July 19, 2018 - 9:00 AM EDT
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Nucor Reports Results for Second Quarter and First Half of 2018

CHARLOTTE, N.C., July 19, 2018 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) today announced second quarter of 2018 consolidated net earnings of $683.2 million, or $2.13 per diluted share, which are the highest second quarter earnings in the Company's history. By comparison, Nucor reported consolidated net earnings of $354.2 million, or $1.10 per diluted share, for the first quarter of 2018 and $323.0 million, or $1.00 per diluted share, for the second quarter of 2017.

In the first half of 2018, Nucor reported consolidated net earnings of $1.04 billion, or $3.23 per diluted share, compared with consolidated net earnings of $679.9 million, or $2.11 per diluted share, in the first half of last year.

"We are pleased to report record second quarter earnings that reflect our success over the last several years positioning Nucor to take advantage of an upturn in the steel market," said John Ferriola, Nucor's Chairman, Chief Executive Officer and President. "We have increased our workforce by 18% and invested $8 billion since the last cyclical peak in 2008. Now, against the backdrop of a strong market and economy, we are capitalizing on those investments to move up the value chain and profitably grow our company. Our financial performance over the last six quarters demonstrates our continued operational excellence and the success of our long-term strategy to pursue our Five Drivers to Profitable Growth. The Nucor team is committed to extending our long track record of superior performance and stockholder value creation in the second half of 2018 and beyond."

Selected Segment Data
In the first quarter of 2018, the Company began reporting its tubular products and piling businesses as part of the steel products segment.  These businesses were previously included in the steel mills segment. All prior period segment data presented in this news release has been recast to reflect this change. Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the second quarter and first six months of 2018 and 2017 (in thousands, unaudited):












Three Months (13 Weeks) Ended


Six Months (26 Weeks) Ended



June 30, 2018


July 1, 2017


June 30, 2018


July 1, 2017

Steel mills


$             961,784


$             579,520


$          1,522,287


$          1,223,703

Steel products


155,766


83,636


241,580


150,555

Raw materials


134,995


66,227


209,542


92,618

Corporate/eliminations

(338,844)


(221,247)


(543,796)


(409,765)



$             913,701


$             508,136


$          1,429,613


$          1,057,111



















 

Financial Review
Included in the second quarter of 2018 results was a benefit of $23.3 million, or $0.06 per diluted share, related to insurance recoveries. Included in the first quarter of 2018 results was an expense of $21.8 million, or $0.07 per diluted share, related to the write off of deferred tax assets due to the change in the tax status of a subsidiary.

Nucor's consolidated net sales increased 16% to $6.50 billion in the second quarter of 2018 compared with $5.57 billion in the first quarter of 2018 and increased 25% compared with $5.17 billion in the second quarter of 2017. Average sales price per ton in the second quarter of 2018 increased 12% compared with the first quarter of 2018 and increased 17% compared with the second quarter of 2017. Total tons shipped to outside customers were 7,197,000 tons in the second quarter of 2018, a 3% increase from the first quarter of 2018 and a 7% increase from the second quarter of 2017. Total steel mill shipments in the second quarter of 2018 increased 3% from the first quarter of 2018 and increased 6% from the second quarter of 2017. Downstream steel products shipments to outside customers in the second quarter of 2018 increased 11% from the first quarter of 2018 and increased 17% from the second quarter of 2017.

In the first half of 2018, Nucor's consolidated net sales increased 20% to $12.03 billion, compared with $9.99 billion in last year's first half. Total tons shipped to outside customers in the first half of 2018 were 14,164,000, an increase of 6% from the first half of 2017, while average sales price per ton increased 13%.

The average scrap and scrap substitute cost per ton used during the second quarter of 2018 was $373, an 11% increase compared to $337 in the first quarter of 2018 and an increase of 19% compared to $313 in the second quarter of 2017. The average scrap and scrap substitute cost per ton used in the first half of 2018 was $355, an increase of 19% from $298 in the first half of 2017.

Overall operating rates at our steel mills increased to 95% in the second quarter of 2018 as compared to 92% in the first quarter of 2018 and 89% in the second quarter of 2017. Operating rates for the first half of 2018 increased to 93% as compared with 89% for the first half of 2017.

Total steel mill energy costs in the second quarter of 2018 decreased approximately $2 per ton compared to the first quarter of 2018 and decreased approximately $1 per ton compared to the second quarter of 2017 primarily due to lower natural gas unit costs and higher productivity resulting from increased steel production. Total steel mill energy costs for the first half of 2018 were consistent with the first half of 2017.

Our liquidity position remains strong with $1.5 billion in cash and cash equivalents as of June 30, 2018. In April 2018, we amended and extended our untapped $1.5 billion revolving credit facility to mature in April 2023. Additionally in April 2018, we issued $500.0 million of 3.950% notes due 2028 and $500.0 million of 4.400% notes due 2048. Proceeds from these issuances were used during the quarter to repay $500.0 million of 5.850% notes that were due June 1, 2018.

Recent Developments
In May 2018, Nucor announced plans to build a galvanizing line at the Company's sheet mill in Arkansas to support Nucor's growth into a wider and more diverse set of strategic end-market applications. The new galvanizing line is a $240 million investment with an annual capacity of approximately 500,000 tons. It is expected to be operational in the first half of 2021.

In June 2018, Nucor's board of directors declared a cash dividend of $0.38 per share payable on August 10, 2018 to stockholders of record on June 29, 2018. This dividend is Nucor's 181st consecutive quarterly cash dividend, a record we expect to continue.

Second Quarter of 2018 Analysis
As expected, earnings in the second quarter of 2018 improved significantly compared to the first quarter of 2018. The primary driver of the improved performance was our steel mills segment, which experienced higher average selling prices and increased profitability across all steel mill product groups, with the strongest profitability increase at our sheet mills. Our steel products and raw materials segments also experienced increased profitability in the second quarter of 2018 compared to the first quarter of 2018. These improved earnings are the result of much stronger market conditions that we believe have been positively impacted by deregulation, tax reform and higher, stable oil prices.

Third Quarter of 2018 Outlook
Earnings in the third quarter of 2018 are expected to further improve compared to the second quarter of 2018. The performance of the steel mills segment is expected to remain strong in the third quarter of 2018 as compared to the second quarter of 2018, with margin expansion expected primarily at our sheet and plate mills. Based on the current steel market fundamentals and communications with our customers, we believe there is sustainable strength in steel end-use markets. We expect third quarter of 2018 performance of our steel products segment to be similar to the second quarter of 2018. The performance of our raw materials segment is expected to decrease in the third quarter of 2018 as compared to the second quarter of 2018 due to margin compression.

About Nucor
Nucor and its affiliates are manufacturers of steel and steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; hollow structural section tubing; electrical conduit; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and hot briquetted iron / direct reduced iron; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.

Forward-Looking Statements
Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. The words "believe," "expect," "project," "will," "should," "could" and similar expressions are intended to identify those forward-looking statements. 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) competitive pressure on sales and pricing, including competition from imports and substitute materials; (2) U.S. and foreign trade policies affecting steel imports or exports; (3) 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; (4) market demand for steel products; and (5) energy costs and availability. These and other factors are discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's fiscal 2017 Annual Report on Form 10-K, Item 1A. Risk Factors. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

Broadcast of Conference Call
You are invited to listen to the live broadcast of Nucor's conference call in which management will discuss Nucor's second quarter results on July 19, 2018 at 2:00 p.m. Eastern time. The conference call will be available over the Internet at www.nucor.com, under Investor Relations.














 TONNAGE DATA 

 (In thousands) 
















 Three Months (13 Weeks) Ended 


 Six Months (26 Weeks) Ended 



June 30, 2018


July 1, 2017


Percentage
Change


June 30, 2018


July 1, 2017


Percentage
Change

Steel mills total shipments:













Sheet 

2,784


2,719


2%


5,482


5,424


1%


Bars

2,374


2,001


19%


4,616


3,958


17%


Structural

626


547


14%


1,227


1,119


10%


Plate

560


614


-9%


1,156


1,191


-3%


Other

96


198


-52%


227


272


-17%



6,440


6,079


6%


12,708


11,964


6%














Sales tons to outside customers:













Steel mills

5,078


4,950


3%


10,094


9,810


3%


Joist

114


104


10%


219


205


7%


Deck

116


104


12%


222


210


6%


Cold finished

149


120


24%


296


242


22%


Fabricated concrete













reinforcing steel

337


291


16%


627


538


17%


Piling

160


145


10%


286


264


8%


Tubular products

286


227


26%


570


450


27%


Other

957


807


19%


1,850


1,613


15%



7,197


6,748


7%


14,164


13,332


6%














 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)










  Three Months (13 Weeks) Ended  


  Six Months (26 Weeks) Ended  










June 30, 2018


July 1, 2017


June 30, 2018


July 1, 2017









Net sales

$     6,460,774


$     5,174,769


$   12,029,193


$     9,989,948









Costs, expenses and other:








  Cost of products sold

5,294,184


4,465,144


10,136,197


8,520,073

  Marketing, administrative and other expenses

234,381


170,211


417,341


346,637

  Equity in earnings of unconsolidated affiliates

(10,943)


(13,302)


(20,523)


(22,058)

  Interest expense, net

29,451


44,580


66,565


88,185


5,547,073


4,666,633


10,599,580


8,932,837

Earnings before income taxes and








noncontrolling interests

913,701


508,136


1,429,613


1,057,111

Provision for income taxes

200,086


166,412


335,886


337,739

Net earnings

713,615


341,724


1,093,727


719,372

Earnings attributable to








noncontrolling interests

30,462


18,676


56,395


39,425

Net earnings attributable to 








Nucor stockholders

$        683,153


$        323,048


$     1,037,332


$        679,947









Net earnings per share:








  Basic

$2.14


$1.00


$3.24


$2.12

  Diluted

$2.13


$1.00


$3.23


$2.11









Average shares outstanding:








  Basic

318,467


320,439


318,941


320,332

  Diluted

319,391


321,226


319,930


321,186









 

 

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

 (In thousands) 












June 30, 2018


Dec. 31, 2017

 ASSETS 





 Current assets: 





 Cash and cash equivalents 

$      1,486,453


$          949,104


 Short-term investments 

-


50,000


 Accounts receivable, net 

2,637,744


2,028,545


 Inventories, net 

4,133,472


3,461,686


 Other current assets 

143,566


335,085










 Total current assets 

8,401,235


6,824,420








 Property, plant and equipment, net 

5,122,381


5,093,147








 Goodwill 


2,185,809


2,196,058








 Other intangible assets, net 

867,905


914,646








 Other assets 

874,362


812,987










 Total assets 

$    17,451,692


$    15,841,258








 LIABILITIES 





 Current liabilities: 





 Short-term debt 

$            59,168


$            52,833


 Long-term debt due within one year 

-


500,000


 Accounts payable 

1,558,020


1,181,346


 Salaries, wages and related accruals 

507,608


516,660


 Accrued expenses and other current liabilities 

625,533


573,925










 Total current liabilities 

2,750,329


2,824,764








 Long-term debt due after one year 

4,232,244


3,242,242








 Deferred credits and other liabilities 

733,695


689,464










 Total liabilities 

7,716,268


6,756,470








 EQUITY 





 Nucor stockholders' equity: 





 Common stock 

152,061


151,960


 Additional paid-in capital 

2,051,382


2,021,339


 Retained earnings 

9,257,823


8,463,709


 Accumulated other comprehensive loss, 






 net of income taxes 

(296,032)


(254,681)


 Treasury stock 

(1,791,827)


(1,643,291)



 Total Nucor stockholders' equity 

9,373,407


8,739,036








 Noncontrolling interests 

362,017


345,752










 Total equity 

9,735,424


9,084,788










 Total liabilities and equity 

$    17,451,692


$    15,841,258















 

 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

 (In thousands) 
















Six Months (26 Weeks) Ended
















June 30, 2018


July 1, 2017










Operating activities:







Net earnings 



$      1,093,727


$          719,372


Adjustments:








Depreciation



316,402


318,278



Amortization



44,573


45,443



Stock-based compensation


51,905


41,159



Deferred income taxes


48,181


(4,173)



Distributions from affiliates


27,453


46,877



Equity in earnings of unconsolidated affiliates

(20,523)


(22,058)



Changes in assets and liabilities (exclusive of acquisitions and dispositions):







Accounts receivable


(602,414)


(396,452)




Inventories


(676,266)


(781,581)




Accounts payable


367,950


371,158




Federal income taxes


208,996


(14,114)




Salaries, wages and related accruals

1,631


(1,897)




Other operating activities

8,977


28,849










Cash provided by operating activities


870,592


350,861










Investing activities:







Capital expenditures


(361,486)


(189,235)


Investment in and advances to affiliates

(73,427)


(19,000)


Disposition of plant and equipment

17,297


12,509


Acquisitions (net of cash acquired)

-


(478,410)


Purchases of investments


-


(50,000)


Proceeds from the sale of investments

50,000


150,000


Other investing activities


1,378


(990)










Cash used in investing activities


(366,238)


(575,126)










Financing activities:







Net change in short-term debt


6,334


21,235


Proceeds from long-term debt, net of discount

995,710


-


Repayments of long-term debt


(500,000)


-


Bond issuance related costs


(7,625)


-


Issuance of common stock


12,280


3,535


Payment of tax withholdings on certain stock-based compensation

(19,508)


(13,185)


Distributions to noncontrolling interests

(40,130)


(79,420)


Cash dividends



(243,649)


(242,704)


Acquisition of treasury stock


(170,315)


-


Other financing activities


(3,879)


(1,101)










Cash provided by (used in) financing activities 

29,218


(311,640)










Effect of exchange rate changes on cash

3,777


1,297










Increase (decrease) in cash and cash equivalents

537,349


(534,608)










Cash and cash equivalents - beginning of year

949,104


2,045,961










Cash and cash equivalents - end of six months

$      1,486,453


$      1,511,353










Non-cash investing activity:






Change in accrued plant and equipment purchases and
  assets 
recorded under capital lease arrangements





$              1,776


$          (12,927)










 


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SOURCE Nucor Corporation


Source: PR Newswire (July 19, 2018 - 9:00 AM EDT)

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