Nucor Reports Results for Third Quarter and First Nine Months of 2010

Oct 21, 2010, 09:00 ET from Nucor Corporation

CHARLOTTE, N.C., Oct. 21 /PRNewswire-FirstCall/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $23.5 million, or $0.07 per diluted share, for the third quarter of 2010. By comparison, Nucor reported net earnings of $91.0 million, or $0.29 per diluted share, in the second quarter of 2010 and a net loss of $29.5 million, or $0.10 per diluted share, in the third quarter of 2009.

In the first nine months of 2010, Nucor reported consolidated net earnings of $145.5 million, or $0.46 per diluted share, compared with a net loss of $352.5 million, or $1.12 per diluted share, in the first nine months of 2009.

In the third quarter of 2010, Nucor's consolidated net sales decreased 1% to $4.14 billion compared with $4.20 billion in the second quarter of 2010 and increased 33% compared with $3.12 billion in the third quarter of 2009.  Average sales price per ton decreased 3% from the second quarter of 2010 and increased 20% over the third quarter of 2009.  Total tons shipped to outside customers were 5,633,000 tons in the third quarter of 2010, an increase of 1% over the second quarter of 2010 and an increase of 10% over the third quarter of 2009.  Total third quarter steel mill shipments increased 9% over the third quarter of 2009 and increased 2% over the second quarter of 2010.  Third quarter downstream steel products shipments to outside customers increased 13% over the third quarter of 2009 and 5% over the second quarter of 2010.

In the first nine months of 2010, Nucor's consolidated net sales increased 45% to $11.99 billion, compared with $8.25 billion in last year's first nine months.  Average sales price per ton increased 13% while total tons shipped to outside customers increased 29% over the first nine months of 2009.

The average scrap and scrap substitute cost per ton used in the third quarter of 2010 was $354, a decrease of 5% compared with $373 in the second quarter of 2010 and an increase of 18% over $299 in the third quarter of 2009.  The average scrap and scrap substitute cost per ton used in the first nine months of 2010 increased 12% to $348 compared to $312 in the first nine months of 2009.  

Nucor recorded a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $50 million in the third quarter of 2010, compared with a charge of $67 million in the second quarter of 2010 and a credit of $120 million in the third quarter of 2009.  In the first nine months of 2010, the LIFO charge was $141 million compared to a credit of $350 million in the first nine months of 2009.  The third quarter LIFO charge was less than anticipated at the time we gave our quantitative guidance.

Overall operating rates at our steel mills in the third quarter (68%) were down from the second quarter (71%) and were flat compared to the third quarter of last year.  Steel mill utilization increased from 53% in the first nine months of 2009 to 71% in the first nine months of 2010.

Total energy costs increased approximately $4 per ton from the second quarter of 2010 and from the third quarter of 2009 primarily due to higher electricity unit costs.  During the first nine months of 2010, total energy costs decreased $4 per ton compared with the first nine months of 2009 primarily due to an increase in production.  

Pre-operating and start-up costs of new facilities decreased from $47.1 million in the third quarter of 2009 to $41.9 million in the third quarter of 2010 and increased from $111.9 million in the first nine months of 2009 to $135.8 million in the first nine months of 2010.  In 2010, these costs primarily related to the special bar quality ("SBQ") mill in Memphis, Tennessee, and the galvanizing line in Decatur, Alabama.

In September, Nucor issued $600 million in debt maturing in 2022 with an interest rate of 4.125%. Our liquidity position remains strong with $2.01 billion in cash and cash equivalents and short-term investments and an undrawn $1.3 billion revolving credit facility that matures in November 2012.

In September, Nucor's board of directors declared a cash dividend of $0.36 per share payable on November 11, 2010 to stockholders of record on September 30, 2010.  This dividend is Nucor's 150th consecutive quarterly cash dividend, a record we expect to continue.

Also in September, Nucor announced the selection of St. James Parish, Louisiana, for the construction of a planned $750 million iron making facility, subject to receipt of all requisite environmental permits.  The 2,500,000 tons-per-year iron making facility will use direct reduction technology to convert natural gas and iron ore pellets into high quality direct reduced iron ("DRI") used by Nucor's steel mills, along with recycled scrap, in producing numerous high quality steel products such as sheet, plate and SBQ steel.  The DRI facility is the first phase of a multi-phase plan that may include an additional DRI facility, coke plant, blast furnace, pellet plant and steel mill.

Operating results excluding LIFO deteriorated from the second quarter, primarily due to lower margins stemming from lower realized selling prices on most steel mill products.  This performance is consistent with our comments at the end of the second quarter in which we noted that there was a general slowdown taking place across all product lines.  The economy has entered into a period of increased uncertainty, both in the U.S. and globally.  The fourth quarter may indeed turn out to be the most challenging quarter of the year.  The most challenging markets for our products continue to be those associated with residential and non-residential construction, which continue to show little, if any, strength.  This is true for our downstream businesses, particularly rebar fabrication where pricing has continued to deteriorate because of extremely weak demand.  It is also true for our sheet and plate mills, which compete in an over-supplied market that has been further pressured by recent new sheet capacity.  We will provide additional and more quantitative earnings guidance after the midpoint between our quarterly earnings releases.

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" 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; (4) competitive pressure on sales and pricing, including competition from imports and substitute materials; and (5) capital investments and their impact on our performance.  These and other factors are outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2009 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 21, 2010 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. 2, 2010

Oct. 3, 2009

Percentage Change

Oct. 2, 2010

Oct. 3, 2009

Percentage Change

Steel mills production

4,426

4,433

-

13,786

10,276

34%

Steel mills total shipments

4,702

4,312

9%

14,005

10,119

38%

Sales tons to outside customers:

Steel mills

3,993

3,705

8%

11,981

8,707

38%

Joist

71

69

3%

202

194

4%

Deck

81

84

-4%

230

232

-1%

Cold finished

123

87

41%

351

243

44%

Fabricated concrete

reinforcing steel

291

280

4%

751

743

1%

Other

1,074

889

21%

3,170

2,819

12%

5,633

5,114

10%

16,685

12,938

29%

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)

 Three Months (13 Weeks) Ended  

 Nine Months (39 Weeks) Ended  

Oct. 2, 2010

Oct. 3, 2009

Oct. 2, 2010

Oct. 3, 2009

Net sales

$4,140,069

$3,120,005

$11,990,877

$8,252,352

Costs, expenses and other:

 Cost of products sold

3,949,779

3,000,851

11,279,755

8,319,079

 Marketing, administrative and other expenses

88,866

96,280

289,230

268,783

 Equity in losses of unconsolidated affiliates

5,732

9,633

31,481

69,431

 Interest expense, net

37,686

34,725

112,796

99,047

4,082,063

3,141,489

11,713,262

8,756,340

Earnings (loss) before income taxes and

noncontrolling interests

58,006

(21,484)

277,615

(503,988)

Provision for (benefit from) income taxes

7,982

(16,173)

80,179

(180,383)

Net earnings (loss)

50,024

(5,311)

197,436

(323,605)

Earnings attributable to

noncontrolling interests

26,529

24,227

51,985

28,915

Net earnings (loss) attributable to

Nucor stockholders

$     23,495

$    (29,538)

$     145,451

$  (352,520)

Net earnings (loss) per share:

 Basic

$0.07

($0.10)

$0.46

($1.12)

 Diluted

$0.07

($0.10)

$0.46

($1.12)

Average shares outstanding:

 Basic

316,223

315,173

315,842

314,743

 Diluted

316,756

315,173

316,483

314,743

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

Oct. 2, 2010

Dec. 31, 2009

ASSETS

Current assets:

Cash and cash equivalents

$        1,850,093

$        2,016,981

Short-term investments

156,495

225,000

Accounts receivable, net

1,468,676

1,116,035

Inventories, net

1,649,605

1,312,903

Other current assets

636,244

511,329

Total current assets

5,761,113

5,182,248

Property, plant and equipment, net

3,847,931

4,013,836

Goodwill

1,831,685

1,803,021

Other intangible assets, net

870,636

902,922

Other assets

949,560

669,877

Total assets

$      13,260,925

$      12,571,904

LIABILITIES

Current liabilities:

Short-term debt

$               3,092

$               1,748

Long-term debt due within one year

-

6,000

Accounts payable

817,785

707,038

Salaries, wages and related accruals

236,505

154,997

Accrued expenses and other current liabilities

420,883

357,274

Total current liabilities

1,478,265

1,227,057

Long-term debt due after one year

3,680,200

3,080,200

Deferred credits and other liabilities

672,111

680,358

Total liabilities

5,830,576

4,987,615

EQUITY

Nucor stockholders' equity:

Common stock

150,158

149,877

Additional paid-in capital

1,701,921

1,675,777

Retained earnings

6,922,580

7,120,218

Accumulated other comprehensive loss,

net of income taxes

(37,356)

(41,056)

Treasury stock

(1,509,986)

(1,514,290)

Total Nucor stockholders' equity

7,227,317

7,390,526

Noncontrolling interests

203,032

193,763

Total equity

7,430,349

7,584,289

Total liabilities and equity

$      13,260,925

$      12,571,904

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

Nine Months (39 Weeks) Ended

Oct. 2, 2010

Oct. 3, 2009

Operating activities:

Net earnings (loss)

$    197,436

$   (323,605)

Adjustments:

Depreciation

385,107

367,966

Amortization

53,378

54,138

Stock-based compensation

34,115

43,460

Deferred income taxes

30,150

51,104

Equity in losses of unconsolidated affiliates

31,481

69,431

Changes in assets and liabilities (exclusive of acquisitions):

Accounts receivable

(340,933)

92,210

Inventories

(325,549)

1,113,104

Accounts payable

107,902

212,291

Federal income taxes

(48,024)

(381,153)

Salaries, wages and related accruals

86,315

(366,261)

Other

4,863

17,575

Cash provided by operating activities

216,241

950,260

Investing activities:

Capital expenditures

(238,330)

(316,024)

Investment in and advances to affiliates

(427,788)

(60,295)

Repayment of advances to affiliates

48,885

-

Disposition of plant and equipment

18,998

10,486

Acquisitions (net of cash acquired)

(64,885)

(24,714)

Purchases of investments

(240,495)

(261,389)

Proceeds from the sale of investments

309,000

-

Cash used in investing activities

(594,615)

(651,936)

Financing activities:

Net change in short-term debt

1,343

(5,222)

Repayment of long-term debt

(6,000)

(180,400)

Proceeds from issuance of long-term debt, net of discount

598,992

-

Debt issuance costs

(4,050)

-

Issuance of common stock

3,648

3,556

Excess tax benefits from stock-based compensation

(1,500)

(3,200)

Distributions to noncontrolling interests

(42,723)

(186,104)

Cash dividends

(342,863)

(332,096)

Cash provided by (used in) financing activities

206,847

(703,466)

Effect of exchange rate changes on cash

4,639

7,683

Decrease in cash and cash equivalents

(166,888)

(397,459)

Cash and cash equivalents - beginning of year

2,016,981

2,355,130

Cash and cash equivalents - end of nine months

$ 1,850,093

$ 1,957,671

SOURCE Nucor Corporation



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