Forward-Looking Statements
Certain statements made in this presentation are forward-looking statements that
involve risks and uncertainties. These forward-looking statements reflect the Company’s
best judgment based on current information, and although we base these statements on
circumstances that we believed to be reasonable when made, there can be no assurance
that future events will not affect the accuracy of such forward-looking information. As
such, the forward-looking statements are not guarantees of future performance, and actual
results may vary materially from the results and expectations discussed herein. Factors
that might cause the Company’s actual results to differ materially from those anticipated in
forward-looking statements include, but are not limited to: (1) the sensitivity of the results
of our operations to prevailing steel prices and the changes in the supply and cost of raw
materials, including scrap steel; (2) availability and cost of electricity and natural gas; (3)
market demand for steel products; (4) competitive pressure on sales and pricing, including
pressure from imports and substitute materials; (5) uncertainties surrounding the global
economy, including excess world capacity for steel production; (6) U.S. and foreign trade
policy affecting steel imports or exports; (7) significant changes in government regulations
affecting environmental compliance; (8) the cyclical nature of the domestic steel industry;
(9) capital investments and their impact on our performance; and (10) our safety
performance.
The following discussion should be read in conjunction with the audited consolidated
financial statements and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” contained in Nucor’s Annual Report on Form 10-K for the year
ended December 31, 2004.
2
Nucor’s Growth Strategy
Nucor is in a position of strength
to execute our
cyclical growth strategy--optimize existing operations,
use greenfield growth to capitalize
on new technologies, pursue strategic
acquisitions, and grow globally through
joint ventures leveraging new
technologies
3
Nucor Overview
• 48 Operating Facilities in 15 states
• 10,600 employees generated $11.4 billion in
2004 sales and 19.5 million tons of 2004
steel shipments
• Corporate Staff of about 60 Employees
• Largest recycler in the United States
4
Nucor Overview
Key Facilities:
Vulcraft (Joist/Deck - 7)
Bar Mill Group (10)
Sheet Mill Group (4)
Structural Mills (2)
Plate Mill (2)
Cold Finish Group (4)
Building Systems Group (3)
Fastener Division (1)
Nucon (2)
• Nucor – North America’s largest and most profitable steel producer
in 2004
5
It Starts With Our Culture
Commitment to Employees
– Team work
– Incentive-based pay for everyone – Pay
For Performance
– Non-union
– Lean management
– Decentralized structure fosters
entrepreneurial spirit
– Egalitarian benefits
– No lay-off practice
6
Position of Strength
• Financial Strength
• Market Leadership
• Diversified Product Mix
• Technological Innovation
• Low-cost Position
7
Nucor Overview
• Profitable every year and every quarter
since 1966
• Steel shipments have grown from 5.8
million tons in 1993 to 19.5 million tons
in 2004
• Sales have grown from $2.3 billion in
1993 to $11.4 billion in 2004
8
Steel Shipments 1993-2004
(millions of tons)
20
16
12
8
4
0
1993
9
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Net Sales 1993-2004
(millions of dollars)
12,000
10,000
8,000
6,000
4,000
2,000
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
10
Net Income 1993-2004
(millions of dollars)
1,200
1,000
800
600
400
200
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
11
Cash from Operations 1993-2004
(millions of dollars)
1,200
1,000
800
600
400
200
0
1993
12
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Financial Strength
• Cash & Short-term Investments Of $1.6 Billion
At The Close Of Q3-2005
• Debt = 18% Of Total Capital At The Close Of Q32005
• Debt Rated “A+” By S&P And “A1” By Moody’s –
Highest North American Metals/Mining Debt
Ratings
• Cash Provided By Operations Of More Than $1.0
Billion In 2004
• Cash Dividends Increased Every Year Since Nucor
Began Paying Dividends In 1973 – Increased
Dividend Twice In 2004 And Again In Q1-2005;
Supplemental Dividend Payments Initiated In 2005
13
Conservative Financial Practices
• Conservative Financial & Accounting Practices
• Financial Reporting In Plain Language And Easy To
Understand Format
• Simple Capital Structure
• No Off-Balance Sheet Financing Arrangements
• No Pro Forma Earnings Reporting
• Strong Balance Sheet
• No Pension Liability
• Superior Financial Flexibility
14
Market Leadership
Largest U.S. structural steel producer
Largest U.S. steel bar producer
Largest U.S. steel joist producer
Largest U.S. steel deck producer
Largest U.S. cold finished bar producer
15
Diversified Product Mix
First Nine Months 2005 Sales Tons
Sheet-Steel - 39%
Bars-Steel - 30%
Structural-Steel - 14%
Plate-Steel - 10%
Steel Joists - 3%
Steel Deck - 2%
Cold Finished Steel - 2%
Other - <1%
16
Diversified Product Mix
End Use Markets
Oil & Gas
15%
Auto/appliance
15%
Construction
60%
17
Various
10%
Diversified Product Mix
Steel Production Capacity (tons)
Hot Rolled Sheet
(Cold Rolled Sheet
4.1 million)
(Galvanized
1.5 million)
Bars
Structural
Plate
Total Steel
18
10.8 million
7.7 million
3.7 million
2.8 million
25.0 million
Diversified Product Mix
Steel Products Production Capacity (tons)
Steel Joists
715,000
Steel Deck
430,000
Cold Finished Bars
490,000
Steel Buildings
145,000
Total Steel Products
19
1.78 million
Technological Innovation
• First to commercialize thin-slab casting
• Near net shape beam blank casting of wideflange beams (structural steel)
• Focus on new disruptive and leapfrog
technologies continues
• Castrip® – direct strip casting of carbon sheet steel
• HIsmelt® – converts iron ore to liquid metal or pig
iron; both a blast furnace replacement technology
and a hot metal source for electric arc furnaces
• Ferro Gusa Carajás – environmentally sustainable
blast furnace
20
Low-Cost Structure
• Variable cost emphasis – minimize fixed
costs
• Decentralized, flat management structure
• Lean management – Nucor managers wear
multiple hats
• Strong balance sheet
• “CAN DO” attitude and energy level of Nucor
people creates efficiencies
21
Growth Opportunities
Position of strength allows us to take
advantage of marketplace opportunities and
continue Nucor’s successful tradition as a cyclical
growth company.
Nucor’s 4 Pronged Growth Strategy
1) Optimize existing operations
2) Continue greenfield growth –
opportunities to capitalize on technology
3) Pursue strategic acquisitions
4) Grow globally through joint ventures leveraging
new technologies
22
Optimize Existing Operations
• Continued Quality Improvements
& Cost Reductions – Our Focus Every Day
• Nucor “BESTmarking”
• Bar Mill Group Capital Projects Program
• Improve Sheet Mill Group’s Volume and Profitability
(continue moving up the value chain)
• Addition of Vacuum Degassers at Decatur,
Alabama and Hickman, Arkansas Sheet Mills
• Building Systems and Load Bearing Light Gauge
Steel Framing Opportunities
23
Optimize Existing Operations
• Nucor announced Bar Mill Group Capital Projects in
early 2002
• More than $200.0 million on capital projects program completed in 2004
• Projects included: Rolling Mill Modernization at
Nebraska, New Melt Shop & Reheat Furnace at
Texas, and New Finishing End at South Carolina
• Program reflects Nucor’s commitment to maintain
our position as a world class competitor in steel
markets
• Focus On Continual Improvement
24
Optimize Existing Operations
• Sheet Mill Group announced in February 2005 the addition of
two vacuum degassers – one at the Alabama sheet mill and
one at the Arkansas sheet mill
• Will enable Nucor to provide higher grades of sheet steel for
automotive and appliance markets – particularly for customers
in the southern half of the United States and Mexico
• Combined additional capacity of 1,000,000 tons annually –
with total capital expenditures for each project estimated at
under $20.0 million
• Builds upon existing vacuum degassing capabilities at the
Indiana and South Carolina sheet mills
• New degassers expected to be operating in the first half of
2006
25
Continue Greenfield Growth
• Hertford County, North Carolina steel plate mill – strong
market presence established
• Chemung, New York Vulcraft joist and deck plant
continues production growth in a new geographic market
• New facility using Castrip technology in Crawfordsville,
Indiana began commercial production in Q2-2002 and
commercialized in 2004
• Nucor’s second Castrip production facility in the United
States will be located at Nucor-Yamato Steel in
Blytheville, Arkansas
• Also plan to establish at least one joint venture in 2005
with a partner overseas to utilize the Castrip technology
26
Technological Innovation
Strip casting
Ladle
Tundish
Transition
piece
Produces ultra-thin gauge hot rolled steel
with superior properties (cold rolled
replacement at hot band cost)
Minimizes environmental
and economic impact
Pinch
rolls
(See www.castrip.com)
Casting rolls
Shear
Controlled
atmosphere
27
Hot
rolling
stand
2nd hot
rolling
stand
(optional)
... .....
Down Coilers
Energy & Emissions (ladle through hot band)
2.00
1.80
0.25
1.7
.22
0.20
GGE (t CO2 equiv/t)
Energy Consumed (GJ/t)
1.60
1.40
1.20
1.00
1.0
0.80
0.15
.12
0.10
0.60
0.05
0.40
.2
.02
0.20
0.00
28
0.00
Strategic Plan – Raw Materials
• Develop supplies of high quality scrap substitutes –
control approximately one-third of Nucor’s iron units
annual consumption
• At our current consumption rate, will require
between 6,000,000 to 7,000,000 tons per year of
high quality scrap substitutes
• Raw materials strategy driven by Nucor’s
ongoing expansion of our sheet steel product
portfolio into higher quality grades
29
Nu-Iron Unlimited
• Acquired an idled direct reduced iron (“DRI”)
plant located in Louisiana in September 2004
• Implementing plan to relocate the plant to
Trinidad and expand annual capacity to
1,800,000 metric tons
• Trinidad site will benefit from a low cost natural
gas supply and favorable logistics for receiving
iron ore from Brazil and shipping DRI to the United
States
• Operations expected to begin in second half of 2006
30
Technology For The 21st Century - HIsmelt
• Direct smelting process being developed by
Rio Tinto, Nucor, Mitsubishi and Shougang
• Blast furnace replacement technology and
hot metal source for electric arc furnaces
• Production at Kwinana, Australia plant started
up operations in Q2-2005
• Future royalty stream for partners
• Raw material source for Nucor
31
Technology For The 21st Century - HIsmelt
(See www.hismelt.com)
32
Ferro Gusa Carajás
• Joint venture with
Companhia Vale do Rio
Doce (CVRD) to produce
pig iron in northern Brazil
• Project will utilize conventional mini-blast
furnaces
• Pig Iron made in an Environmentally
Friendly manner – charcoal source
exclusively from eucalyptus trees grown in
cultivated forest
• Production started in Q3-2005
33
Pursue Acquisitions
Nucor’s DISCIPLINED acquisition strategy has
greatly expanded our platform for generating
earnings and attractive returns on our
shareholders’ capital
Nucor’s Acquisition Criteria
• Don’t over-pay
• Stick with businesses we understand
• There must be CULTURAL COMPATIBILITY
34
Pursue Acquisitions
• Former Auburn Steel Company – an excellent beginning
– Acquired in March 2001 for $115 million
– 470,000 tons-per-year merchant bar, rebar and
special bar quality (SBQ) steel mill in New York
• Nucor Steel – Auburn gives us a merchant bar presence
in the Northeast
• With adoption of Nucor incentive pay system, set 26year production record in 2001 with continued growth
through 2004
• Has made solid operating contributions
• Excellent strategic fit with Vulcraft joist and deck plant
about 80 miles away in Chemung, New York
35
Pursue Acquisitions
36
•
Former Trico Steel Company sheet mill in Decatur, Alabama acquired
in July 2002 for a purchase price of $117.7 million
•
Current annual capacity of 2,100,000 tons, initially increased our sheet
capacity by 30%
•
Purchase strategy called for a major renovation of the facility with
capital expenditures exceeding $100.0 million from acquisition through
2004
•
Supports our flat-rolled strategy by building market share and
broadening our product portfolio to include higher quality grades
•
2004 production of 1,800,000 tons up 50% over 2003 production of
1,200,000 tons with production target of 2,100,000 tons in 2005
•
In August 2004, acquired cold rolling assets from Worthington
Industries, Inc. located adjacent to Decatur sheet mill for
approximately $80.3 million
•
This modern 1,000,000-ton cold mill with 600,000 tons of annealing
capacity complements our strategy to serve value-added customers in
the Southeast market
Pursue Acquisitions
• Former Birmingham Steel Corporation – in
December 2002 acquired substantially all the
assets for $615.0 million in cash (included $116.9
million in inventory and receivables)
• The four operating bar mills have combined annual
capacity of more than 2,300,000 tons, increasing
Nucor’s annual bar product capacity by more than
50% to 6,500,000 tons
• Made significant operating profit contributions in
2003, 2004, and first nine months of 2005
• Acquisition broadened base of customers and
markets served
37
Pursue Acquisitions
• Corus Tuscaloosa – Tuscaloosa, Alabama plate mill
acquired in July 2004 for approximately $89.4 million
• Plate mill has an annual capacity of 800,000 tons –
increasing Nucor’s total annual plate capacity to
approximately 2,100,000 tons
• Manufactures pressure vessel steel coil, discrete
plate and cut-to-length plate products
• Acquisition was immediately accretive to earnings
and payback period measured in months
• Production records being set as part of Nucor Team
38
Pursue Acquisitions
• Marion Steel Company - In June 2005, purchased
substantially all the assets for approximately $109.0
million
• Bar products mill in Marion, Ohio with annual capacity
of approximately 400,000 tons, increasing Nucor’s
annual bar product capacity to approximately 6,900,000
tons
• Mill is in close proximity to 60% of the steel
consumption in the United States
• Enhances Nucor’s leadership position in the bar
market, expanding our nationwide network to 10 bar
mills
• Nucor Steel – Marion Team set new monthly production
record in June 2005; that record subsequently broken in
September 2005
39
Pursue Acquisitions & Joint Ventures –
Downstream Opportunities
• Nucon Steel – acquired in November 2001; our platform for
growth in load bearing light gauge steel framing systems for
commercial and residential markets
• Harris Steel, Inc. – acquired one-half interest in February
2004; joint venture with nation’s second largest independent
rebar fabricator
• Nufab Rebar LLC joint venture formed in January 2005;
partnership with Ambassador Steel, nation’s largest
independent rebar fabricator; Nufab Rebar acquired Lulich
Steel in May 2005
• Nucor Cold Finish – Wisconsin acquired in February
2005; with the addition of 140,000 tons capacity, Nucor
became largest producer of cold finished bars in the U.S.
40
Performance Expectations
• 10% or better annual compound earnings
growth (through the economic cycle)
• Return on invested capital exceeding our cost
of capital
• Market leadership in every product group and
business in which we compete
• Continue Nucor tradition of emerging from
economic down-cycles stronger than before
entering them
41
Record 2004 Results
• RECORD EPS of $7.02 in 2004 – more than three and
one-half times greater than prior EPS record of $1.90
set in 2000
• 2004 steel shipments of 19,500,000 tons compare to
17,700,000 tons in 2003 and 11,000,000 tons in 2000
• Castrip technology commercialized in 2004
• First Nine Months 2005 record EPS of $6.08, up from
First Nine Months 2004 EPS of $4.90
• Nucor Team remains focused on DISCIPLINED
execution of strategic growth plan
42
2000 – 2004 Steel Shipments
(millions of tons)
20
15
10
5
0
Total
Bar
Sheet
2000
43
2004
Plate
Beam
Nucor’s Success
•
•
•
•
•
Nucor’s facilities
Nucor’s capabilities
Nucor’s financial strength
Nucor’s strategies
And, the single most important asset behind
Nucor’s success – Nucor’s EMPLOYEES –
THE RIGHT PEOPLE
• NUCOR’S BEST YEARS ARE STILL AHEAD
OF US
44