Nucor Reports Results for First Quarter of 2017

CHARLOTTE, N.C., April 20, 2017 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $356.9 million, or $1.11 per diluted share, for the first quarter of 2017. By comparison, Nucor reported net earnings of $159.6 million, or $0.50 per diluted share, for the fourth quarter of 2016 and net earnings of $87.6 million, or $0.27 per diluted share, for the first quarter of 2016.

Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the first quarters of 2017 and 2016 (in thousands):



Three Months (13 Weeks) Ended



April 1, 2017


April 2, 2016






Steel mills


$              684,161


$                    280,372

Steel products


26,922


42,367

Raw materials


26,391


(63,372)

Corporate/eliminations


(188,499)


(89,804)



$              548,975


$                    169,563

 

Included in the first quarter of 2017 results were inventory related purchase accounting charges of $9.8 million, or $0.02 per diluted share, associated with the recent acquisitions of Southland Tube and Republic Conduit. Included in the fourth quarter of 2016 results were the effects of a change in estimate related to the cost of certain inventories that resulted in a benefit of $77.6 million, or $0.16 per diluted share. Included in the first quarter of 2016 earnings were out-of-period non-cash gains totaling $13.4 million ($0.04 per diluted share) related to a noncontrolling interest adjustment and to tax adjustments.

Nucor's consolidated net sales increased 22% to $4.82 billion in the first quarter of 2017 from $3.96 billion in the fourth quarter of 2016 and increased 30% compared with $3.72 billion in the first quarter of 2016. Average sales price per ton in the first quarter of 2017 increased 8% compared to the fourth quarter of 2016 and increased 21% from the first quarter of 2016. Total tons shipped to outside customers were 6,584,000 tons in the first quarter of 2017, a 13% increase from the fourth quarter of 2016 and a 7% increase from the first quarter of 2016. Total steel mill shipments in the first quarter of 2017 increased 19% from the fourth quarter of 2016 and increased 9% from the first quarter of 2016. Downstream steel products shipments to outside customers in the first quarter of 2017 decreased 3% from the fourth quarter of 2016 and increased 3% from the first quarter of 2016.

The average scrap and scrap substitute cost per ton used during the first quarter of 2017 was $284, an increase of 20% from $236 in the fourth quarter of 2016 and an increase of 47% compared to $193 in the first quarter of 2016.

Overall operating rates at our steel mills increased to 89% in the first quarter of 2017 as compared to 74% in the fourth quarter of 2016 and 80% in the first quarter of 2016.

Total steel mill energy costs in the first quarter of 2017 decreased approximately $1 per ton compared to the fourth quarter of 2016 and increased approximately $1 per ton compared to the first quarter of 2016.

Our liquidity position remains strong with $1.7 billion in cash and cash equivalents and short-term investments, as of April 1, 2017, and an untapped $1.5 billion revolving credit facility that does not expire until April 2021.

In February 2017, Nucor's board of directors declared a cash dividend of $0.3775 per share payable on May 11, 2017 to stockholders of record on March 31, 2017. This dividend is Nucor's 176th consecutive quarterly cash dividend, a record we expect to continue.

In March 2017, Nucor announced an investment of $85 million to upgrade the rolling mill at its steel bar mill in Marion, Ohio in order to maintain a cost competitive position by reducing operating costs.

Imports continue to impact the U.S. steel industry. Important trade cases in cut-to-length plate, steel concrete reinforcing bar (rebar) and steel wire rod are in progress, which are helping to stop the flood of dumped and subsidized products from foreign producers, and are making sure that we can compete on a level-playing field. In the cut-to-length plate cases filed against twelve countries in April 2016, the U.S. Department of Commerce has now announced affirmative final determinations on dumped and subsidized imports from all twelve countries. The U.S. International Trade Commission has also voted unanimously that the domestic industry is being injured by dumped and subsidized plate imports from China, Brazil, Turkey and South Africa.  The remaining votes in the plate cases are expected in the coming weeks.  In February 2017, the U.S. Department of Commerce announced preliminary antidumping duties on rebar imports from Japan, Taiwan, and Turkey, and preliminary countervailing duties on rebar imports from Turkey. We expect the rebar case to conclude later this year. In March 2017, we filed a new trade case to address the flood of dumped and subsidized steel wire rod imports from ten countries. The wire rod case is in the preliminary phase.

As expected, earnings in the first quarter of 2017 increased significantly compared to the fourth quarter of 2016 primarily due to the performance of our steel mills segment. The increased profitability of the steel mills segment was driven by the improved performance of our sheet, bar and plate mills. The profitability of the steel products segment in the first quarter of 2017 decreased compared to the fourth quarter of 2016 due to typical seasonality. The performance of the raw materials segment improved from the fourth quarter of 2016 due to the much improved performance of our scrap processing and brokerage operations as well as our direct reduced iron (DRI) facility in Trinidad.

Earnings in the first quarter of 2017 were the highest Nucor has had in recent years, and we expect earnings in the second quarter of 2017 to improve compared to the first quarter of 2017. Performance of the steel mills segment is expected to improve in the second quarter of 2017 as compared to the first quarter of 2017 as metal margins are expected to expand at our sheet mills due to the delayed impact of contract pricing. Our plate mills are anticipated to realize the full benefit of higher margins throughout the entire quarter. We expect increased profitability for our downstream products segment in the second quarter of 2017 as compared to the first quarter of 2017 due to seasonal factors as improving weather conditions benefit nonresidential construction markets. The performance of the raw materials segment is expected to improve in the second quarter of 2017 as compared to the first quarter of 2017 due to the improved profitability of our DRI facilities. We also expect intercompany profit eliminations to have a smaller relative impact in the second quarter of 2017.  We continue to be encouraged by the renewed growth in demand we are seeing in the energy markets and the nonresidential construction markets. The automotive markets remain strong.

In the fourth quarter of 2016, the Company changed its method of accounting for certain inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method which required retrospective application to prior period financial statements. Accordingly, all amounts for prior periods presented in this release are presented after the retrospective application of the change in accounting principle.

Nucor and its 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; hollow structural section tubing; electrical conduit; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating; 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) competitive pressure on sales and pricing, including competition from imports and substitute materials; (2) 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; (3) market demand for steel products; and (4) energy costs and availability.  These and other factors are discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's fiscal 2016 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 first quarter results on April 20, 2017 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 




April 1, 2017


April 2, 2016


Percentage
Change

Steel mills total shipments








Sheet 


2,705


2,568


5%


Tubular products


223


-




Bars


1,957


1,748


12%


Structural


611


601


2%


Plate


577


554


4%


Other


74


176


-58%




6,147


5,647


9%









Sales tons to outside customers:








Steel mills


5,202


4,899


6%


Joist


101


98


3%


Deck


106


101


5%


Cold finished


122


119


3%


Fabricated concrete








reinforcing steel


247


242


2%


Other


806


689


17%




6,584


6,148


7%

 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)






  Three Months (13 Weeks) Ended  






April 1, 2017


April 2, 2016





Net sales

$   4,815,179


$         3,715,576





Costs, expenses and other:




  Cost of products sold

4,054,929


3,400,591

  Marketing, administrative and other expenses

176,426


109,745

  Equity in earnings of unconsolidated affiliates

(8,756)


(9,245)

  Interest expense, net

43,605


44,922


4,266,204


3,546,013

Earnings before income taxes and




noncontrolling interests

548,975


169,563

Provision for income taxes

171,327


47,066

Net earnings

377,648


122,497

Earnings attributable to




noncontrolling interests

20,749


34,932

Net earnings attributable to 




Nucor stockholders

$       356,899


$               87,565





Net earnings per share:




  Basic

$1.11


$0.27

  Diluted

$1.11


$0.27





Average shares outstanding:




  Basic

320,224


319,240

  Diluted

321,146


319,294

 

 

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

 (In thousands) 














April 1, 2017


Dec. 31, 2016

 ASSETS 






 Current assets: 






 Cash and cash equivalents 


$      1,657,759


$     2,045,961


 Short-term investments 


50,000


150,000


 Accounts receivable, net 


1,980,556


1,631,676


 Inventories, net 


3,064,170


2,479,958


 Other current assets 


125,708


198,798











 Total current assets 


6,878,193


6,506,393









 Property, plant and equipment, net 


5,133,404


5,078,650









 Goodwill 



2,177,276


2,052,728









 Other intangible assets, net 


969,492


866,835









 Other assets 


717,095


718,912











 Total assets 


$    15,875,460


$   15,223,518









 LIABILITIES 






 Current liabilities: 






 Short-term debt 


$            48,153


$           17,959


 Long-term debt due within one year 


600,000


600,000


 Accounts payable 


1,257,900


838,109


 Federal income taxes payable 


76,755


-


 Salaries, wages and related accruals 


325,981


428,829


 Accrued expenses and other current liabilities 


529,007


505,069











 Total current liabilities 


2,837,796


2,389,966









 Long-term debt due after one year 


3,739,908


3,739,141









 Deferred credits and other liabilities 


829,685


839,703











 Total liabilities 


7,407,389


6,968,810









 EQUITY 






 Nucor stockholders' equity: 






 Common stock 


151,775


151,734


 Additional paid-in capital 


1,986,983


1,974,672


 Retained earnings 


7,866,405


7,630,916


 Accumulated other comprehensive loss, 







 net of income taxes 


(316,992)


(317,843)


 Treasury stock 


(1,554,148)


(1,559,614)



 Total Nucor stockholders' equity 


8,134,023


7,879,865









 Noncontrolling interests 


334,048


374,843











 Total equity 


8,468,071


8,254,708











 Total liabilities and equity 


$    15,875,460


$   15,223,518

 

 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

 (In thousands) 
















Three Months (13 Weeks) Ended
















April 1, 2017


April 2, 2016










Operating activities:







Net earnings 



$                       377,648


$                       122,497


Adjustments:








Depreciation



158,525


152,249



Amortization



22,368


18,112



Stock-based compensation


9,524


7,300



Deferred income taxes


(6,695)


15,530



Distributions from affiliates


30,249


36,015



Equity in earnings of unconsolidated affiliates

(8,756)


(9,245)



Changes in assets and liabilities (exclusive of acquisitions and dispositions):







Accounts receivable


(297,158)


(104,252)




Inventories



(519,902)


114,479




Accounts payable


413,256


197,350




Federal income taxes


157,346


23,273




Salaries, wages and related accruals

(102,744)


(49,453)




Other operating activities


3,584


27,004










Cash provided by operating activities


237,245


550,859










Investing activities:







Capital expenditures



(94,535)


(80,697)


Investment in and advances to affiliates

(14,000)


(6,098)


Disposition of plant and equipment


8,870


5,309


Acquisitions (net of cash acquired)


(478,163)


(1,386)


Purchases of investments


(50,000)


(50,000)


Proceeds from the sale of investments


150,000


100,000


Other investing activities


-


792










Cash used in investing activities


(477,828)


(32,080)










Financing activities:







Net change in short-term debt


30,180


(14,671)


Issuance of common stock


7,432


-


Payment of tax withholdings on certain stock-based compensation

(1,349)


-


Excess tax benefits from stock-based compensation

-


353


Distributions to noncontrolling interests

(61,544)


(49,853)


Cash dividends



(121,303)


(120,153)


Acquisition of treasury stock


-


(5,173)


Other financing activities


(518)


(559)










Cash used in financing activities 


(147,102)


(190,056)










Effect of exchange rate changes on cash


(517)


10,296










(Decrease) increase in cash and cash equivalents

(388,202)


339,019










Cash and cash equivalents - beginning of year

2,045,961


1,939,469










Cash and cash equivalents - end of three months

$                   1,657,759


$                   2,278,488










Non-cash investing activity:







Change in accrued plant and equipment purchases

$                        (11,222)


$                           (4,949)










 

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SOURCE Nucor Corporation

For Investor/Analyst Inquiries: Gregg Lucas 704-972-1841, For Media Inquiries: Katherine Miller 704-353-9015