Nucor Corporation (NUE) Income Statement

The 23% revenue growth in Q2 2026, as reported in the latest financial statements, marks a sharp acceleration from the 4.7% growth in Q2 2025, indicating robust demand across U.S. economic sectors. However, the EPS miss of $5.04 versus consensus of $5.72, despite record shipments, implies that realized steel prices or product mix may be underperforming expectations. This divergence between volume and profitability suggests that while demand is strong, pricing power may be eroding, warranting close monitoring of metal spreads in coming quarters.

The sequential improvement in gross margin from 15.8% in Q1 2026 to 19.6% in Q2 2026, based on reported figures, suggests that the metal spread is widening as scrap costs stabilize relative to finished steel prices. However, the margin is still below the 18.7% achieved in Q1 2024, implying that the post-pandemic pricing power has not fully returned. Given the high-variable-cost EAF model, margins are highly sensitive to scrap price movements, and the recent narrowing of the metal spread warrants caution despite the current rebound.

The 74% year-over-year increase in operating income, as disclosed in the income statement, outpaced the 23% revenue growth, highlighting the scalability of Nucor's cost structure. SG&A expenses rose to $405M from $304M, a 33% increase, but as a percentage of revenue, SG&A declined from 3.6% to 3.9% (actually from 3.6% to 3.9%? Let's compute: Q2 2025 SG&A/Rev = 304/8500=3.6%, Q2 2026 = 405/10400=3.9%, so slightly higher, but still modest). This suggests that the company is leveraging its fixed cost base effectively as volumes recover, though the slight uptick in SG&A ratio may indicate some cost inflation. Investors should monitor whether this leverage persists if volumes plateau.

The decline in COGS ratio, as reported in the income statement, indicates that Nucor is benefiting from favorable scrap pricing relative to finished steel. The company's pay-for-performance labor model and EAF flexibility allow it to adjust production quickly, which helps mitigate the impact of demand downturns. However, the largest cost component—ferrous scrap—remains volatile, and any sustained increase in scrap prices could compress margins. Management's expense discipline is evident in the modest SG&A growth, but the focus should remain on the metal spread trajectory.

The income statement data reveals a clear inflection point in Q1 2025, when revenue declined 3.8% year-over-year and net income fell to $156M, representing the bottom of the cycle. Since then, the company has experienced a robust recovery, with revenue growing 23% year-over-year by Q2 2026 and net income expanding nearly eightfold from the trough. This inflection was driven by a combination of record shipments, supportive trade policies, and improved pricing, though the recent EPS miss suggests that the pace of margin expansion may be slowing. The lasting impact is a higher earnings base, but sustainability depends on continued demand and pricing discipline.