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Press release from PR Newswire

Nucor Reports Results for Third Quarter and First Nine Months of 2011

Thursday, October 20, 2011

Nucor Reports Results for Third Quarter and First Nine Months of 201109:00 EDT Thursday, October 20, 2011CHARLOTTE, N.C., Oct. 20, 2011 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $181.5 million, or $0.57 per diluted share, for the third quarter of 2011. By comparison, Nucor reported net earnings of $23.5 million, or $0.07 per diluted share, in the third quarter of 2010 and net earnings of $299.8 million, or $0.94 per diluted share, in the second quarter of 2011.In the first nine months of 2011, Nucor reported consolidated net earnings of $641.1 million, or $2.02 per diluted share, compared with net earnings of $145.5 million, or $0.46 per diluted share, in the first nine months of 2010, an increase of 340%. Nucor incurred a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $28.0 million ($0.05 per diluted share) in the third quarter of 2011, compared with a charge of $32.0 million ($0.06 per diluted share) in the second quarter of 2011 and a charge of $50.0 million ($0.10 per diluted share) in the third quarter of 2010.  The LIFO charge in the first nine months of 2011 was $91.0 million ($0.17 per diluted share) compared to a charge of $141.0 million ($0.28 per diluted share) in the first nine months of 2010.Pre-operating and start-up costs of new facilities were $17.0 million in the third quarter of 2011 compared to $31.4 million in the second quarter of 2011 and $41.9 million in the third quarter of 2010. For the nine-month period, pre-operating and start-up costs decreased from $135.8 million in 2010 to $76.3 million in 2011.  The decrease in pre-operating and start-up costs was due to several projects coming out of start-up, including the special bar quality ("SBQ") mill in Memphis, Tennessee, the wire rod products mill in Kingman, Arizona, and the galvanizing line in Decatur, Alabama.Nucor's consolidated net sales increased 3% to $5.25 billion in the third quarter of 2011 compared to $5.11 billion in the second quarter of 2011 and increased 27% compared with $4.14 billion in the third quarter of 2010.  Average sales price per ton decreased less than 1% from the second quarter of 2011 and increased 24% over the third quarter of 2010.  Total tons shipped to outside customers were 5,785,000 tons in the third quarter of 2011, an increase of 3% over both the second quarter of 2011 and the third quarter of 2010.  Total third quarter steel mill shipments increased 9% over the third quarter of 2010 and increased 5% over the second quarter of 2011.  Third quarter downstream steel products shipments to outside customers increased 5% over the third quarter of 2010 and 7% over the second quarter of 2011.In the first nine months of 2011, Nucor's consolidated net sales increased 27% to $15.19 billion, compared with $11.99 billion in last year's first nine months.  Average sales price per ton increased 22% while total tons shipped to outside customers increased 4% over the first nine months of 2010.The average scrap and scrap substitute cost per ton used in the third quarter of 2011 was $449, an increase of 1% over $444 in the second quarter of 2011 and an increase of 27% over $354 in the third quarter of 2010.  The average scrap and scrap substitute cost per ton used increased 26% from $348 in the first nine months of 2010 to $439 in the first nine months of 2011.    Overall operating rates at our steel mills in the third quarter (74%) increased from the second quarter (71%) and third quarter of last year (68%).  Steel mill utilization increased from 71% in the first nine months of 2010 to 75% in the first nine months of 2011.Total energy costs increased approximately $3 per ton over both the second quarter of 2011 and the third quarter of 2010 primarily due to higher electricity unit costs.  During the first nine months of 2011, total energy costs increased $1 per ton compared with the first nine months of 2010 also due to higher electricity unit costs.  Construction, primarily infrastructure, is continuing on our 2,500,000-ton direct reduced iron ("DRI") facility in Louisiana. 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 $3.02 billion in cash and cash equivalents, short-term investments, and restricted cash and investments, and an untapped $1.3 billion revolving credit facility that matures in November 2012. In September, Nucor's board of directors declared a cash dividend of $0.3625 per share payable on November 11, 2011 to stockholders of record on September 30, 2011.  This dividend is Nucor's 154th consecutive quarterly cash dividend, a record we expect to continue. While third quarter earnings of $0.57 per share were, as we expected, below the level achieved in the second quarter of 2011, they remain well ahead of 2010 levels of $0.07 per share.  This deterioration from the second quarter reflects lower steel prices and significantly lower metal margins for sheet mill products due to increases in the supply/demand imbalances from both new domestic supply and increased imports.  We continue to benefit from our diversified product mix as our other steel mills delivered a solid improvement quarter over quarter.  Scrap prices remained relatively high and stable in the third quarter.  This price stability, combined with generally low service center inventories, has minimized volatility in order rates and pricing in our long product business. End markets such as automotive, heavy equipment, energy and general manufacturing have continued to show the most strength compared to 2010 but have shown very little improvement compared to the first half of 2011.  Although we have seen only minimal improvement in non-residential construction markets and expect to see only slight improvement in demand through the end of 2011, our combined construction businesses (steel mills and downstream facilities) will continue to operate profitably.  We expect further margin compression in the sheet market in the fourth quarter.  We also expect a smaller compression in plate margins due to imports.  As a result, we expect our overall earnings to be lower than the third quarter.  The magnitude of margin compression will be favorably impacted by expected lower scrap costs through the quarter.  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 third quarter results on October 20, 2011 at 2:00 p.m. eastern time.  The conference call will be available over the Internet at www.nucor.com, under Investor Relations.  Unaudited figures are as follows:TONNAGE DATA (in thousands) Three Months (13 Weeks) Ended Nine Months (39 Weeks) Ended Oct. 1, 2011Oct. 2, 2010Percentage ChangeOct. 1, 2011Oct. 2, 2010Percentage ChangeSteel mills production4,9104,42611%14,79613,7867%Steel mills total shipments5,1284,7029%15,19214,0058%Sales tons to outside customers:Steel mills4,1943,9935%12,66411,9816%Joist827115%2192028%Deck83812%2342302%Cold finished118123-4%3813519%Fabricated concretereinforcing steel3122917%8087518%Other9961,074-7%3,0553,170-4%5,7855,6333%17,36116,6854%CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)(In thousands, except per share data)  Three Months (13 Weeks) Ended    Nine Months (39 Weeks) Ended  Oct. 1, 2011Oct. 2, 2010Oct. 1, 2011Oct. 2, 2010Net sales$           5,252,144$           4,140,069$            15,193,887$      11,990,877Costs, expenses and other:  Cost of products sold4,776,2833,949,77913,613,39911,279,755  Marketing, administrative and other expenses140,20688,866412,598289,230  Equity in losses of unconsolidated affiliates11,2475,73214,19031,481  Interest expense, net40,19337,686125,943112,7964,967,9294,082,06314,166,13011,713,262Earnings before income taxes and  noncontrolling interests284,21558,0061,027,757277,615Provision for income taxes84,1047,982324,94680,179Net earnings 200,11150,024702,811197,436Earnings attributable to  noncontrolling interests18,59326,52961,67951,985Net earnings attributable to  Nucor stockholders$              181,518$                23,495$                 641,132$           145,451Net earnings per share:  Basic$0.57$0.07$2.02$0.46  Diluted$0.57$0.07$2.02$0.46Average shares outstanding:  Basic317,194316,223316,866315,842  Diluted317,287316,756317,061316,483CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) Oct. 1, 2011Dec. 31, 2010 ASSETS Current assets: Cash and cash equivalents $        1,101,437$        1,325,406 Short-term investments 1,312,5511,153,623 Accounts receivable, net 1,838,1261,439,828 Inventories, net 2,188,8281,557,574 Other current assets 452,954384,744 Total current assets 6,893,8965,861,175 Property, plant and equipment, net 3,766,6433,852,118 Restricted cash and investments 607,721598,482 Goodwill 1,830,3381,836,294 Other intangible assets, net 802,086856,125 Other assets 906,581917,716 Total assets $      14,807,265$      13,921,910 LIABILITIES Current liabilities: Short-term debt $               7,624$             13,328 Long-term debt due within one year 350,000- Accounts payable 1,175,195896,703 Salaries, wages and related accruals 344,511207,168 Accrued expenses and other current liabilities 480,755387,239 Total current liabilities 2,358,0851,504,438 Long-term debt due after one year 3,930,2004,280,200 Deferred credits and other liabilities 839,799806,578 Total liabilities 7,128,0846,591,216 EQUITY Nucor stockholders' equity: Common stock 150,480150,181 Additional paid-in capital 1,748,7321,711,518 Retained earnings 7,090,8366,795,988 Accumulated other comprehensive loss, net of income taxes (21,599)(27,776) Treasury stock (1,505,713)(1,509,841) Total Nucor stockholders' equity 7,462,7367,120,070 Noncontrolling interests 216,445210,624 Total equity 7,679,1817,330,694 Total liabilities and equity $      14,807,265$      13,921,910CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months (39 Weeks) EndedOct. 1, 2011Oct. 2, 2010Operating activities:Net earnings $               702,811$               197,436Adjustments:Depreciation391,847385,107Amortization51,67553,378Stock-based compensation40,32334,115Deferred income taxes40,85530,150Equity in losses of unconsolidated affiliates14,19031,481Changes in assets and liabilities (exclusive of acquisitions):Accounts receivable(401,237)(340,933)Inventories(634,048)(325,549)Accounts payable280,545107,902Federal income taxes2,217(48,024)Salaries, wages and related accruals141,40786,315Other42,5594,863Cash provided by operating activities673,144216,241Investing activities:Capital expenditures(318,252)(238,330)Investment in and advances to affiliates(76,678)(427,788)Repayment of advances to affiliates15,00048,885Disposition of plant and equipment22,15518,998Acquisitions (net of cash acquired)-(64,885)Purchases of investments(614,982)(240,495)Proceeds from the sale of investments456,055309,000Purchases of restricted investments(564,994)-Proceeds from the sale of restricted investments18,299-Other changes in restricted cash and investments538,644-Cash used in investing activities(524,753)(594,615)Financing activities:Net change in short-term debt(5,646)1,343Repayment of long-term debt-(6,000)Proceeds from issuance of long-term debt, net of discount-598,992Debt issuance costs-(4,050)Issuance of common stock6,9573,648Excess tax benefits from stock-based compensation700(1,500)Distributions to noncontrolling interests(55,855)(42,723)Cash dividends(346,005)(342,863)Other financing activities30,000-Cash provided by (used in) financing activities (369,849)206,847Effect of exchange rate changes on cash(2,511)4,639Decrease in cash and cash equivalents(223,969)(166,888)Cash and cash equivalents - beginning of year1,325,4062,016,981Cash and cash equivalents - end of nine months$            1,101,437$            1,850,093SOURCE Nucor CorporationFor further information: Nucor Executive Offices, +1-704-366-7000, or fax, +1-704-362-4208