Nucor Reports Results for Second Quarter and First Half of 2017

CHARLOTTE, N.C., July 20, 2017 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $323.0 million, or $1.00 per diluted share, for the second quarter of 2017. By comparison, Nucor reported net earnings of $356.9 million, or $1.11 per diluted share, for the first quarter of 2017 and net earnings of $243.6 million, or $0.76 per diluted share, for the second quarter of 2016.

In the first half of 2017, Nucor reported consolidated net earnings of $679.9 million, or $2.11 per diluted share, compared with consolidated net earnings of $331.2 million, or $1.03 per diluted share, in the first half of last year.

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



Three Months (13 Weeks) Ended


Six Months (26 Weeks) Ended



July 1, 2017


July 2, 2016


July 1, 2017


July 2, 2016

Steel mills


$       617,366


$       530,727


$    1,301,527


$       811,099

Steel products


45,809


82,946


72,731


125,313

Raw materials


66,227


(27,181)


92,618


(90,553)

Corporate/eliminations

(221,266)


(196,608)


(409,765)


(286,412)



$       508,136


$       389,884


$    1,057,111


$       559,447










Included in the first quarter of 2017 earnings are 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.

Nucor's consolidated net sales increased 7% to $5.17 billion in the second quarter of 2017 from $4.82 billion in the first quarter of 2017 and increased 22% compared with $4.25 billion in the second quarter of 2016. Average sales price per ton in the second quarter of 2017 increased 5% from the first quarter of 2017 and increased 17% from the second quarter of 2016. Total tons shipped to outside customers were 6,748,000 tons in the second quarter of 2017, a 2% increase from the first quarter of 2017 and a 5% increase from the second quarter of 2016. Total second quarter steel mill shipments increased 3% from the first quarter of 2017 and increased 7% from the second quarter of 2016. Second quarter of 2017 downstream steel products shipments to outside customers increased 9% from the first quarter of 2017 and increased 1% from the second quarter of 2016.

In the first half of 2017, Nucor's consolidated net sales increased 25% to $9.99 billion, compared with $7.96 billion in last year's first half, and total tons shipped to outside customers increased 6% from the first half of 2016, while average sales price per ton increased 19%.

The average scrap and scrap substitute cost per ton used during the second quarter of 2017 was $313, an increase of 10% from $284 in the first quarter of 2017 and an increase of 35% compared with $232 in the second quarter of 2016. The average scrap and scrap substitute cost per ton used in the first half of 2017 was $298, an increase of 40% from $213 in the first half of 2016.

Overall operating rates at our steel mills increased to 90% in the second quarter of 2017 as compared to 89% in both the first quarter of 2017 and the second quarter of 2016. Operating rates for the first half of 2017 increased to 90% as compared with 84% for the first half of 2016.

Total steel mill energy costs in the second quarter of 2017 were comparable to the first quarter of 2017 and increased approximately $2 per ton compared to the second quarter of 2016, primarily due to higher natural gas unit costs. Total steel mill energy costs for the first half of 2017 also increased $2 per ton compared to the first half of 2016 primarily due to higher natural gas unit costs.

Our liquidity position remains strong with $1.6 billion in cash and cash equivalents and short-term investments, as of July 1, 2017, and an untapped $1.5 billion revolving credit facility that does not expire until April 2021.

In May, Nucor announced that it is investing an estimated $176 million to build a hot band galvanizing and pickling line at its sheet mill in Ghent, Kentucky. The new galvanizing line will expand Nucor Steel Gallatin's product capabilities and should have an annual capacity of 500,000 tons. Once the necessary approvals are obtained, it is expected to take two years to construct the galvanizing line and begin operations.

In June, Nucor's board of directors declared a cash dividend of $0.3775 per share payable on August 11, 2017 to stockholders of record on June 30, 2017. This dividend is Nucor's 177th consecutive quarterly cash dividend, a record we expect to continue.

Imports continue to negatively impact the U.S. steel industry. Through the first half of 2017, finished steel imports have increased an estimated 15% compared to the same period last year and account for an estimated 27% share of the U.S. market. The industry continues to pursue trade cases to combat unfairly traded imports. Final determinations issued earlier this year against cut-to-length steel plate imports from twelve countries are having a positive impact as steel imports of these products have decreased in the first six months of this year compared to the same period last year. Last month, the U.S. International Trade Commission made final injury determinations affirming the Department of Commerce's antidumping duties in the steel concrete reinforcing bar (rebar) case against Japan and Turkey, as well as final countervailing duties on rebar imports from Turkey. A final decision regarding Taiwan is still pending.  In May, the government determined that there is a reasonable indication that the U.S. steel industry is materially injured or threatened with material injury by reason of carbon and certain alloy steel wire rod imports from ten countries.  As a result, the government will continue its wire rod antidumping and countervailing duty investigations, and is expected to issue preliminary duty determinations in the coming months.

The performance of our steel mills segment, particularly of our sheet mills and bar mills, decreased in the second quarter of 2017 as compared to the first quarter of 2017. Market conditions for hot-rolled sheet products have been challenging due to aggressive competition. The profitability of our plate mills improved in the second quarter of 2017 as compared to the first quarter of 2017. The performance of our downstream products segment improved in the second quarter of 2017 as compared to the first quarter of 2017. The profitability of the downstream products segment in the second quarter of 2017 decreased from the second quarter of 2016 due to a highly competitive market environment and margin compression resulting from higher steel prices. In particular, our rebar fabrication operations have experienced significant declines in performance due to downward pressure on pricing caused by surges of rebar imports. Our raw materials segment's performance increased in the second quarter of 2017 as compared to the first quarter of 2017 due to the profitable performance of both of our direct reduced iron facilities.

Earnings in the third quarter of 2017 should be in a range similar to the quarterly results of the first half of 2017. Nonresidential construction indicators, such as the Dodge Momentum Index and Architecture Billings Index, continue to suggest that construction activity will remain healthy through the end of the year. We continue to gain ground in the automotive market and expect to continue that trend through the remainder of the year. We are encouraged by improved energy markets compared to the depressed levels of 2015 and 2016.

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 second quarter results on July 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


 Six Months (26 Weeks) Ended



July 1, 2017


July 2, 2016


Percentage
Change


July 1, 2017


July 2, 2016


Percentage
Change

Steel mills total shipments













Sheet

2,719


2,682


1%


5,424


5,250


3%


Tubular products

227


-




450


-




Bars

2,001


1,960


2%


3,958


3,708


7%


Structural

588


596


-1%


1,199


1,197


-


Plate

614


600


2%


1,191


1,154


3%


Other

198


92


115%


272


268


1%



6,347


5,930


7%


12,494


11,577


8%














Sales tons to outside customers:













Steel mills

5,322


5,082


5%


10,524


9,981


5%


Joist

104


95


9%


205


193


6%


Deck

104


108


-4%


210


209


-


Cold finished

120


110


9%


242


229


6%


Fabricated concrete













reinforcing steel

291


304


-4%


538


546


-1%


Other

807


758


6%


1,613


1,447


11%



6,748


6,457


5%


13,332


12,605


6%














 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)










  Three Months (13 Weeks) Ended 


  Six Months (26 Weeks) Ended 










July 1, 2017


July 2, 2016


July 1, 2017


July 2, 2016









Net sales

$     5,174,769


$     4,245,772


$     9,989,948


$     7,961,348









Costs, expenses and other:








  Cost of products sold

4,465,144


3,660,512


8,520,073


7,061,103

  Marketing, administrative and other expenses

170,211


161,711


346,637


271,456

  Equity in earnings of unconsolidated affiliates

(13,302)


(6,819)


(22,058)


(16,064)

  Interest expense, net

44,580


40,484


88,185


85,406


4,666,633


3,855,888


8,932,837


7,401,901

Earnings before income taxes and








noncontrolling interests

508,136


389,884


1,057,111


559,447

Provision for income taxes

166,412


118,515


337,739


165,581

Net earnings

341,724


271,369


719,372


393,866

Earnings attributable to








noncontrolling interests

18,676


27,749


39,425


62,681

Net earnings attributable to








Nucor stockholders

$        323,048


$        243,620


$        679,947


$        331,185









Net earnings per share:








  Basic

$1.00


$0.76


$2.12


$1.03

  Diluted

$1.00


$0.76


$2.11


$1.03









Average shares outstanding:








  Basic

320,439


319,360


320,332


319,299

  Diluted

321,226


319,578


321,186


319,435









 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 (In thousands)












July 1, 2017


Dec. 31, 2016

 ASSETS





 Current assets:





 Cash and cash equivalents

$      1,511,353


$      2,045,961


 Short-term investments

50,000


150,000


 Accounts receivable, net

2,081,150


1,631,676


 Inventories, net

3,326,563


2,479,958


 Other current assets

213,626


198,798










 Total current assets

7,182,692


6,506,393








 Property, plant and equipment, net

5,062,423


5,078,650








 Goodwill


2,179,641


2,052,728








 Other intangible assets, net

946,978


866,835








 Other assets

740,991


718,912










 Total assets

$    16,112,725


$    15,223,518








 LIABILITIES





 Current liabilities:





 Short-term debt

$            39,197


$            17,959


 Long-term debt due within one year

1,100,000


600,000


 Accounts payable

1,214,313


838,109


 Salaries, wages and related accruals

422,744


428,829


 Accrued expenses and other current liabilities

549,052


505,069










 Total current liabilities

3,325,306


2,389,966








 Long-term debt due after one year

3,240,694


3,739,141








 Deferred credits and other liabilities

834,812


839,703










 Total liabilities

7,400,812


6,968,810








 EQUITY





 Nucor stockholders' equity:





 Common stock

151,920


151,734


 Additional paid-in capital

2,004,079


1,974,672


 Retained earnings

8,067,846


7,630,916


 Accumulated other comprehensive loss,






 net of income taxes

(292,935)


(317,843)


 Treasury stock

(1,553,845)


(1,559,614)



 Total Nucor stockholders' equity

8,377,065


7,879,865








 Noncontrolling interests

334,848


374,843










 Total equity

8,711,913


8,254,708










 Total liabilities and equity

$    16,112,725


$    15,223,518















 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 (In thousands)
















Six Months (26 Weeks) Ended
















July 1, 2017


July 2, 2016










Operating activities:







Net earnings



$          719,372


$          393,866


Adjustments:








Depreciation



318,278


306,088



Amortization



45,443


35,587



Stock-based compensation


41,159


37,576



Deferred income taxes


(4,173)


11,687



Distributions from affiliates


46,877


37,026



Equity in earnings of unconsolidated affiliates

(22,058)


(16,064)



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







Accounts receivable


(396,452)


(398,266)




Inventories


(781,581)


(183,056)




Accounts payable


371,158


452,815




Federal income taxes


(14,114)


129,325




Salaries, wages and related accruals

(5,794)


32,091




Other operating activities

28,849


27,697










Cash provided by operating activities


346,964


866,372










Investing activities:







Capital expenditures


(189,235)


(227,342)


Investment in and advances to affiliates

(19,000)


(12,508)


Disposition of plant and equipment

12,509


11,631


Acquisitions (net of cash acquired)

(478,410)


-


Purchases of investments


(50,000)


(550,000)


Proceeds from the sale of investments

150,000


100,000


Other investing activities


(990)


6,265










Cash used in investing activities


(575,126)


(671,954)










Financing activities:







Net change in short-term debt


21,235


(31,375)


Issuance of common stock


7,432


1,882


Payment of tax withholdings on certain stock-based compensation

(13,185)


(9,407)


Excess tax benefits from stock-based compensation

-


916


Distributions to noncontrolling interests

(79,420)


(78,684)


Cash dividends



(242,704)


(240,302)


Acquisition of treasury stock


-


(5,173)


Other financing activities


(1,101)


(4,630)










Cash used in financing activities


(307,743)


(366,773)










Effect of exchange rate changes on cash

1,297


14,036










Decrease in cash and cash equivalents

(534,608)


(158,319)










Cash and cash equivalents - beginning of year

2,045,961


1,939,469










Cash and cash equivalents - end of six months

$      1,511,353


$      1,781,150










Non-cash investing activity:






Change in accrued plant and equipment purchases

$          (12,927)


$              2,630










 

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SOURCE Nucor Corporation

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