for -- on top of that, you've got a really strong demand for structural and the HSS side. We're seeing incredible performance from our conduit team. Our sprinkler pipe team is having a great year, and all of that has played a role in leading to our Steel Products group having the best quarter on the earnings side that we've had since the beginning of 2024. So we see a really good outlook well past the end of '26 and into '27 for the order fence.

William Peterson

Congrats again.

Leon Topalian

Thank you, Bill.

Operator

Your next question comes from the line of Lawson Winder with BofA Securities.

Lawson Winder

Nice results. If I could add on your comments around merchant bar. Could you just discuss a bit more as to what end markets are primarily driving that? And then how do the market dynamics vary regionally on merchant bar? And then, is there any merchant bar replacement of rebar capacity at the current moment or to any extent at all?

Leon Topalian

I say that last part of your question again, Lawson?

Lawson Winder

Just in terms of the strength in shipments from merchant bar, is that causing any displacement of rebar shipping capacity?

Leon Topalian

Okay. Look, I'm going to ask Randy Spicer to jump in on this, but just a bit of framing. Our rebar strategy and our that end market has been incredibly strong for us. Our longest product groups are some of the most profitable and have been through the entire cycle. There's a lot of questions right on the flattening of this cost curve. But our ability to maintain margins, our ability, and how our teams executed and remaining the low-cost producer, building these facilities where there's a high level of scrap inventory as well as the customers that are in proximity gives Nucor unique differentiated advantage in this marketplace. And quite frankly, ADC is growing. And so again, I remain very optimistic knowing that, and there's some competitors coming into the space, and that will continue. But we've been in this business for 60 years now. We know this market incredibly well. Our teams are executing at a high level. But Randy, why don't you share a little more on what we're doing with merchant bar in particular in that growth.

Randy Spicer

Thanks, Leon. Lawson, thank you for the question. Yes, certainly, seeing tremendous growth in both, quite frankly, merchant and rebar as evidenced by the record shipments that we've seen that's in place. What I would tell you specifically around merchant bar is it's got exposure to some of the highest markets that we've seen right now, specifically, as Leon just talked about data centers, we're in the middle of what we call the AI Super Bowl, the hyperscaler has committed enormous amount of capital to these data center build-outs and those structures require these larger sections that we're able to produce at Nucor. And that's showing up directly in our order book. So if you look and see, we're at record levels to be able to take advantage of both here on '26 as well as the growth as we go forward into '27. With that, you're also spot on of as you see the margins increase in that space, you're also seeing some of the rebar producers out there, right, that are payable of making flexible products, of which Nucor is one of the largest in that space that you're actually able to move into margin bar space as well. So with that growth, we've continued to see strong performance, and we would expect to see that as we go forward into future years.

Lawson Winder

Okay. That's very helpful. And then maybe just to put a finer point on my last question. I mean, given the way your capacity as [indiscernible] seen up between and in Missouri, is there some placement of rebar as a result of that merchant bar capacity, i.e., is the rebar market in the U.S. getting tighter as a result of what you're seeing in merchant bar.

Leon Topalian

Well, look, you're seeing ADC actually grow. If you look back a year or two, is it roughly 9.5 million tons, we're predicting that to be upwards to 10.5 million tons or possibly 11 million tons. And so the market is growing. And so that's just bonds very well, again, for our capability set and where we're going. But very specifically to your displacement question. One of the unique advantages and what Randy and his groups have done, again, this is over years when we put Frostproof and Sedalia in our first two micro mills, we looked at overall mix and how do we supply that. We took Darlington from rebar some MBQ into normal rebar, and all MBQ and Ohio and SBQ and wire rod. And so Darlington's capabilities has expanded tremendously. Cant's investment in their growth, and they've moved out of a lot of rebar into heavy MBQ and beyond. And so again, the breadth of our our footprint enables us to shift and modify where we meet the geographic needs and the capability sets that, again, our customers need from us in the regions we're located. So yes, there's been a lot of that that's happened, Lawson, over the last 5, 6, 7 years that really kind of catapulted with the investment of the rod mill at Darlington and now continues on.

Operator

Your next question comes from the line of Tristan Gresser with BNP Parabas.

Tristan Gresser

I have two. First one is on your auto strategy. You had a slide in your presentation, and I think a couple of years ago, you mentioned you go to double auto shipments. So could you provide maybe an update on tonnage wise, how much do you expect to achieve this year and the next. Also I was curious if [indiscernible], I don't think you've done this in the past, but are you entering into annual contracts with OEMs? Do you have everything you need from a raw material standpoint or you need to make some adjustments. And lastly, from a quality perspective, it would be interesting to have your view if you're confident that you can fully replicate the products that customers usually get from integrated producer. I'd leave it there.

Leon Topalian

Tristan, I'm going to go ahead and jump in here, and while I'm going to tell you, Noah Hanners will answer the question in a minute. I may not leave him anything to answer. Because I really appreciate the question, and I want to fully blow apart any notion that do not have the technical and quality capabilities to provide and make exposed automotive panels. It has been the last bastion of the integrated competition and the only thing they have left, think about it. Left in America, there's not a single integrated producer making a long product in America. [indiscernible] effort, these resources that process engineering and process and quality control the PPAPs. All that work is now shifting into West Virginia. So as they begin ramping up, that mill will produce 30% automotive steels capable of making the highest end, so you can fully dismantle any notion that the EAF producers cannot make the most complex, high-quality and exposed pieces of that vehicle, it's over. We're on it, we're doing it, and we're going to continue to do it, and we're going to continue to take that market share away from the integrated producers period full stop. So Noah, anything to add on that, I'll let you [indiscernible].

Noah Hanners

I love Leon's energy around this because so proud of what our team has accomplished, and we can produce the full suite of what auto demand for us. And I'll tell you, our customers are pumped about doing more business with us. And and the capabilities that we're bringing to the market are perfectly timed for meeting their demand. I mean if you talk about West Virginia, the first phase of West Virginia is largely volume, improving the mill. And then we get out to 2028, and that's when we'll start to put auto tons through qualifications on Western. So it's coming soon. The second thing is at Berkeley. We already do a lot of auto out of Berkeley. They were a substrate mill for that qualification, I just mentioned. They just galvanized their first coil on the new galv line last week, awesome accomplished that team, on time, on budget, and we're just really well positioned to take substantial share in the automotive market continue to grow exercise our capabilities there. We're about 10% this year. We'll do about 1 million tons at West Virginia, as we ramped up there. A significant portion of that, probably 10% goes into auto exposed. So awesome story about our growth in automotive, really proud of our team.

Jack Sullivan

And the other thing I'd add there, Noah, on automotive, I think the big testament goes to the amount of time and energy and frankly, patients that's taken our team and our investors on helping us along this journey. As Leon mentioned, we are now on a platform aspirationally, we'd like to get a bigger chunk of that platform, but starting out with certain parts and look forward to continuing to chip away at that.

Operator

Your next question comes from the line of Matt Dushkin with Wells Fargo.

Your next question comes from the line of Richard Garchitorena with Barclays.

All right team. It looks like we're having a bit of technical difficulty with these last two questions here. It appears our conference room has dropped. So in order to get these last two questions up, we will need to end this event and restart this broadcast.

Leon Topalian

[ Kaila, ] why don't we wrap here and then Jack and his IR team can reach out accordingly to Richard and the other gentlemen to answer their question.

Operator

Okay. Yes. The only thing we won't have the closing remarks on the broadcast, we'll have to add those in separately.

Leon Topalian

I do that live now anyway. So we're ready to wrap up.

Operator

Okay. Unfortunately, because the conference room has dropped, there's -- they're not able to hear your closing remarks. So...

Leon Topalian

How quickly can we restart it?

Operator

We can do it pretty quick here. I will end the broadcast and the event you just have to call back in, and you'll have to ask your analysts to redial back.

[Technical difficulty]

Your next question comes from the line of Matt Dushkin with Wells Fargo.

Unknown Analyst

So on the data centers that you all said it's 15% of backlog. I just kind of want to unpack what's the breakout of that between your different products? Like how much is structural versus how much is she versus downstream? Just any color there would be helpful.

Leon Topalian

Yes. Look, the 15% is the entire enterprise. And obviously, in the long products, particularly structural, much higher, Matt. It's in the 30% to 35% range. And so those teams continue to operate in one of the strongest demanded -- well, the strongest demand environment we've ever had. Nucor Yamato and Berkeley Beam are running rates with backlogs that are unprecedented. We've never seen in the history of those mills in the 35-year history at NYS. So again, robust doesn't really put justice to the demand drivers fueling that. And a big piece of that for structural in the data centers.

Stephen Laxton

Matt, maybe if I could just add a little bit there to some of our downstream businesses are seeing a lot of volume from the data center space to particularly [ Vulcraft, ] but also, it might surprise you, our metal buildings group has picked up a fair amount of volume as well. And really that's just a testament to our team's ability, the breadth of the portfolio and solutions that we offer. And the range of end market capabilities we have and the willingness to work with customers to find the right outcome. So it's really -- it's -- Leon correctly highlighted, is pronounced in beams. That's not surprising to anybody. Randy highlighted earlier, it's having an impact on MBQ and bar. And of course, in fall craft, you wouldn't be surprised. But some of the other areas because of Nucor's breadth, we're seeing volume pick up as well.

Unknown Analyst

That's all super helpful. And then I just want to pivot to piggyback on Tristan's question. And sorry, when you'll cut off, you may have been answering this. But just curious about the commercial approach to the exposed auto qualifications, how are you all thinking about the contract structure for that, whether it's fixed maybe attain with the spot market, which I assume would be tough, but just curious on that.

Leon Topalian

Matt, where did you cut off? What did you hear? How far into the answer before you lost us?

Unknown Analyst

We got to how you won with GM and then it kind of just cut off a little bit after that, kind of like...

Leon Topalian

Okay. It gives me a wonderful opportunity to make sure everyone understands the dispelling nature that EAF producers cannot make the most stringent grades of exposed automotive. Again, we're on the General Motors platform for that, the Mercy start-up of their second galv line is in play in West Virginia will continue to ramp. And look, this is also not a new story. Well, it's the first platform we've been given, we've been in the automotive space for more than 10 years, right? So we've learned and worked with the major OEMs in this country for a long time, not just GM, but Ford and BMW and Mercedes and many others. And I'll let Noah speak more to that. But look, with General Motors, we've had a great relationship with 6x recipient of the Supplier of the Year award with them. And so we understand their need. We've worked closely with them. Our engineers, metallurgist and commercial teams to build incredible relationships. Our technical teams and Detroit provide an incredible avenue for those OEMs to understand how we're doing it and for us to link in those PPAPs and process control side to have that full offering. And so no, I'll let you answer maybe if you want to add any more detail on the commercial, and how we're thinking about that. I just wanted to provide the backdrop that these are not new orders or new customers for us. It's a new platform, new grades, but not new relationships.

Noah Hanners

Thanks for the question, Matt. Sorry, I missed my answer the first time. I assure you it was brilliant. But to give you some more color, I guess, specifically on the contract side. It's one thing to have the capabilities, and we're at a point where we're very confident in our capabilities. It's built on decades of work by our team to learn how to make the grades and meet our customers' requirements. And this proof of our ability to get on platform that I've talked about here is really a testament to that. But then getting set up contractually and qualified takes a number of years. And we have a leg up on our growth because we have an auto exposed gap line in Mexico where we do extensive automotive a variety of different grades that will match up nicely with the suite of capabilities of Berkeley and West Virginia. And then we have a broad book of capabilities and qualifications that we've worked through. So our team is very experienced with the qualification process, and we're able to lean into those qualifications at some of our other locations to really set West Virginia up for success. West Virginia by volume are our biggest growth opportunity for automotive. We'll do 1 million tons of automotive out of West Virginia, about 100,000 million tons of that will eventually be auto exposed. So we're able to lean into that know-how across our team and those other resources to start to fast track those qualifications.

Operator

Your next question comes from the line of Richard Garchitorena with Barclays.

Richard Garchitorena

If I can just ask quickly in terms of pricing, obviously, the market has been able to withstand pricing moving higher. Can you provide some color in terms of what you're hearing from customers? And when it comes to fixed price contracts resetting next year, how should we think about that impacting your results.

Leon Topalian

Richard, I want to make sure I understand the question. Are you asking how pricing in the structural side moving into '27 is impacting our customers?

Richard Garchitorena

No. I want to know the [ toll ] in the market. Yes, how in market...

Noah Hanners

Hi, Richard. This is Noah. Let me just step in and talk about where we are with our sheet contracts and how we work through resetting this contracts as we step into 2027. And we come into this market. You've heard the demand drivers we've talked about, really robust demand picture across the sheet group and an expectation of continued growth in demand. And then we're bringing these new capabilities to the fold as well. So West Virginia will start to come online. Berkley, Indiana, just painted their first coil. So our goal through contract season is to match up these new capabilities and these really strong demand picture to meet the needs, especially our long-term customers. And we've never been -- I would tell you more deliberate about that plan. And we have a strategy that feels good because it's very coherent across our mills. Some mills are going to have to give up volume to get West Virginia online, they're able to go out, and we're able to back those replacement tons up contractually. So I think we have a very coherent plan in the face of a lot of strong demand picture out there. So maybe talk about the terms. We're not going to get into the specifics, but they're significantly better as we step into 2027. We've improved the overall quality of the agreements, lower discounts higher extras and our volume variances are tighter than they were in 2026. If you look back historically, we've been about 80% to 85% contracted will be a little heavier than that this year. And I think our commercial team has done an outstanding job positioning us for 2027.

Leon Topalian

And [ Tristan, ] you had also asked about the composition of our contracts that are fixed that may be resetting at a different price as we go into 2027, Nucor really doesn't have a very large percentage of contracts that are fixed.

Noah Hanners

Yes, the majority of our fixed are going to be in auto. And I would call that just loosely 5% to maybe at 7% of our fixed contracts. But the majority will reset at year-end, right?

Katja Jancic

That's 5% to 7% sheet.

Noah Hanners

Yes, right. Very low single-digit percentage of overall company.

Operator

Your next question comes from the line of Tristan Gresser with BNP Perama.

Tristan Gresser

I just have another question on the strong performance of the Steel Products division. If you could dive a little bit into that, the main driver behind it, maybe the contribution of towers, panels, doors, anything standing out or anything really behind the strong performance? And also when we look past that, looking into Q4 and Q1 next year, should we expect some similar scale of ASP increase? Or would you expect some moderation of that? And even with lower volumes, how do you think about margins? Are they going to continue to expand every quarter? Or are you going to feel that the pressure from those higher substrate costs in general?

Leon Topalian

Well, look, that's a lot to unpack here, and I'm going to let John Holatz take most of it. But look, as we sort of answered earlier as well, Tristan, as we came out of '25 into '26, the demand environment has continued to to become more and more and more robust. And with that, pricing is flowing through the enterprise as well. So you're seeing higher realized pricing in our downstream products groups that are now hitting the balance sheet, and we'll continue to do so well into 2027, again, at a very high level, and the products group now in Nucor is such a wide and diverse set of businesses and generates great returns. But again, there's a lot of different business segments in that. So John, why don't you just walk through to Tristan's question, some of those highlights and what we're most excited about as we head.

John Hollatz

Yes, Tristan, I appreciate that question and the recognition that our Steel Products earnings were the best earnings in Q3 that we've had since the beginning of of 2024. And this is not just one specific product. This is a variety of different products that are contributing to this. We talked earlier about the the Tubular Group and their performance related to water mall overall construction. On the Vulcraft joist and deck side, we had noted previously that we were seeing higher prices in new order entry and that is now being realized in our earnings and new orders continue to exceed our current backlog pricing. And that backlog carries us well into 2027. It was mentioned earlier, our Buildings group and their participation in the data center market. They had a really strong third quarter. It's setting the stage for a great year in 2027. And again, we're the only company, as Steve mentioned, that has the ability to support data centers through conventional construction with joist and deck and structural steel or the alternative of supplying a pre-engineered building. And then I also want to recognize our Insulated Panel Group, one of our expand Beyond businesses and had record earnings in the third quarter, and that again will carry us well into 2027. Overall, our backlogs are up about 25%. Pricing continues to improve, and it's going to -- we're going to have a good Q4 and a really strong 2027.

Leon Topalian

And maybe the other thing too, and you mentioned it, Tristan, but look, we're excited -- we love our door business. We love with CHI and Ritec are doing, but think about the build out what we've done in towers, right? We've been pretty public that we made some runs on the M&A side that didn't work out. We love the space and have for a lot of years. And so we made the decision a couple of years ago that we're going to do it organically. We bought a small company in Summit to kind of begin and get some in-house knowledge and now it's expanded to 3 greenfield towers plants, 2 of which are online and the third that will be up and running by mid next year. But think about what -- and I think it was Steve's opening comments, we -- that team has already qualified at 30 different utilities. So not unlike the robust excitement and demand picture from OEMs into the sheet group to provide the higher end and automotive exposed grades. We're finding and feeling the very same relationship build and networking within the utility side to grow that space. And so the order books are getting filled very, very quickly. And again, it's a space that not only are -- do we feel really well poised to provide, but the build-out of those facilities is so automated. We truly believe we're going to have a cost -- significant cost advantage in a differentiated position in that market. So again, I'm really proud of what the downstream products groups teams are doing across the board and including the [ Spanbion ] businesses. So I appreciate the question, Tristan.

Operator

This concludes our Q&A portion. I will now turn the call back to Leon Topalian, Chair and CEO, for closing remarks.

Leon Topalian

Well, team, as we close, I want to thank our 33,000 teammates for another strong quarter and for your continued unwavering commitment to our most important value, the health, safety and well-being of every one of our team members. Thank you to our customers for the place trust you place in us with each and every order. We want to continue to work hard and earn your business every day and asking to our shareholders, thank you for trusting us for your valuable shareholder capital, '26 is shaping up to be a really, really good year. And we believe '27 will be even stronger. Our best days are definitely in front of us. Thank you for your interest in Nucor, and have a great day.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.