Nucor Reports Results For Second Quarter And First Half Of 2014

CHARLOTTE, N.C., July 24, 2014 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $147.0 million, or $0.46 per diluted share, for the second quarter of 2014. By comparison, Nucor reported net earnings of $111.0 million, or $0.35 per diluted share, in the first quarter of 2014 and net earnings of $85.1 million, or $0.27 per diluted share, in the second quarter of 2013. Second quarter of 2014 diluted net earnings per share of $0.46 was above our guidance range of $0.35 to $0.40 per diluted share due to better than forecasted performance in the steel mills segment.

In the first half of 2014, Nucor reported consolidated net earnings of $258.1 million, or $0.80 per diluted share, compared with consolidated net earnings of $169.9 million, or $0.53 per diluted share, in the first half of last year. 

Nucor's results include no charge to value inventories using the last-in, first-out (LIFO) method of accounting in the second quarter of 2014, compared with a charge of $14.5 million ($0.03 per diluted share) recorded in the first quarter of 2014 and no charge in the second quarter of 2013.  As a result, the LIFO charge in the first half of 2014 was $14.5 million ($0.03 per diluted share), compared with a charge of $18.0 million ($0.03 per diluted share) in the first half of 2013. The second quarter of 2014 included $20.3 million ($0.04 per diluted share) of higher employee stock-based compensation expense than the first quarter of 2014 and was comparable to the second quarter of 2013 due to the timing of annual grants that are typically authorized in June of each year. Included in the first quarter of 2014 earnings was a $12.8 million ($0.04 per diluted share) charge primarily related to tax legislation changes in the state of New York. Also included in first quarter results was a $9.0 million charge ($0.02 per diluted share) related to the disposal of assets within the steel mills segment.

Nucor's consolidated net sales increased 4% to $5.29 billion in the second quarter of 2014 compared with $5.11 billion in the first quarter of 2014 and increased 13% compared with $4.67 billion in the second quarter of 2013. Average sales price per ton increased 1% over the first quarter of 2014 and increased 4% over the second quarter of 2013. Total tons shipped to outside customers were 6,370,000 tons in the second quarter of 2014, a 3% increase over the first quarter of 2014 and an increase of 9% over the second quarter of 2013.  Total second quarter steel mill shipments increased 1% over the first quarter of 2014 and 9% over the second quarter of 2013.  Second quarter downstream steel products shipments to outside customers increased 17% over the first quarter of 2014 and increased 11% over the second quarter of 2013.

In the first half of 2014, Nucor's consolidated net sales increased 13% to $10.40 billion, compared with $9.22 billion in last year's first half. Total tons shipped to outside customers increased 9% from the first half of 2013, while average sales price per ton increased 4%.

The average scrap and scrap substitute cost per ton used in the second quarter of 2014 was $384, a 4% decrease from $398 in the first quarter of 2014 and an increase of 2% over $377 in the second quarter of 2013. The average scrap and scrap substitute cost per ton used in the first half of 2014 was $391, an increase of 3% over $378 in the first half of 2013.

Overall operating rates at our steel mills increased to 79% in the second quarter of 2014 as compared with 75% in the first quarter of 2014 and 73% in the second quarter of 2013. Steel mill utilization increased to 77% in the first half of 2014 from 73% in the first half of 2013.

Total steel mill energy costs in the second quarter of 2014 decreased approximately $3 per ton compared with the first quarter of 2014 and increased $1 per ton over the second quarter of 2013. Energy costs for the first half of 2014 increased $3 per ton over the first half of 2013 due to increased natural gas and electricity unit costs.

Our liquidity position remains strong with $1.17 billion in cash and cash equivalents and short-term investments and an untapped $1.5 billion revolving credit facility that does not expire until August 2018.

In June, Nucor's board of directors declared a cash dividend of $0.37 per share payable on August 11, 2014 to stockholders of record on June 30, 2014. This dividend is Nucor's 165th consecutive quarterly cash dividend, a record we expect to continue.

Second quarter of 2014 earnings increased compared with the first quarter of 2014 due in large part to improved performance by the steel mills segment, particularly at our sheet and bar mills. Sheet steel profitability improved because of higher sales volumes and margin improvement due to continued strong demand and supply disruptions at some of our competitors.  Our bar mills also benefited from higher sales volumes and margin improvement.  Nucor-Yamato Steel underwent a planned three week outage in the second quarter which contributed to decreased volumes for structural steel. The improved results of the steel mills segment were achieved despite imports being at levels not seen since 2006. Our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) returned to solid profitability in the second quarter of 2014, reflecting improving conditions in the nonresidential construction markets.

The performance of our raw materials segment decreased in the second quarter of 2014 compared with the first quarter of 2014 due to an operating loss at our new direct reduced iron (DRI) plant in St. James Parish, Louisiana, which was consistent with our guidance. The Louisiana DRI plant underwent a three week outage in the second quarter to implement adjustments that will improve yield and conversion costs. The Louisiana DRI plant has continued to exceed our volume expectations while producing excellent quality DRI units. Also within the raw materials segment, The David J. Joseph Company experienced decreased profitability in the second quarter of 2014 compared to the first quarter of 2014 due to lower scrap selling prices.

We currently expect to see a stronger improvement in earnings for the third quarter of 2014.  Although non-residential construction markets remain at historically low levels, they are improving at a moderate pace.  We therefore expect further increased operating profits in our downstream products businesses.  Steel mill profitability is also expected to improve in the third quarter of 2014 as our Nucor-Yamato Steel division has no planned outage and sheet and plate margins continue to benefit from positive pricing trends.  We also expect improvement in the performance of the Louisiana DRI facility in the third quarter, with profitable performance anticipated by the end of the year. 

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 discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2013 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.

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 24, 2014 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 5, 2014


June 29, 2013


Percentage

Change


July 5, 2014


June 29, 2013


Percentage

Change

Steel mills production


5,324


4,892


9%


10,518


9,710


8%

Steel mills total shipments


5,477


5,025


9%


10,909


10,100


8%















Sales tons to outside customers:














Steel mills


4,646


4,274


9%


9,246


8,608


7%


Joist


97


91


7%


189


162


17%


Deck


101


83


22%


188


152


24%


Cold finished


133


124


7%


271


246


10%


Fabricated concrete














reinforcing steel


321


280


15%


560


508


10%


Other


1,072


987


9%


2,105


1,869


13%




6,370


5,839


9%


12,559


11,545


9%

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)










  Three Months (13 Weeks) Ended  


  Six Months (26 Weeks) Ended  










July 5, 2014


June 29, 2013


July 5, 2014


June 29, 2013









Net sales

$     5,291,075


$     4,665,588


$      10,399,519


$   9,216,360









Costs, expenses and other:








  Cost of products sold

4,875,208


4,352,463


9,606,450


8,600,019

  Marketing, administrative and other expenses

132,813


123,150


266,247


239,375

  Equity in earnings of








unconsolidated affiliates

(3,202)


(1,585)


(7,676)


(413)

  Interest expense, net

44,391


39,228


85,132


71,719


5,049,210


4,513,256


9,950,153


8,910,700

Earnings before income taxes and








noncontrolling interests

241,865


152,332


449,366


305,660

Provision for income taxes

74,930


46,062


152,735


88,662

Net earnings

166,935


106,270


296,631


216,998

Earnings attributable to








noncontrolling interests

19,894


21,125


38,559


47,064

Net earnings attributable to 








Nucor stockholders

$        147,041


$          85,145


$          258,072


$      169,934









Net earnings per share:








  Basic

$0.46


$0.27


$0.80


$0.53

  Diluted

$0.46


$0.27


$0.80


$0.53









Average shares outstanding:








  Basic

319,693


318,903


319,597


318,796

  Diluted

319,981


319,023


319,872


318,934

 

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

 (In thousands) 














July 5, 2014


Dec. 31, 2013

 ASSETS 






 Current assets: 






 Cash and cash equivalents 


$    1,067,561


$   1,483,252


 Short-term investments 


100,000


28,191


 Accounts receivable, net 


2,071,439


1,810,987


 Inventories, net 


2,738,658


2,605,609


 Other current assets 


517,132


482,007











 Total current assets 


6,494,790


6,410,046









 Property, plant and equipment, net 


4,971,813


4,917,024









 Goodwill 



1,971,452


1,973,608









 Other intangible assets, net 


842,445


874,154









 Other assets 


1,030,388


1,028,451











 Total assets 


$  15,310,888


$ 15,203,283









 LIABILITIES 





 Current liabilities: 






 Short-term debt 


$        42,414


$       29,202


 Long-term debt due within one year 


11,300


3,300


 Accounts payable 


1,124,077


1,117,078


 Salaries, wages and related accruals 


276,660


282,860


 Accrued expenses and other current liabilities 


562,775


527,776











 Total current liabilities 


2,017,226


1,960,216









 Long-term debt due after one year 


4,368,900


4,376,900









 Deferred credits and other liabilities 


978,749


955,889











 Total liabilities 


7,364,875


7,293,005









 EQUITY 






 Nucor stockholders' equity: 






 Common stock 


151,172


151,010


 Additional paid-in capital 


1,867,948


1,843,353


 Retained earnings 


7,160,952


7,140,440


 Accumulated other comprehensive (loss) income, 







 net of income taxes 


(3,952)


9,080


 Treasury stock 


(1,495,298)


(1,498,114)



 Total Nucor stockholders' equity 


7,680,822


7,645,769









 Noncontrolling interests 


265,191


264,509











 Total equity 


7,946,013


7,910,278











 Total liabilities and equity 


$  15,310,888


$ 15,203,283

















 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

 (In thousands) 
















Six Months (26 Weeks) Ended
















July 5, 2014


June 29, 2013










Operating activities:







Net earnings 



$               296,631


$               216,998


Adjustments:








Depreciation



326,429


258,390



Amortization



36,265


37,575



Stock-based compensation

33,752


34,043



Deferred income taxes


(5,121)


12,304



Distributions from affiliates

11,504


7,708



Equity in earnings of unconsolidated affiliates

(7,676)


(413)



Loss on assets


9,046


-



Changes in assets and liabilities (exclusive of






     acquisitions and dispositions):







Accounts receivable


(249,196)


(70,785)




Inventories


(130,463)


36,087




Accounts payable


90,460


(44,724)




Federal income taxes


14,100


3,709




Salaries, wages and related accruals

(1,672)


(35,332)




Other



19,270


29,414










Cash provided by operating activities

443,329


484,974










Investing activities:







Capital expenditures


(446,798)


(621,306)


Investment in and advances to affiliates

(68,491)


(43,485)


Repayment of advances to affiliates

15,000


30,500


Disposition of plant and equipment

12,858


10,145


Acquisitions (net of cash acquired)

(38,466)


-


Purchases of investments


(100,000)


(19,390)


Proceeds from the sale of investments

27,529


73,428


Proceeds from the sale of restricted investments

-


148,725


Changes in restricted cash


-


55,355










Cash used in investing activities


(598,368)


(366,028)










Financing activities:







Net change in short-term debt


13,212


1,796


Repayment of long-term debt


-


(250,000)


Excess tax benefits from stock-based compensation

2,700


1,700


Distributions to noncontrolling interests

(37,877)


(57,266)


Cash dividends



(237,369)


(235,280)


Other financing activities


(1,123)


109










Cash used in financing activities 


(260,457)


(538,941)










Effect of exchange rate changes on cash

(195)


(2,400)










Decrease in cash and cash equivalents

(415,691)


(422,395)










Cash and cash equivalents - beginning of year

1,483,252


1,052,862










Cash and cash equivalents - end of six months

$            1,067,561


$               630,467










Non-cash investing activity:






Change in accrued plant and equipment purchases

$               (96,023)


$               (20,537)

 

SOURCE Nucor Corporation



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