NUCOR CORP

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Interim Presentation

The information furnished in this Item 1 reflects all adjustments which are, in the opinion of management, necessary to make a fair statement of the results for the interim periods presented and are of a normal and recurring nature unless otherwise noted. The information furnished has not been audited; however, the December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited condensed consolidated financial statements included in this Item 1 should be read in conjunction with the audited consolidated financial statements and the notes thereto included in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

In November 2023, new accounting guidance was issued that updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”) and included within each reported measure of a segment's profit or loss. This new guidance also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The new guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The new guidance is required to be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This new guidance will likely result in additional required disclosures when adopted. The Company is evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.

In December 2023, new accounting guidance was issued related to income tax disclosures. The new guidance requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The new guidance is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This new guidance will likely result in additional required disclosures when adopted. The Company is evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.

2. Inventories

Inventories consisted of approximately 33%raw materials and supplies and 67% finished and semi-finished products at June 29, 2024 (approximately 37% and 63%, respectively, at December 31, 2023). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which products are sold to customers at various stages throughout the process. Since most steel products can be classified as either finished or semi-finished products, these two categories of inventory are combined.

3. Property, Plant and Equipment

Property, plant and equipment is recorded net of accumulated depreciation of $12.25 billion at June 29, 2024 ($11.79 billion at December 31, 2023).

Included within property, plant and equipment, net, of the steel mills segment at June 29, 2024 is $244.2 million of assets, net of accumulated depreciation, related to our joint venture Nucor-JFE Steel Mexico, S. de R.L. de C.V. (“NJSM”). If NJSM’s financial performance continues to underperform its forecasts, management may determine that a triggering event has occurred and will perform an impairment assessment to determine if the carrying amount of NJSM’s property, plant and equipment, net, exceeds its projected undiscounted cash flows. A future assessment may result in the impairment of part or all of the carrying value of NJSM’s property, plant and equipment, net.

4. Goodwill and Other Intangible Assets

The change in the net carrying amount of goodwill for thesix months ended June 29, 2024 by segment was as follows (in thousands):

Nucor completed its most recent annual goodwill impairment testing as of the first day of the fourth quarter of 2023 and concluded that as of such date there wasno impairment of goodwill for any of its reporting units.

Intangible assets with estimated useful lives offive to 25 years are amortized on a straight-line or accelerated basis and consisted of the following as of June 29, 2024 and December 31, 2023 (in thousands):

Intangible asset amortization expense in the second quarter of 2024 and 2023 was$61.2 million and $58.4 million, respectively, and$119.9 million and $117.2 million in the first six months of 2024 and 2023, respectively. Annual amortization expense is estimated to be $242.1 million in 2024; $243.8 million in 2025; $240.6 million in 2026; $237.2 million in 2027; and $231.1 million in 2028.

5. Current Liabilities

Book overdrafts included in accounts payable in the condensed consolidated balance sheets were $148.1 million at June 29, 2024 ($159.0 million at December 31, 2023). Dividends payable, included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, were $129.5 million at June 29, 2024 ($133.6 million at December 31, 2023).

6. Fair Value Measurements

The following table summarizes information regarding Nucor’s financial assets and financial liabilities that were measured at fair value as of June 29, 2024 and December 31, 2023 (in thousands). Nucor does not have any non-financial assets or non-financial liabilities that are measured at fair value on a recurring basis.

Fair value measurements for Nucor’s cash equivalents, short-term investments and restricted cash and cash equivalents and an investment in a publicly traded nuclear power equipment manufacturer are classified under Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Fair value measurements for Nucor’s derivatives, which are typically commodity or foreign exchange contracts, are classified under Level 2 because such measurements are based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices, and spot and future exchange rates. Fair value measurements for Nucor's investments in privately held companies, most of which are in a nuclear fusion technology company, are classified under Level 3 because such measurements are based on unobservable inputs that indicate a change in fair value, including the transaction price in the event of a change in ownership of the investee (e.g., the sale of other investors' interest in the company) or the transaction price in the event of additional equity issuances of the investee. There were no transfers between levels in the fair value hierarchy for the periods presented.

The fair value of short-term and long-term debt, including current maturities, was approximately $6.12 billion at June 29, 2024 (approximately $6.22 billion at December 31, 2023). The debt fair value estimates are classified under Level 2 because such estimates are based on readily available market prices of our debt at June 29, 2024 and December 31, 2023, or similar debt with the same maturities, ratings and interest rates.

7. Contingencies

We are from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position or cash flows. Nucor maintains liability insurance with self-insurance limits for certain risks.

8. Stock-Based Compensation

Stock Options

A summary of activity under Nucor’s stock option plans for the firstsix months of 2024 is as follows (shares and aggregate intrinsic value in thousands):

For the 2024 stock option grant, the grant date fair value of $67.83 per share was calculated using the Black-Scholes options pricing model with the following assumptions:

Compensation expense for stock options was $3.6 million and $3.4 million in thesecond quarter of 2024 and 2023, respectively, and $4.0 million and $3.9 million in the first six months of 2024 and 2023, respectively. As of June 29, 2024, unrecognized compensation expense related to stock options was $2.9 million, which we expect to recognize over a weighted-average period of 2.4 years.

Restricted Stock Units

A summary of Nucor’s restricted stock unit (“RSU”) activity for the firstsix months of 2024 is as follows (shares in thousands):

Compensation expense for RSUs was $53.9 million and $48.5 million in thesecond quarter of 2024 and 2023, respectively, and $66.8 million and $60.7 million in the first six months of 2024 and 2023, respectively. As of June 29, 2024, unrecognized compensation expense related to unvested RSUs was $141.1 million, which we expect to recognize over a weighted-average period of 1.6 years.

Restricted Stock Awards

A summary of Nucor’s restricted stock activity under the Nucor Corporation Senior Officers Annual Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “AIP”) and the Nucor Corporation Senior Officers Long-Term Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “LTIP”) for the firstsix months of 2024 is as follows (shares in thousands):

Compensation expense for common stock and common stock units awarded under the AIP and the LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $3.9 million and $11.7 million in thesecond quarter of 2024 and 2023, respectively, and $11.9 million and $19.4 million in the first six months of 2024 and 2023, respectively. As of June 29, 2024, unrecognized compensation expense related to unvested restricted stock awards was $14.7 million, which we expect to recognize over a weighted-average period of 2.0 years.

9. Employee Benefit Plan

Nucor makes contributions to a Profit Sharing and Retirement Savings Plan for qualified employees based on the profitability of the Company. Nucor’s expense for these benefits totaled $88.3 million and $194.4 million in thesecond quarter of 2024 and 2023, respectively, and $211.6 million and $356.6 million in the first six months of 2024 and 2023, respectively. The related liability for these benefits is included in salaries, wages and related accruals in the condensed consolidated balance sheets.

10. Interest (Income) Expense

The components of net interest (income) expense for thesecond quarter and first six months of 2024 and 2023 are as follows (in thousands):

11. Income Taxes

The effective tax rate for the second quarter of 2024 was 20.7% compared to 22.6% for the second quarter of 2023. The decrease in the effective tax rate for the second quarter of 2024 as compared to the second quarter of 2023 was primarily due to increased federal tax credits and the change in relative proportions of net earnings attributable to noncontrolling interests to total pre-tax earnings between the periods.

The Internal Revenue Service (the “IRS”) is currently examining Nucor’s 2015, 2019, and 2020 federal income tax returns. Nucor has concluded U.S. federal income tax matters for the tax years through 2014, and for the tax years 2016 and 2018. The tax years 2017, 2021, and 2022 remain open to examination by the IRS. The 2015 through 2021 Canadian income tax returns for Nucor Rebar Fabrication Group Inc. (formerly known as Harris Steel Group Inc.) and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 2016 through 2023 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada, Trinidad & Tobago, and other state and local jurisdictions).

Non-current deferred tax assets included in other assets in the condensed consolidated balance sheets were $34.2 million at June 29, 2024 ($40.7 million at December 31, 2023). Non-current deferred tax liabilities included in deferred credits and other liabilities in the condensed consolidated balance sheets were $1.26 billion at June 29, 2024 ($1.33 billion at December 31, 2023).

12. Stockholders’ Equity

The following tables reflect the changes in stockholders’ equity attributable to Nucor and the noncontrolling interests of Nucor’s joint ventures - Nucor-Yamato Steel Company (Limited Partnership) (“NYS”), California Steel Industries, Inc. (“CSI”) and NJSM - in each of which Nucor owns 51% (the third of which Nucor acquired an additional 1% interest in the fourth quarter of 2023, bringing its total equity ownership to a 51% controlling interest), for the three months andsix months ended June 29, 2024 and July 1, 2023 (in thousands):

Dividends declared were $0.54 per share in thesecond quarter of 2024 ($0.51 per share in thesecond quarter of 2023) and $1.08 per share in the firstsix months of 2024 ($1.02 per share in the firstsix months of 2023).

On May 11, 2023, the Company announced that its Board of Directors had approved a share repurchase program under which the Company is authorized to repurchase up to $4.00 billion of the Company’s common stock and terminated all previously authorized share repurchase programs. Share repurchases are made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. As of June 29, 2024, the Company had approximately $1.82 billion available for share repurchases under the program authorized by the Company’s Board of Directors.

13. Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive income (loss) by component for the three months and six months ended June 29, 2024 and July 1, 2023 (in thousands):

(1)

Includes $7,475 and $12,816 net-of-tax impact of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net losses on commodity contracts in thesecond quarter and first six months of 2024, respectively. The tax impact of those reclassifications was $2,400 and $4,200 in thesecond quarter and first six months of 2024, respectively.

(2)

Includes $6,228 and $6,403 net-of-tax impact of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net gains on commodity contracts in thesecond quarter and first six months of 2023, respectively. The tax impact of those reclassifications was $1,900 and $2,000 in thesecond quarter and first six months of 2023, respectively.

14. Segments

Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate; steel trading and rebar distribution businesses; and Nucor’s equity method investment in NuMit LLC (“NuMit”). The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, precision castings, steel fasteners, metal building systems, insulated metal panels, overhead doors, steel grating, tubular products, steel racking, piling products, wire and wire mesh, and utility towers and structures. The raw materials segment includes The David J. Joseph Company and its affiliates (“DJJ”), primarily a scrap broker and processor; Nu-Iron Unlimited and Nucor Steel Louisiana LLC (“Nucor Steel Louisiana”), two facilities that produce direct reduced iron (“DRI”) used by the steel mills; and our natural gas production operations.

Corporate/eliminations include items such as net interest (income) expense, charges and credits associated with changes in allowances to eliminate intercompany profit in inventory, profit sharing expense and stock-based compensation. Corporate assets primarily include cash and cash equivalents, short-term investments, restricted cash and cash equivalents, allowances to eliminate intercompany profit in inventory, deferred income tax assets, federal and state income taxes receivable and investments in and advances to affiliates.

Nucor’s results by segment for thesecond quarter and first six months of 2024 and 2023 were as follows (in thousands):

15. Revenue

The following tables disaggregate our revenue by major source for thesecond quarter and first six months of 2024 and 2023 (in thousands):

Contract liabilities are primarily related to deferred revenue resulting from cash payments received in advance from customers to protect against credit risk. Contract liabilities totaled $243.6 million as of June 29, 2024 ($313.8 million as of December 31, 2023) and are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

16. Earnings Per Share

The computations of basic and diluted net earnings per share for thesecond quarter and first six months of 2024 and 2023 are as follows (in thousands, except per share amounts):

The number of shares that were not included in the diluted net earnings per share calculation, because to do so would have been anti-dilutive, was immaterial for all periods presented.

17. Subsequent Events

On July 23, 2024, Nucor acquired Rytec Corporation ("Rytec"), a manufacturer and seller of high-speed, high-performance commercial doors, for a cash purchase price of approximately $565 million. Rytec hastwo manufacturing facilities in Wisconsin. The Company believes this acquisition further executes its strategy to expand beyond its core steelmaking businesses into related downstream businesses. Rytec will be included in the steel products segment.