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Press release from PR Newswire

Nucor Reports Results For Second Quarter And First Half Of 2012

Thursday, July 19, 2012

Nucor Reports Results For Second Quarter And First Half Of 201209:00 EDT Thursday, July 19, 2012CHARLOTTE, N.C., July 19, 2012 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $112.3 million, or $0.35 per diluted share, for the second quarter of 2012. By comparison, Nucor reported net earnings of $145.1 million, or $0.46 per diluted share, in the first quarter of 2012 and net earnings of $299.8 million, or $0.94 per diluted share, in the second quarter of 2011.  In the first half of 2012, Nucor reported consolidated net earnings of $257.4 million, or $0.81 per diluted share, compared with consolidated net earnings of $459.6 million, or $1.44 per diluted share, in the first half of last year.In late June 2012, Nucor completed the acquisition of the entire equity interest in Skyline Steel LLC ("Skyline") and its subsidiaries for the purchase price of approximately $684 million including our most current working capital adjustment estimates.  Our second quarter results were negatively impacted by non-cash charges of $8.5 million, or $.02 per diluted share, which were not factored into our second quarter earnings guidance that was announced prior to the acquisition.  These charges include the impact of purchase accounting adjustments and the elimination of profit associated with our steel mills' sales to Skyline post-acquisition.  Based on our current projections, the costs associated with inventory-related purchase accounting adjustments will conclude in November 2012. Skyline is now a wholly owned subsidiary of Nucor Corporation and will maintain its main office in Parsippany, New Jersey.  It is a premier steel foundation distributor serving the U.S., Canada, Mexico and the Caribbean.  Skyline distributes products to service challenging applications including marine construction, bridge and highway construction, heavy civil construction, storm protection, underground commercial parking, and environment containment projects in the infrastructure and construction industries. The second quarter 2012 results also include a non-cash impairment charge related to our Duferdofin Nucor S.r.l. joint venture of $30.0 million, or $0.09 per diluted share.  Operating performance at Duferdofin Nucor has continued well below budgeted levels through the first half of 2012.  This trend, combined with the recently escalated economic and political turmoil in Europe, caused Nucor to conclude that Duferdofin Nucor had a triggering event requiring assessment for impairment in the second quarter.  The impairment charge reflects the impact on our fair value model of both deeper expected losses in the near term and a slower projected recovery to historic operating performance levels.Nucor recorded a credit to value inventories using the last-in, first-out (LIFO) method of accounting of $14.5 million ($0.03 per diluted share) in the second quarter of 2012, compared with a charge of $14.5 million ($0.03 per diluted share) in the first quarter of 2012 and a charge of $32.0 million ($0.06 per diluted share) in the second quarter of 2011.  As a result, there was no LIFO charge in the first half of 2012, compared with a charge of $63.0 million ($0.12 per diluted share) in the first half of 2011.  Nucor's consolidated net sales increased 1% to $5.10 billion in the second quarter of 2012 compared with $5.07 billion in the first quarter of 2012 and decreased slightly compared with $5.11 billion in the second quarter of 2011. Average sales price per ton increased slightly from the first quarter of 2012 and decreased 6% from the second quarter of 2011. Total tons shipped to outside customers were 5,925,000 tons in the second quarter of 2012, a slight increase from the first quarter of 2012 and an increase of 6% over the second quarter of 2011.  Total second quarter steel mill shipments increased 7%  over  the  second  quarter  of  2011 and  were  down  1%  from  the  first  quarter of  2012.  Second quarter downstream steel products shipments to outside customers increased 10% over the second quarter of 2011 and 19% over the first quarter of 2012.In the first half of 2012, Nucor's consolidated net sales increased 2% to $10.18 billion, compared with $9.94 billion in last year's first half. Total tons shipped to outside customers increased 2% over the first half of 2011, while average sales price per ton was unchanged.The average scrap and scrap substitute cost per ton used in the second quarter of 2012 was $427, a decrease of 4% from $445 in the first quarter of 2012 and a decrease of 4% from $444 in the second quarter of 2011. The average scrap and scrap substitute cost per ton used in the first half of 2012 was $436, an increase of 1% over $433 in the first half of 2011.Overall operating rates at our steel mills in the second quarter (76%) were down from the first quarter (79%) and increased from last year's second quarter (71%).  Steel mill utilization increased from 75% in the first half of 2011 to 77% in the first half of 2012.  Construction is going well on our 2,500,000-ton DRI facility in Louisiana. The majority of the equipment will arrive in 2012, and we are on schedule for completion of construction and beginning of start-up in mid-2013.Nucor-Yamato Steel Company, a joint venture between Nucor and Yamato Kogyo Co. Ltd., has approved an estimated $115 million plan to expand the production of hot rolled sheet piling. This project is expected to be completed at Nucor's steel mill in Blytheville, Arkansas, in early 2014. The project will add several new sheet piling sections, increasing the single sheet widths by 22% and providing a lighter stronger sheet covering more area at a lower installed cost. Our liquidity position remains strong with $2.17 billion in cash and cash equivalents, short-term investments, and restricted cash and investments and an untapped $1.5 billion revolving credit facility that matures in December 2016.In June, Nucor's board of directors declared a cash dividend of $0.365 per share payable on August 10, 2012 to stockholders of record on June 29, 2012.  This dividend is Nucor's 157th consecutive quarterly cash dividend, a record we expect to continue.Our second quarter performance reflected a balance of mixed trends resulting from our diverse steel and steel products portfolio.  Our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) are generally showing improving trends and we expect the profitability that they experienced in May and June to continue in the third quarter.  Our sheet mills experienced the most severe downward trend during the quarter with profitability in April 2012 that was more than double profits earned in June 2012.  The negative factors impacting our steel mills include an import surge across most products that began late in 2011 and continued through the first  half  of  2012, undercutting  seasonal pricing momentum that is normally experienced early in the year.  In addition, U.S. sheet steel markets have been negatively impacted by new domestic supply that began ramping up production in 2011, while a combination of political and economic uncertainty is beginning to affect steel buyer confidence for all products.  Lower scrap pricing has reduced the profitability of our scrap processing business.   We believe that this weakened scrap pricing trend bottomed in early July with a pick-up in scrap export activity, but only time will tell if the early July scrap pricing was a true bottom followed by stability.We currently expect to see a modest reduction in earnings exclusive of one?time charges for the third quarter of 2012.  Continued slow domestic growth, coupled with continued or worsening global economic uncertainty may both become increasing negative factors.  The construction market continues to be very challenging.  The two-year $60 billion per year extension of the highway bill is good news, but far short of the $400 billion per year needed for the next five to six years to rebuild our crumbling domestic infrastructure, according to the American Society of Civil Engineers' 2009 Report Card for America's Infrastructure.  Dan DiMicco, Nucor's Chairman and CEO, stated, "These are investments that must be made and will provide returns many times over during the next 50 years.  They must be started now as we are years behind, and we need the millions of jobs and economic growth that are proven to come with REAL infrastructure investments."We do see our third quarter results benefiting from lower scrap costs in transit and in inventory combined with the positive impact on steel mill customer buying patterns if scrap prices stabilize.  It is worth noting several positive factors for sheet steel that should drive favorable pricing momentum by the end of the third quarter. The positive factors include recent reductions in sheet steel imports and shuttered and reduced operating rates by newer domestic market entrants.  Markets such as automotive, heavy equipment, energy and general manufacturing remain improved, primarily benefiting demand for special bar quality, sheet and plate products.  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 piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; 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, 2011 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 19, 2012 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, 2012July 2, 2011Percentage ChangeJune 30, 2012July 2, 2011Percentage ChangeSteel mills production5,0614,6678%10,3209,8864%Steel mills total shipments5,2024,8647%10,43710,0644%Sales tons to outside customers:Steel mills4,2644,0525%8,6888,4703%Joist75707%1391371%Deck7679-4%141151-7%Cold finished1321292%2702633%Fabricated concretereinforcing steel32227517%57249615%Other1,0569936%2,0362,059-1%5,9255,5986%11,84611,5762%  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)(In thousands, except per share data)  Three Months (13 Weeks) Ended    Six Months (26 Weeks) Ended  June 30, 2012July 2, 2011June 30, 2012July 2, 2011Net sales$    5,104,199$5,107,809$  10,176,793$9,941,743Costs, expenses and other:  Cost of products sold4,704,2694,458,3599,396,3368,868,558  Marketing, administrative and other expenses112,528130,246219,647240,950  Equity in losses (earnings) ofunconsolidated affiliates158(1,267)6,8322,943  Impairment of non-current assets30,000-30,000-  Interest expense, net41,05143,18482,72385,7504,888,0064,630,5229,735,5389,198,201Earnings before income taxes andnoncontrolling interests216,193477,287441,255743,542Provision for income taxes76,626155,709138,276240,842Net earnings139,567321,578302,979502,700Earnings attributable tononcontrolling interests27,26821,80545,57643,086Net earnings attributable to Nucor stockholders$      112,299$   299,773$      257,403$   459,614Net earnings per share:  Basic$0.35$0.94$0.81$1.45  Diluted$0.35$0.94$0.81$1.44Average shares outstanding:  Basic317,975316,811317,832316,702  Diluted318,040317,022317,910316,948   CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  (In thousands) June 30, 2012Dec. 31, 2011 ASSETS  Current assets:  Cash and cash equivalents $    1,111,989$   1,200,645 Short-term investments 569,4211,362,641 Accounts receivable, net 1,919,4651,710,773 Inventories, net 2,406,1221,987,257 Other current assets 479,347446,765 Total current assets 6,486,3446,708,081 Property, plant and equipment, net 3,959,2793,755,604 Restricted cash and investments 491,640585,833 Goodwill 1,988,8741,830,661 Other intangible assets, net 990,224784,640 Other assets 850,205905,531 Total assets $  14,766,566$ 14,570,350 LIABILITIES  Current liabilities:  Short-term debt $          7,109$         1,826 Long-term debt due within one year 900,000650,000 Accounts payable 1,127,471958,645 Salaries, wages and related accruals 255,960333,341 Accrued expenses and other current liabilities 466,748452,247 Total current liabilities 2,757,2882,396,059 Long-term debt due after one year 3,380,2003,630,200 Deferred credits and other liabilities 846,519837,511 Total liabilities 6,984,0076,863,770 EQUITY  Nucor stockholders' equity:  Common stock 150,730150,496 Additional paid-in capital 1,794,4571,756,534 Retained earnings 7,135,7537,111,566 Accumulated other comprehensive loss,  net of income taxes (20,351)(38,177) Treasury stock (1,502,425)(1,505,534) Total Nucor stockholders' equity 7,558,1647,474,885 Noncontrolling interests 224,395231,695 Total equity 7,782,5597,706,580 Total liabilities and equity $  14,766,566$ 14,570,350   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)  (In thousands) Six Months (26 Weeks) EndedJune 30, 2012July 2, 2011Operating activities:Net earnings $       302,979$    502,700Adjustments:Depreciation260,968256,059Amortization33,12234,680Stock-based compensation37,31231,531Deferred income taxes(23,144)(22,885)Equity in losses of unconsolidated affiliates6,8322,943Impairment of non-current assets30,000-Changes in assets and liabilities (exclusive of acquisitions):Accounts receivable(76,245)(392,950)Inventories(152,494)(661,337)Accounts payable42,394245,572Federal income taxes3,364136,985Salaries, wages and related accruals(82,991)90,366Other64,38969,058Cash provided by operating activities446,486292,722Investing activities:Capital expenditures(383,448)(212,893)Investment in and advances to affiliates(57,771)(49,839)Repayment of advances to affiliates15,000-Disposition of plant and equipment21,02618,409Acquisitions (net of cash acquired)(746,410)-Purchases of investments(409,403)(141,461)Proceeds from the sale of investments1,200,153202,400Proceeds from the sale of restricted investments87,115-Changes in restricted cash7,07821,949Cash used in investing activities(266,660)(161,435)Financing activities:Net change in short-term debt5,2341,357Issuance of common stock6,1563,206Excess tax benefits from stock-based compensation3,877(200)Distributions to noncontrolling interests(52,812)(43,272)Cash dividends(232,766)(230,561)Other financing activities670-Cash used in financing activities (269,641)(269,470)Effect of exchange rate changes on cash1,1592,321Decrease in cash and cash equivalents(88,656)(135,862)Cash and cash equivalents - beginning of year1,200,6451,325,406Cash and cash equivalents - end of six months$    1,111,989$ 1,189,544SOURCE Nucor CorporationFor further information: Nucor Executive Offices, +1-704-366-7000, or fax, +1-704-362-4208