Nucor Reports Results for Second Quarter and First Half of 2018

Nucor Reports Results for Second Quarter and First Half of 2018

PR Newswire

CHARLOTTE, N.C., July 19, 2018 /PRNewswire/ -- Nucor Corporation NUE today announced second quarter of 2018 consolidated net earnings of $683.2 million, or $2.13 per diluted share, which are the highest second quarter earnings in the Company's history. By comparison, Nucor reported consolidated net earnings of $354.2 million, or $1.10 per diluted share, for the first quarter of 2018 and $323.0 million, or $1.00 per diluted share, for the second quarter of 2017.

In the first half of 2018, Nucor reported consolidated net earnings of $1.04 billion, or $3.23 per diluted share, compared with consolidated net earnings of $679.9 million, or $2.11 per diluted share, in the first half of last year.

"We are pleased to report record second quarter earnings that reflect our success over the last several years positioning Nucor to take advantage of an upturn in the steel market," said John Ferriola, Nucor's Chairman, Chief Executive Officer and President. "We have increased our workforce by 18% and invested $8 billion since the last cyclical peak in 2008. Now, against the backdrop of a strong market and economy, we are capitalizing on those investments to move up the value chain and profitably grow our company. Our financial performance over the last six quarters demonstrates our continued operational excellence and the success of our long-term strategy to pursue our Five Drivers to Profitable Growth. The Nucor team is committed to extending our long track record of superior performance and stockholder value creation in the second half of 2018 and beyond."

Selected Segment Data

In the first quarter of 2018, the Company began reporting its tubular products and piling businesses as part of the steel products segment.  These businesses were previously included in the steel mills segment. All prior period segment data presented in this news release has been recast to reflect this change. Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the second quarter and first six months of 2018 and 2017 (in thousands, unaudited):























Three Months (13 Weeks) Ended



Six Months (26 Weeks) Ended





June 30, 2018



July 1, 2017



June 30, 2018



July 1, 2017

Steel mills



$             961,784



$             579,520



$          1,522,287



$          1,223,703

Steel products



155,766



83,636



241,580



150,555

Raw materials



134,995



66,227



209,542



92,618

Corporate/eliminations

(338,844)



(221,247)



(543,796)



(409,765)





$             913,701



$             508,136



$          1,429,613



$          1,057,111





































 

Financial Review

Included in the second quarter of 2018 results was a benefit of $23.3 million, or $0.06 per diluted share, related to insurance recoveries. Included in the first quarter of 2018 results was an expense of $21.8 million, or $0.07 per diluted share, related to the write off of deferred tax assets due to the change in the tax status of a subsidiary.

Nucor's consolidated net sales increased 16% to $6.50 billion in the second quarter of 2018 compared with $5.57 billion in the first quarter of 2018 and increased 25% compared with $5.17 billion in the second quarter of 2017. Average sales price per ton in the second quarter of 2018 increased 12% compared with the first quarter of 2018 and increased 17% compared with the second quarter of 2017. Total tons shipped to outside customers were 7,197,000 tons in the second quarter of 2018, a 3% increase from the first quarter of 2018 and a 7% increase from the second quarter of 2017. Total steel mill shipments in the second quarter of 2018 increased 3% from the first quarter of 2018 and increased 6% from the second quarter of 2017. Downstream steel products shipments to outside customers in the second quarter of 2018 increased 11% from the first quarter of 2018 and increased 17% from the second quarter of 2017.

In the first half of 2018, Nucor's consolidated net sales increased 20% to $12.03 billion, compared with $9.99 billion in last year's first half. Total tons shipped to outside customers in the first half of 2018 were 14,164,000, an increase of 6% from the first half of 2017, while average sales price per ton increased 13%.

The average scrap and scrap substitute cost per ton used during the second quarter of 2018 was $373, an 11% increase compared to $337 in the first quarter of 2018 and an increase of 19% compared to $313 in the second quarter of 2017. The average scrap and scrap substitute cost per ton used in the first half of 2018 was $355, an increase of 19% from $298 in the first half of 2017.

Overall operating rates at our steel mills increased to 95% in the second quarter of 2018 as compared to 92% in the first quarter of 2018 and 89% in the second quarter of 2017. Operating rates for the first half of 2018 increased to 93% as compared with 89% for the first half of 2017.

Total steel mill energy costs in the second quarter of 2018 decreased approximately $2 per ton compared to the first quarter of 2018 and decreased approximately $1 per ton compared to the second quarter of 2017 primarily due to lower natural gas unit costs and higher productivity resulting from increased steel production. Total steel mill energy costs for the first half of 2018 were consistent with the first half of 2017.

Our liquidity position remains strong with $1.5 billion in cash and cash equivalents as of June 30, 2018. In April 2018, we amended and extended our untapped $1.5 billion revolving credit facility to mature in April 2023. Additionally in April 2018, we issued $500.0 million of 3.950% notes due 2028 and $500.0 million of 4.400% notes due 2048. Proceeds from these issuances were used during the quarter to repay $500.0 million of 5.850% notes that were due June 1, 2018.

Recent Developments

In May 2018, Nucor announced plans to build a galvanizing line at the Company's sheet mill in Arkansas to support Nucor's growth into a wider and more diverse set of strategic end-market applications. The new galvanizing line is a $240 million investment with an annual capacity of approximately 500,000 tons. It is expected to be operational in the first half of 2021.

In June 2018, Nucor's board of directors declared a cash dividend of $0.38 per share payable on August 10, 2018 to stockholders of record on June 29, 2018. This dividend is Nucor's 181st consecutive quarterly cash dividend, a record we expect to continue.

Second Quarter of 2018 Analysis

As expected, earnings in the second quarter of 2018 improved significantly compared to the first quarter of 2018. The primary driver of the improved performance was our steel mills segment, which experienced higher average selling prices and increased profitability across all steel mill product groups, with the strongest profitability increase at our sheet mills. Our steel products and raw materials segments also experienced increased profitability in the second quarter of 2018 compared to the first quarter of 2018. These improved earnings are the result of much stronger market conditions that we believe have been positively impacted by deregulation, tax reform and higher, stable oil prices.

Third Quarter of 2018 Outlook

Earnings in the third quarter of 2018 are expected to further improve compared to the second quarter of 2018. The performance of the steel mills segment is expected to remain strong in the third quarter of 2018 as compared to the second quarter of 2018, with margin expansion expected primarily at our sheet and plate mills. Based on the current steel market fundamentals and communications with our customers, we believe there is sustainable strength in steel end-use markets. We expect third quarter of 2018 performance of our steel products segment to be similar to the second quarter of 2018. The performance of our raw materials segment is expected to decrease in the third quarter of 2018 as compared to the second quarter of 2018 due to margin compression.

About Nucor

Nucor and its affiliates are manufacturers of steel and 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 hot briquetted iron / direct reduced iron; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.

Forward-Looking Statements

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) U.S. and foreign trade policies affecting steel imports or exports; (3) 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; (4) market demand for steel products; and (5) 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 2017 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.

Broadcast of Conference Call

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, 2018 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, 2018



July 1, 2017



Percentage

Change



June 30, 2018



July 1, 2017



Percentage

Change

Steel mills total shipments:

























Sheet 

2,784



2,719



2%



5,482



5,424



1%



Bars

2,374



2,001



19%



4,616



3,958



17%



Structural

626



547



14%



1,227



1,119



10%



Plate

560



614



-9%



1,156



1,191



-3%



Other

96



198



-52%



227



272



-17%





6,440



6,079



6%



12,708



11,964



6%



























Sales tons to outside customers:

























Steel mills

5,078



4,950



3%



10,094



9,810



3%



Joist

114



104



10%



219



205



7%



Deck

116



104



12%



222



210



6%



Cold finished

149



120



24%



296



242



22%



Fabricated concrete

























reinforcing steel

337



291



16%



627



538



17%



Piling

160



145



10%



286



264



8%



Tubular products

286



227



26%



570



450



27%



Other

957



807



19%



1,850



1,613



15%





7,197



6,748



7%



14,164



13,332



6%



























 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)



















  Three Months (13 Weeks) Ended  



  Six Months (26 Weeks) Ended  



















June 30, 2018



July 1, 2017



June 30, 2018



July 1, 2017

















Net sales

$     6,460,774



$     5,174,769



$   12,029,193



$     9,989,948

















Costs, expenses and other:















  Cost of products sold

5,294,184



4,465,144



10,136,197



8,520,073

  Marketing, administrative and other expenses

234,381



170,211



417,341



346,637

  Equity in earnings of unconsolidated affiliates

(10,943)



(13,302)



(20,523)



(22,058)

  Interest expense, net

29,451



44,580



66,565



88,185



5,547,073



4,666,633



10,599,580



8,932,837

Earnings before income taxes and















noncontrolling interests

913,701



508,136



1,429,613



1,057,111

Provision for income taxes

200,086



166,412



335,886



337,739

Net earnings

713,615



341,724



1,093,727



719,372

Earnings attributable to















noncontrolling interests

30,462



18,676



56,395



39,425

Net earnings attributable to 















Nucor stockholders

$        683,153



$        323,048



$     1,037,332



$        679,947

















Net earnings per share:















  Basic

$2.14



$1.00



$3.24



$2.12

  Diluted

$2.13



$1.00



$3.23



$2.11

















Average shares outstanding:















  Basic

318,467



320,439



318,941



320,332

  Diluted

319,391



321,226



319,930



321,186

















 

 

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

 (In thousands) 























June 30, 2018



Dec. 31, 2017

 ASSETS 









 Current assets: 









 Cash and cash equivalents 

$      1,486,453



$          949,104



 Short-term investments 

-



50,000



 Accounts receivable, net 

2,637,744



2,028,545



 Inventories, net 

4,133,472



3,461,686



 Other current assets 

143,566



335,085



















 Total current assets 

8,401,235



6,824,420















 Property, plant and equipment, net 

5,122,381



5,093,147















 Goodwill 



2,185,809



2,196,058















 Other intangible assets, net 

867,905



914,646















 Other assets 

874,362



812,987



















 Total assets 

$    17,451,692



$    15,841,258















 LIABILITIES 









 Current liabilities: 









 Short-term debt 

$            59,168



$            52,833



 Long-term debt due within one year 

-



500,000



 Accounts payable 

1,558,020



1,181,346



 Salaries, wages and related accruals 

507,608



516,660



 Accrued expenses and other current liabilities 

625,533



573,925



















 Total current liabilities 

2,750,329



2,824,764















 Long-term debt due after one year 

4,232,244



3,242,242















 Deferred credits and other liabilities 

733,695



689,464



















 Total liabilities 

7,716,268



6,756,470















 EQUITY 









 Nucor stockholders' equity: 









 Common stock 

152,061



151,960



 Additional paid-in capital 

2,051,382



2,021,339



 Retained earnings 

9,257,823



8,463,709



 Accumulated other comprehensive loss, 











 net of income taxes 

(296,032)



(254,681)



 Treasury stock 

(1,791,827)



(1,643,291)





 Total Nucor stockholders' equity 

9,373,407



8,739,036















 Noncontrolling interests 

362,017



345,752



















 Total equity 

9,735,424



9,084,788



















 Total liabilities and equity 

$    17,451,692



$    15,841,258





























 

 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

 (In thousands) 































Six Months (26 Weeks) Ended































June 30, 2018



July 1, 2017



















Operating activities:













Net earnings 





$      1,093,727



$          719,372



Adjustments:















Depreciation





316,402



318,278





Amortization





44,573



45,443





Stock-based compensation



51,905



41,159





Deferred income taxes



48,181



(4,173)





Distributions from affiliates



27,453



46,877





Equity in earnings of unconsolidated affiliates

(20,523)



(22,058)





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













Accounts receivable



(602,414)



(396,452)







Inventories



(676,266)



(781,581)







Accounts payable



367,950



371,158







Federal income taxes



208,996



(14,114)







Salaries, wages and related accruals

1,631



(1,897)







Other operating activities

8,977



28,849



















Cash provided by operating activities



870,592



350,861



















Investing activities:













Capital expenditures



(361,486)



(189,235)



Investment in and advances to affiliates

(73,427)



(19,000)



Disposition of plant and equipment

17,297



12,509



Acquisitions (net of cash acquired)

-



(478,410)



Purchases of investments



-



(50,000)



Proceeds from the sale of investments

50,000



150,000



Other investing activities



1,378



(990)



















Cash used in investing activities



(366,238)



(575,126)



















Financing activities:













Net change in short-term debt



6,334



21,235



Proceeds from long-term debt, net of discount

995,710



-



Repayments of long-term debt



(500,000)



-



Bond issuance related costs



(7,625)



-



Issuance of common stock



12,280



3,535



Payment of tax withholdings on certain stock-based compensation

(19,508)



(13,185)



Distributions to noncontrolling interests

(40,130)



(79,420)



Cash dividends





(243,649)



(242,704)



Acquisition of treasury stock



(170,315)



-



Other financing activities



(3,879)



(1,101)



















Cash provided by (used in) financing activities 

29,218



(311,640)



















Effect of exchange rate changes on cash

3,777



1,297



















Increase (decrease) in cash and cash equivalents

537,349



(534,608)



















Cash and cash equivalents - beginning of year

949,104



2,045,961



















Cash and cash equivalents - end of six months

$      1,486,453



$      1,511,353



















Non-cash investing activity:











Change in accrued plant and equipment purchases and

  assets 
recorded under capital lease arrangements









$              1,776



$          (12,927)



















 



Cision View original content:http://www.prnewswire.com/news-releases/nucor-reports-results-for-second-quarter-and-first-half-of-2018-300683609.html

SOURCE Nucor Corporation

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