Nucor Reports Results for Second Quarter of 2020

Loading...
Loading...

CHARLOTTE, N.C., July 23, 2020 /PRNewswire/ -- Nucor Corporation NUE today announced consolidated net earnings of $108.9 million, or $0.36 per diluted share, for the second quarter of 2020. By comparison, Nucor reported consolidated net earnings of $20.3 million, or $0.07 per diluted share, for the first quarter of 2020 and $386.5 million, or $1.26 per diluted share, for the second quarter of 2019.

Included in the first quarter of 2020 results were losses on assets of $287.8 million, or $0.92 per diluted share, related to our equity method investment located in Italy, Duferdofin Nucor S.r.l.

In the first half of 2020, Nucor reported consolidated net earnings of $129.2 million, or $0.42 per diluted share, compared with consolidated net earnings of $888.3 million, or $2.88 per diluted share, in the first half of 2019.

"I want to thank my teammates for their dedication and commitment to living our culture in the uncertain environment created by the COVID-19 pandemic during the last few months. Our team's reliability and resilience are being recognized and appreciated by our customers," said Leon Topalian, Nucor's President and Chief Executive Officer.

COVID-19 Update
The COVID-19 pandemic continues to have a significant impact on most aspects of Americans' daily lives and has created considerable economic uncertainty.  We believe Nucor is well positioned to navigate this environment given our diverse product mix, advantaged cost position, flexible production capability and financial strength.  Our most important value during this time remains the health and safety of our teammates, their families and the communities where we operate.

Financial Strength
Nucor's enterprise-wide efforts to conserve cash and support our teammates during the COVID-19 pandemic, as described in our first quarter earnings release and 10-Q, have been effective.  We have continued to generate very robust operating cash flow in challenging steel market conditions.

We were pleased to be able to further enhance our financial flexibility with the recent issuance of $500.0 million of 2.000% notes due 2025 and $500.0 million of 2.700% notes due 2030.

At the end of the second quarter of 2020, we had $3.04 billion in cash and cash equivalents and short-term investments on hand. Our $1.50 billion revolving credit facility remains undrawn and does not expire until April 2023.  We continue to have the strongest credit rating in the North American steel sector (Baa1/A-) with stable outlooks at both Moody's and Standard & Poor's.

Selected Segment Data
Earnings (loss) before income taxes and noncontrolling interests by segment for the second quarter and first half of 2020 and 2019 were as follows (in thousands):

 



Three Months (13 Weeks) Ended



Six Months (26 Weeks) Ended




July 4, 2020



June 29, 2019



July 4, 2020



June 29, 2019


Steel mills


$

161,453



$

578,920



$

317,959



$

1,268,318


Steel products



155,826




116,084




318,385




193,517


Raw materials



(1,834)




21,709




(9,745)




74,932


Corporate/eliminations



(134,388)




(182,091)




(299,245)




(312,529)




$

181,057



$

534,622



$

327,354



$

1,224,238


 

Financial Review
Nucor's consolidated net sales decreased 23% to $4.33 billion in the second quarter of 2020 compared with $5.62 billion in the first quarter of 2020 and decreased 27% compared with $5.90 billion in the second quarter of 2019. Average sales price per ton in the second quarter of 2020 increased 1% compared with the first quarter of 2020 and decreased 10% compared with the second quarter of 2019. A total of 5,479,000 tons were shipped to outside customers in the second quarter of 2020, a 24% decrease from the first quarter of 2020 and a 19% decrease from the second quarter of 2019. Total steel mill shipments in the second quarter of 2020 decreased 27% as compared to the first quarter of 2020 and decreased 18% as compared to the second quarter of 2019. Steel mill shipments to internal customers represented 21% of total steel mill shipments in the second quarter of 2020, compared with 20% in the first quarter of 2020 and 19% in the second quarter of 2019. Downstream steel product shipments to outside customers in the second quarter of 2020 decreased 12% from the first quarter of 2020 and decreased 7% from the second quarter of 2019.

In the first half of 2020, Nucor's consolidated net sales of $9.95 billion decreased 17% compared with consolidated net sales of $11.99 billion reported in the first half of 2019. Total tons shipped to outside customers in the first half of 2020 were 12,666,000, a decrease of 6% from the first half of 2019, while the average sales price per ton in the first half of 2020 decreased 12% from the first half of 2019.

The average scrap and scrap substitute cost per gross ton used in the second quarter of 2020 was $284, a 3% decrease compared to $293 in the first quarter of 2020 and a 14% decrease compared to $330 in the second quarter of 2019. The average scrap and scrap substitute cost per gross ton used in the first half of 2020 was $289, a 15% decrease compared to $341 in the first half of 2019.

Pre-operating and start-up costs related to the Company's growth projects were approximately $22 million, or $0.06 per diluted share, in the second quarter of 2020, compared with approximately $29 million, or $0.07 per diluted share, in the first quarter of 2020 and approximately $20.5 million, or $0.05 per diluted share, in the second quarter of 2019.

Loading...
Loading...

In the first half of 2020, pre-operating and start-up costs related to the Company's growth projects were approximately $51 million, or $0.13 per diluted share, compared with approximately $40.1 million, or $0.10 per diluted share, in the first half of 2019.

Overall operating rates at the Company's steel mills decreased to 68% in the second quarter of 2020 as compared to 89% in the first quarter of 2020 and 84% in the second quarter of 2019. Operating rates in the first half of 2020 decreased to 79% as compared to 85% in the first half of 2019.

Second Quarter of 2020 Analysis
Though overall market conditions were challenged by the COVID-19 pandemic, demand in nonresidential construction markets was resilient during the second quarter of 2020. The profitability of the steel products segment in the second quarter of 2020 decreased as compared to the first quarter of 2020, but we consider the second quarter of 2020 to be another strong quarter for this segment. The performance of our steel mills segment in the second quarter of 2020 decreased compared to the first quarter of 2020 (excluding the first quarter of 2020 impairment charge), due to the impacts of the COVID-19 pandemic. Our sheet and plate mills were the most negatively impacted of our facilities due to weak oil and gas market activity and customer production disruptions. The performance of our raw materials segment in the second quarter of 2020 marginally improved compared to the first quarter of 2020 due to better than forecasted June performance.

Third Quarter of 2020 Outlook
The ongoing COVID-19 pandemic continues to cause uncertainty in overall market conditions as we enter the third quarter of 2020. At this point, we believe earnings in the third quarter of 2020 will be similar to the second quarter of 2020. We expect another strong quarter for our downstream products segment due to the continued resiliency of nonresidential construction markets. The steel mills segment's performance in the third quarter of 2020 is expected to be similar to the second quarter of 2020. Nonresidential construction market conditions continue to benefit our bar and structural mills, but market conditions for our sheet and plate mills remain challenged and average selling prices remain depressed. The performance of our raw materials segment in the third quarter of 2020 is expected to decrease compared to the second quarter of 2020 due to depressed pricing for raw materials.

Cash Dividend
On June 4, 2020, Nucor's board of directors declared a cash dividend of $0.4025 per share. This cash dividend is payable on August 11, 2020 to stockholders of record as of June 30, 2020 and is Nucor's 189th consecutive quarterly cash dividend.

Earnings 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 23, 2020 at 2:00 p.m. eastern time. The conference call will be available over the Internet at www.nucor.com, under Investors.

About Nucor
Nucor and its affiliates are manufacturers of steel and steel products, with operating facilities in the United States, Canada and Mexico. 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; precision castings; 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 "anticipate," "believe," "expect," "project," "may," "will," "should," "could" and similar expressions are intended to identify those forward-looking statements. These forward-looking statements reflect the Company's best judgment based on current information, and although we base these statements on circumstances that we believe to be reasonable when made, there can be no assurance that future events will not affect the accuracy of such forward-looking information. As such, the forward-looking statements are not guarantees of future performance, and actual results may vary materially from the projected results and expectations discussed in this news release. 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 pressure 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 changes in the supply and cost of raw materials, including pig iron, iron ore and scrap steel; (4) market demand for steel products, which, in the case of many of our products, is driven by the level of nonresidential construction activity in the United States, as well as prevailing domestic prices for oil and gas; (5) energy costs and availability; and (6) the impact of the COVID-19 pandemic. These and other factors are discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in "Item 1A. Risk Factors" of Nucor's Annual Report on Form 10-K for the year ended December 31, 2019 and in "Item 1A. Risk Factors"  of Nucor's Quarterly Report on Form 10-Q for the quarter ended April 4, 2020. 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, except as may be required by applicable law.

 

 

Tonnage Data

(In thousands)
















Three Months (13 Weeks) Ended


Six Months (26 Weeks) Ended



July 4, 2020


June 29, 2019


Percent Change


July 4, 2020


June 29, 2019


Percent Change

Steel mills total shipments:













Sheet


2,002


2,612


-23%


4,876


5,256


-7%

Bars


1,731


2,020


-14%


3,973


4,021


-1%

Structural


517


556


-7%


1,201


1,120


7%

Plate


438


529


-17%


1,048


1,135


-8%

Other


81


83


-2%


169


257


-34%



4,769


5,800


-18%


11,267


11,789


-4%














Sales tons to outside customers:













Steel mills


3,758


4,682


-20%


8,940


9,454


-5%

Joist


122


116


5%


253


226


12%

Deck


111


116


-4%


236


222


6%

Cold finished


75


131


-43%


201


274


-27%

Fabricated concrete reinforcing steel


309


328


-6%


620


587


6%

Piling


156


164


-5%


336


302


11%

Tubular products


249


245


2%


536


508


6%

Other steel products


87


97


-10%


186


196


-5%

Raw materials


612


845


-28%


1,358


1,722


-21%



5,479


6,724


-19%


12,666


13,491


-6%

 

 

Condensed Consolidated Statements of Earnings (Unaudited)


(In thousands, except per share data)





















Three Months (13 Weeks) Ended



Six Months (26 Weeks) Ended




July 4, 2020



June 29, 2019



July 4, 2020



June 29, 2019


Net sales


$

4,327,306



$

5,895,986



$

9,951,643



$

11,992,610


Costs, expenses and other:

















Cost of products sold



3,949,347




5,120,492




8,944,416




10,321,224


Marketing, administrative and other expenses



142,017




208,980




295,409




389,719


Equity in losses (earnings) of unconsolidated affiliates



14,078




(1,138)




14,901




(4,044)


Losses on assets



5,000




-




292,846




-


Interest expense, net



35,807




33,030




76,717




61,473





4,146,249




5,361,364




9,624,289




10,768,372


Earnings before income taxes and noncontrolling interests



181,057




534,622




327,354




1,224,238


Provision for income taxes



47,904




122,345




139,822




281,168


Net earnings



133,153




412,277




187,532




943,070


Earnings attributable to noncontrolling interests



24,272




25,794




58,320




54,781


Net earnings attributable to Nucor stockholders


$

108,881



$

386,483



$

129,212



$

888,289


Net earnings per share:

















Basic


$

0.36



$

1.26



$

0.42



$

2.89


Diluted


$

0.36



$

1.26



$

0.42



$

2.88


Average shares outstanding:

















Basic



302,921




305,461




302,915




306,017


Diluted



302,933




305,952




302,932




306,559


 

 

Condensed Consolidated Balance Sheets (Unaudited)


(In thousands)













July 4, 2020



Dec. 31, 2019


ASSETS









Current assets:









Cash and cash equivalents


$

2,789,189



$

1,534,605


Short-term investments



247,473




300,040


Accounts receivable, net



1,888,929




2,160,102


Inventories, net



3,373,258




3,842,095


Other current assets



336,115




389,528


Total current assets



8,634,964




8,226,370


Property, plant and equipment, net



6,556,451




6,178,555


Goodwill



2,190,144




2,201,063


Other intangible assets, net



698,437




742,186


Other assets



685,969




996,492


Total assets


$

18,765,965



$

18,344,666


LIABILITIES









Current liabilities:









Short-term debt


$

64,652



$

62,444


Current portion of long-term debt and finance lease obligations



29,521




29,264


Accounts payable



902,071




1,201,698


Salaries, wages and related accruals



359,160




510,844


Accrued expenses and other current liabilities



609,634




659,524


Total current liabilities



1,965,038




2,463,774


Long-term debt and finance lease obligations due after one year



5,279,103




4,291,301


Deferred credits and other liabilities



898,339




798,415


Total liabilities



8,142,480




7,553,490


EQUITY









Nucor stockholders' equity:









Common stock



152,061




152,061


Additional paid-in capital



2,106,907




2,107,646


Retained earnings



10,998,533




11,115,056


Accumulated other comprehensive loss,

    net of income taxes



(340,836)




(302,966)


Treasury stock



(2,721,845)




(2,713,931)


Total Nucor stockholders' equity



10,194,820




10,357,866


Noncontrolling interests



428,665




433,310


Total equity



10,623,485




10,791,176


Total liabilities and equity


$

18,765,965



$

18,344,666


 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)


(In thousands)













Six Months (26 Weeks) Ended




July 4, 2020



June 29, 2019


Operating activities:









Net earnings


$

187,532



$

943,070


Adjustments:









Depreciation



349,691




321,979


Amortization



42,165




42,748


Stock-based compensation



39,101




61,260


Deferred income taxes



90,515




57,052


Distributions from affiliates



2,000




27,405


Equity in losses (earnings) of unconsolidated affiliates



14,901




(4,044)


Losses on assets



292,846




-


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









Accounts receivable



264,424




112,015


Inventories



464,004




281,119


Accounts payable



(272,910)




(248,671)


Federal income taxes



26,145




(122,358)


Salaries, wages and related accruals



(142,388)




(220,946)


Other operating activities



(8,058)




(62,774)


Cash provided by operating activities



1,349,968




1,187,855


Investing activities:









Capital expenditures



(777,317)




(649,947)


Investment in and advances to affiliates



(9,756)




(11,170)


Divestiture of affiliates



-




67,591


Disposition of plant and equipment



17,652




18,396


Acquisitions (net of cash acquired)



794




(9,495)


Purchase of investments



(222,500)




(50,000)


Proceeds from the sale of investments



275,067




-


Other investing activities



1,132




2,176


Cash used in investing activities



(714,928)




(632,449)


Financing activities:









Net change in short-term debt



2,208




2,217


Proceeds from long-term debt, net of discount



1,074,995




-


Repayment of long-term debt



(77,150)




-


Bond issuance related costs



(6,250)




-


Issuance of common stock



-




5,892


Payment of tax withholdings on certain stock-based compensation



(17,263)




(15,446)


Distributions to noncontrolling interests



(62,965)




(67,380)


Cash dividends



(245,619)




(246,474)


Acquisition of treasury stock



(39,499)




(197,511)


Other financing activities



(4,645)




(4,346)


Cash provided by (used in) financing activities



623,812




(523,048)


Effect of exchange rate changes on cash



(4,268)




548


Increase in cash and cash equivalents



1,254,584




32,906


Cash and cash equivalents - beginning of year



1,534,605




1,398,886


Cash and cash equivalents - end of six months


$

2,789,189



$

1,431,792


Non-cash investing activity:









Change in accrued plant and equipment purchases


$

(25,897)



$

39,862


 

 

SOURCE Nucor Corporation

Loading...
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsPress ReleasesConference Call Announcements
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...