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Press release from PR Newswire

Nucor Reports Results for Second Quarter and First Half of 2011

Thursday, July 21, 2011

Nucor Reports Results for Second Quarter and First Half of 201109:00 EDT Thursday, July 21, 2011CHARLOTTE, N.C., July 21, 2011 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $299.8 million, or $0.94 per diluted share, for the second quarter of 2011. By comparison, Nucor reported net earnings of $159.8 million, or $0.50 per diluted share, in the first quarter of 2011 and net earnings of $91.0 million, or $0.29 per diluted share, in the second quarter of 2010.  These increases in profits of 88% and 229%, respectively, were achieved despite the rebalancing by our customers of supply chain inventories, the impact on the manufacturing/auto sector of the devastating Japanese earthquake/tsunami and the lost sales, production and shipments from the weather-related power outages and historic river flooding in North America.  In the first half of 2011, Nucor reported consolidated net earnings of $459.6 million, or $1.44 per diluted share, compared with consolidated net earnings of $122.0 million, or $0.38 per diluted share, in the first half of last year.Nucor incurred a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $32.0 million ($0.06 per diluted share) in the second quarter of 2011, compared with a charge of $31.0 million ($0.06 per diluted share) in the first quarter of 2011 and a charge of $67.0 million ($0.13 per diluted share) in the second quarter of 2010.  The LIFO charge in the first half of 2011 was $63.0 million ($0.12 per diluted share), compared with a charge of $91.0 million ($0.18 per diluted share) in the first half of 2010.  Pre-operating and start-up costs of new facilities were $31.4 million in the second quarter of 2011 compared to $27.9 million in the first quarter of 2011 and $43.4 million in the second quarter of 2010. For the six-month period, pre-operating and start-up costs decreased from $93.9 million in 2010 to $59.3 million in 2011. In 2011, these costs related to several projects, primarily the galvanizing line in Decatur, Alabama and the Castrip facility in Blytheville, Arkansas.  The decrease in pre-operating and start-up costs was due to the improved performance at the special bar quality ("SBQ") mill in Memphis, Tennessee and the wire rod products mill in Kingman, Arizona.Nucor's consolidated net sales increased 6% to $5.11 billion in the second quarter of 2011 compared with $4.83 billion in the first quarter of 2011 and increased 22% compared with $4.20 billion in the second quarter of 2010. Average sales price per ton increased 13% from the first quarter of 2011 and increased 21% from the second quarter of 2010. Total tons shipped to outside customers were 5,598,000 tons in the second quarter of 2011, a decrease of 6% from the first quarter of 2011 and an increase of 1% over the second quarter of 2010.  Total second quarter steel mill shipments increased 6% over the second quarter of 2010 and were down 6% from the first quarter of 2011.  Second quarter downstream steel products shipments to outside customers increased 3% over the second quarter of 2010 and 12% over the first quarter of 2011.In the first half of 2011, Nucor's consolidated net sales increased 27% to $9.94 billion, compared with $7.85 billion in last year's first half. Average sales price per ton increased 21% while total tons shipped to outside customers increased 5% over the first half of 2010.The average scrap and scrap substitute cost per ton used in the second quarter of 2011 was $444, an increase of 5% over $424 in the first quarter of 2011 and an increase of 19% over $373 in the second quarter of 2010. The average scrap and scrap substitute cost per ton used in the first half of 2011 was $433, an increase of 26% over $345 in the first half of 2010.Overall operating rates at our steel mills in the second quarter (71%) were down from the first quarter (80%) and were unchanged from last year's second quarter.  Steel mill utilization increased from 72% in the first half of 2010 to 75% in the first half of 2011.  Second quarter utilization rates were negatively impacted by downtime caused by weather-related events and resulting power outages.Total energy costs increased approximately $3 per ton from the first quarter of 2011 primarily due to inefficiencies caused by lower operating rates. Total energy costs increased approximately $3 per ton from the second quarter of 2010 to the second quarter of 2011 and increased $1 per ton from the first half of 2010 to the first half of 2011 mainly as a result of higher energy unit costs.  Construction, primarily infrastructure, has begun on our 2,500,000-ton direct reduced iron ("DRI") facility in Louisiana.  The management team is largely in place, and purchase contracts for most of the major equipment have been issued.  The majority of the equipment will begin arriving in 2012, and we are on schedule for completion of construction and beginning of start-up in mid-2013.Our liquidity position remains strong with $2.28 billion in cash and cash equivalents and short-term investments and an untapped $1.3 billion revolving credit facility that matures in November 2012.In June, Nucor's board of directors declared a cash dividend of $0.3625 per share payable on August 11, 2011 to stockholders of record on June 30, 2011.  This dividend is Nucor's 153rd consecutive quarterly cash dividend, a record we expect to continue.As we expected, our profitability significantly improved from the first quarter to the second quarter, as price increases for steel mill products caught up with higher raw material costs.  Demand in end markets such as automotive, heavy equipment, energy and general manufacturing continues to incrementally improve, benefiting special bar quality, sheet and plate products.  However, new domestic supply in the sheet market and increases in imports of sheet steel have begun to put significant pressure on prices and margins.  Unless the supply/demand/pricing dynamics reverse themselves, the sheet market will be the most challenging for the industry in the third quarter.  Accordingly, we expect third quarter results to be lower than second quarter, but by how much remains to be seen.  Those markets associated with residential and non-residential construction are not robust; however, they are stable and slowly improving.  Despite the challenges throughout this downturn, our combined construction-related businesses (steel mills and downstream facilities) have remained strong profit contributors.  We will provide quantitative earnings guidance later in the quarter.Nucor and affiliates are manufacturers of 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; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap.  Nucor is North America's largest recycler.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) 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) market demand for steel products; (3) energy costs and availability; and (4) competitive pressure on sales and pricing, including competition from imports and substitute materials.  These and other factors are outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2010 Annual Report on Form 10-K.  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.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 21, 2011 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 July 2, 2011July 3, 2010Percentage ChangeJuly 2, 2011July 3, 2010Percentage ChangeSteel mills production4,6674,648-9,8869,3606%Steel mills total shipments4,8644,5976%10,0649,3038%Sales tons to outside customers:Steel mills4,0523,9223%8,4707,9886%Joist7072-3%1371315%Deck7981-2%1511491%Cold finished12911710%26322815%Fabricated concretereinforcing steel2752663%4964608%Other9931,097-9%2,0592,096-2%5,5985,5551%11,57611,0525%CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)(In thousands, except per share data)  Three Months (13 Weeks) Ended    Six Months (26 Weeks) Ended  July 2, 2011July 3, 2010July 2, 2011July 3, 2010Net sales$ 5,107,809$ 4,195,966$ 9,941,743$ 7,850,808Costs, expenses and other:  Cost of products sold4,441,5913,887,9298,837,1167,329,976  Marketing, administrative and other expenses147,014107,770272,392200,364  Equity in losses (income) ofunconsolidated affiliates(1,267)7,3722,94325,749  Interest expense, net43,18437,32285,75075,1104,630,5224,040,3939,198,2017,631,199Earnings before income taxes andnoncontrolling interests477,287155,573743,542219,609Provision for income taxes155,70949,355240,84272,197Net earnings321,578106,218502,700147,412Earnings attributable tononcontrolling interests21,80515,22643,08625,456Net earnings attributable to Nucor stockholders$    299,773$      90,992$    459,614$    121,956Net earnings per share:  Basic$0.94$0.29$1.45$0.38  Diluted$0.94$0.29$1.44$0.38Average shares outstanding:  Basic316,811315,849316,702315,653  Diluted317,022316,472316,948316,349CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) July 2, 2011Dec. 31, 2010 ASSETS Current assets: Cash and cash equivalents $   1,189,544$   1,325,406 Short-term investments 1,092,6841,153,623 Accounts receivable, net 1,837,1751,439,828 Inventories, net 2,222,1671,557,574 Other current assets 374,925384,744 Total current assets 6,716,4955,861,175 Property, plant and equipment, net 3,804,5743,852,118 Restricted cash 576,557598,482 Goodwill 1,845,9481,836,294 Other intangible assets, net 826,789856,125 Other assets 963,186917,716 Total assets $ 14,733,549$ 13,921,910 LIABILITIES Current liabilities: Short-term debt $        14,673$        13,328 Accounts payable 1,143,536896,703 Federal income taxes payable 85,396- Salaries, wages and related accruals 294,583207,168 Accrued expenses and other current liabilities 464,497387,239 Total current liabilities 2,002,6851,504,438 Long-term debt due after one year 4,280,2004,280,200 Deferred credits and other liabilities 775,273806,578 Total liabilities 7,058,1586,591,216 EQUITY Nucor stockholders' equity: Common stock 150,405150,181 Additional paid-in capital 1,735,3001,711,518 Retained earnings 7,024,8306,795,988 Accumulated other comprehensive income (loss), net of income taxes 60,422(27,776) Treasury stock (1,506,009)(1,509,841) Total Nucor stockholders' equity 7,464,9487,120,070 Noncontrolling interests 210,443210,624 Total equity 7,675,3917,330,694 Total liabilities and equity $ 14,733,549$ 13,921,910CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Six Months (26 Weeks) EndedJuly 2, 2011July 3, 2010Operating activities:Net earnings $    502,700$    147,412Adjustments:Depreciation256,059255,262Amortization34,68035,855Stock-based compensation31,53125,246Deferred income taxes(22,885)4,178Equity in losses of unconsolidated affiliates2,94325,749Changes in assets and liabilities (exclusive of acquisitions):Accounts receivable(392,950)(290,542)Inventories(661,337)(628,941)Accounts payable245,572178,286Federal income taxes136,985(19,886)Salaries, wages and related accruals90,36672,791Other69,058(99,169)Cash provided by (used in) operating activities292,722(293,759)Investing activities:Capital expenditures(212,893)(163,219)Investment in and advances to affiliates(49,839)(402,391)Repayment of advances to affiliates-48,885Disposition of plant and equipment18,40915,522Acquisitions (net of cash acquired)-(63,722)Purchases of investments(141,461)(240,495)Proceeds from the sale of investments202,400125,000Changes in restricted cash21,949-Cash used in investing activities(161,435)(680,420)Financing activities:Net change in short-term debt1,357852Repayment of long-term debt-(6,000)Issuance of common stock3,2061,777Excess tax benefits from stock-based compensation(200)(2,200)Distributions to noncontrolling interests(43,272)(10,511)Cash dividends(230,561)(228,465)Cash used in financing activities (269,470)(244,547)Effect of exchange rate changes on cash2,3213,249Decrease in cash and cash equivalents(135,862)(1,215,477)Cash and cash equivalents - beginning of year1,325,4062,016,981Cash and cash equivalents - end of six months$ 1,189,544$    801,504SOURCE Nucor CorporationFor further information: Nucor Executive Offices, +1-704-366-7000, or fax, +1-704-362-4208