Industry Press Releases

Nucor Reports Results for First Quarter of 2015

Friday, Apr 24, 2015
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Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $67.8 million, or $0.21 per diluted share, for the first quarter of 2015. By comparison, Nucor reported net earnings of $111.0 million, or $0.35 per diluted share, for the first quarter of 2014 and net earnings of $210.4 million, or $0.65 per diluted share, for the fourth quarter of 2014.

Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the first quarter of 2015 and 2014 (in thousands):

       
     

Three Months (13 Weeks) Ended

     

April 4, 2015

 

April 5, 2014

           
 

Steel mills

 

$              217,128

 

$                    317,797

 

Steel products

 

32,458

 

1,720

 

Raw materials

 

(41,497)

 

8,359

 

Corporate/eliminations

 

(89,044)

 

(120,375)

     

$              119,045

 

$                    207,501

Nucor's results include a credit of $16.5 million ($0.03 per diluted share) to value inventories using the last-in, first-out (LIFO) method of accounting. The credit is compared with a charge of $14.5 million ($0.03 per diluted share) in the first quarter of 2014 and a credit of $57.3 million ($0.11 per diluted share) in the fourth quarter of 2014. Included in the fourth quarter of 2014 results were $8.9 million ($0.02 per diluted share) of non-cash inventory related purchase accounting charges associated with the acquisition of Nucor Steel Gallatin and a $13.2 million ($0.04 per diluted share) out-of-period non-cash gain related to a correction to tax balances. Included in the first quarter of 2014 earnings was a $12.8 million ($0.04 per diluted share) charge primarily related to tax legislation changes in the state of New York. Also included in first quarter of 2014 results was a $9.0 million charge ($0.02 per diluted share) related to the disposal of assets within the steel mills segment.

Nucor's consolidated net sales decreased 14% to $4.40 billion in the first quarter of 2015 from $5.11 billion in the first quarter of 2014 and decreased 12% compared with $5.00 billion in the fourth quarter of 2014. Average sales price per ton in the first quarter of 2015 decreased 5% from both the first quarter of 2014 and the fourth quarter of 2014. Total tons shipped to outside customers were 5,635,000 tons in the first quarter of 2015, a 9% decrease from the first quarter of 2014 and a 7% decrease from the fourth quarter of 2014. Total first quarter steel mill shipments decreased 10% from the first quarter of 2014 and decreased 8% from the fourth quarter of 2014. First quarter downstream steel products shipments to outside customers increased 1% over the first quarter of 2014 and decreased 4% from the fourth quarter of 2014.

The average scrap and scrap substitute cost per ton used during the first quarter of 2015 was $324, a decrease of 19% from $398 in the first quarter of 2014 and a decrease of 11% compared to $363 in the fourth quarter of 2014. We expect to further benefit from the large decrease in scrap prices that occurred in February during the second quarter of 2015, as we finish consuming scrap and pig iron purchased before the February price correction.

Overall operating rates at our steel mills decreased to 65% in the first quarter of 2015 as compared to 75% in the first quarter of 2014 and 76% in the fourth quarter of 2014.

Total steel mill energy costs in the first quarter of 2015 decreased approximately $3 per ton compared to the first quarter of 2014 and increased approximately $2 per ton compared to the fourth quarter of 2014. The decrease from the first quarter of 2014 was primarily due to lower natural gas unit costs. The increase from the fourth quarter of 2014 was due to reduced electricity productivity caused by lower steel mill utilization rates and slightly higher electricity unit costs.

Our liquidity position remains strong with $1.27 billion in cash and cash equivalents and short-term investments and an untapped $1.5 billion revolving credit facility that does not expire until August 2018. Nucor had no commercial paper outstanding at the end of the first quarter of 2015.

In February, Nucor's board of directors declared a cash dividend of $0.3725 per share payable on May 11, 2015 to stockholders of record on March 31, 2015. This dividend is Nucor's 168th consecutive quarterly cash dividend, a record we expect to continue.

Nucor Steel Louisiana successfully resumed operations late in the first quarter following completion of repairs related to the failure of the process gas heater that occurred on November 2, 2014. The restart of the direct reduced iron (DRI) facility has progressed as planned. The facility is once again producing DRI at the world class level of quality we expect and is regularly operating at 85% of capacity.

As expected, overall operating performance at the steel mills segment for the first quarter of 2015 decreased significantly compared to the fourth quarter of 2014. This lower performance is primarily due to lower selling prices and margins resulting from the exceptionally high level of steel imports flooding the domestic market. It is estimated that imports accounted for 33% of the finished steel market in the first quarter of 2015. Import levels in February and March were lower than the peak in January, but remain at the exceptionally high levels experienced during most of 2014. We anticipate selling prices to remain under pressure as the flood of imports continues in the second quarter of 2015.  Global overcapacity built by foreign, state-owned enterprises continues to be a significant risk factor to our business.

Automotive markets remain strong and we continue to see improving demand in nonresidential construction markets. Conditions remain challenging in energy markets, in which the collapse in oil prices and continued high levels of imported oil country tubular goods products has caused an inventory glut in the pipe and tube sector. We cannot determine when these conditions will improve, but once energy market steel inventories are rebalanced we expect overall steel demand to meet or exceed levels seen in 2014.

The overall operating performance of the downstream products segment for the first quarter of 2015 decreased from the fourth quarter of 2014 due to typical seasonality experienced in the first quarter; however, the results of the downstream products segment in the first quarter of 2015 increased over the first quarter of 2014 due to both lower input costs and improved volumes. The operating performance of the raw materials segment for the first quarter of 2015 decreased from the fourth quarter of 2014 due to a larger operating loss of approximately $44 million ($0.09 per diluted share) at Nucor Steel Louisiana and decreased performance of our scrap processing business and natural gas drilling working interests.

Earnings in the second quarter of 2015 are expected to be somewhat improved from the first quarter of 2015. Although margins in the steel mills segment are expected to improve, they will remain under pressure during the second quarter of 2015 as selling prices have not yet fully stabilized and imports remain at exceptionally high levels. This pricing pressure is expected to mitigate the benefits of lower average raw materials costs in the second quarter. We expect much better performance in the downstream products segment in the second quarter of 2015. The performance of the raw materials segment is expected to decrease in the second quarter of 2015 due to a planned one month outage at our DRI facility in Trinidad. We anticipate an operating loss similar to the first quarter of 2015 at Nucor Steel Louisiana, which, due to the extended length of the time the facility was not operating, will work through higher cost iron ore inventory that was purchased in 2014.  Performance in the second half of 2015 is expected to further improve on the strength of continuing improvement in nonresidential construction and its impact on our downstream products businesses and steel mills. Additionally, steel pricing is expected to stabilize and rebound as service center destocking runs its course.

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; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; 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," "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 2014 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 23, 2015 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 4, 2015

 

April 5, 2014

 

Percentage
Change

Steel mills production

 

4,758

 

5,194

 

-8%

Steel mills total shipments

 

4,887

 

5,432

 

-10%

               

Sales tons to outside customers:

           
 

Steel mills

 

4,165

 

4,600

 

-9%

 

Joist

 

89

 

92

 

-3%

 

Deck

 

82

 

87

 

-6%

 

Cold finished

 

130

 

138

 

-6%

 

Fabricated concrete

           
 

reinforcing steel

 

262

 

239

 

10%

 

Other

 

907

 

1,033

 

-12%

     

5,635

 

6,189

 

-9%

               

 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)

       
 

  Three Months (13 Weeks) Ended  

       
 

April 4, 2015

 

April 5, 2014

       

Net sales

$   4,399,440

 

$         5,108,444

       

Costs, expenses and other:

     

  Cost of products sold

4,111,158

 

4,731,242

  Marketing, administrative and other expenses

124,561

 

133,434

  Equity in losses (earnings) of unconsolidated affiliates

259

 

(4,474)

  Interest expense, net

44,417

 

40,741

 

4,280,395

 

4,900,943

Earnings before income taxes and

     

noncontrolling interests

119,045

 

207,501

Provision for income taxes

34,753

 

77,805

Net earnings

84,292

 

129,696

Earnings attributable to

     

noncontrolling interests

16,492

 

18,665

Net earnings attributable to 

     

Nucor stockholders

$         67,800

 

$            111,031

       

Net earnings per share:

     

  Basic

$0.21

 

$0.35

  Diluted

$0.21

 

$0.35

       

Average shares outstanding:

     

  Basic

320,315

 

319,505

  Diluted

320,483

 

319,768

       

 

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

 (In thousands) 

               
         

April 4, 2015

 

Dec. 31, 2014

 ASSETS 

         

 Current assets: 

       
 

 Cash and cash equivalents 

 

$      1,165,864

 

$     1,024,144

 

 Short-term investments 

 

100,000

 

100,000

 

 Accounts receivable, net 

 

1,711,101

 

2,068,298

 

 Inventories, net 

 

2,405,916

 

2,745,032

 

 Other current assets 

 

480,108

 

504,414

               
   

 Total current assets 

 

5,862,989

 

6,441,888

               

 Property, plant and equipment, net 

 

5,184,235

 

5,287,639

               

 Goodwill 

   

2,043,315

 

2,068,664

               

 Other intangible assets, net 

 

834,805

 

862,093

               

 Other assets 

 

930,094

 

955,643

               
   

 Total assets 

 

$    14,855,438

 

$   15,615,927

               

 LIABILITIES 

         

 Current liabilities: 

       
 

 Short-term debt 

 

$            26,891

 

$        207,476

 

 Long-term debt due within one year 

 

16,300

 

16,335

 

 Accounts payable 

 

746,184

 

993,872

 

 Salaries, wages and related accruals 

 

225,600

 

352,488

 

 Accrued expenses and other current liabilities 

 

509,831

 

527,605

               
   

 Total current liabilities 

 

1,524,806

 

2,097,776

               

 Long-term debt due after one year 

 

4,360,600

 

4,360,600

               

 Deferred credits and other liabilities 

 

1,064,361

 

1,082,433

               
   

 Total liabilities 

 

6,949,767

 

7,540,809

               

 EQUITY 

         

 Nucor stockholders' equity: 

       
 

 Common stock 

 

151,242

 

151,237

 

 Additional paid-in capital 

 

1,890,886

 

1,883,356

 

 Retained earnings 

 

7,326,244

 

7,378,214

 

 Accumulated other comprehensive loss, 

       
   

 net of income taxes 

 

(264,503)

 

(145,708)

 

 Treasury stock 

 

(1,492,357)

 

(1,494,629)

   

 Total Nucor stockholders' equity 

 

7,611,512

 

7,772,470

               

 Noncontrolling interests 

 

294,159

 

302,648

               
   

 Total equity 

 

7,905,671

 

8,075,118

               
   

 Total liabilities and equity 

 

$    14,855,438

 

$   15,615,927

               
               

 

 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

 (In thousands) 

                 
           

Three Months (13 Weeks) Ended

                 
           

April 4, 2015

 

April 5, 2014

                 

Operating activities:

         
 

Net earnings 

   

$                          84,292

 

$                       129,696

 

Adjustments:

         
   

Depreciation

   

157,934

 

161,480

   

Amortization

   

18,655

 

18,432

   

Stock-based compensation

 

6,453

 

6,088

   

Deferred income taxes

 

(10,173)

 

8,312

   

Equity in losses (earnings) of unconsolidated affiliates

259

 

(4,474)

   

Loss on assets

   

-

 

9,046

   

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

     
     

Accounts receivable

 

343,497

 

(97,183)

     

Inventories

   

330,842

 

(123,145)

     

Accounts payable

 

(237,847)

 

7,489

     

Federal income taxes

 

39,397

 

56,526

     

Salaries, wages and related accruals

(122,226)

 

(59,147)

     

Other operating activities

 

(47,389)

 

36,094

                 

Cash provided by operating activities

 

563,694

 

149,214

                 

Investing activities:

         
 

Capital expenditures

   

(77,523)

 

(258,058)

 

Investment in and advances to affiliates

(20,776)

 

(7,105)

 

Repayment of advances to affiliates

 

-

 

3,000

 

Disposition of plant and equipment

 

2,604

 

4,540

 

Acquisitions (net of cash acquired)

 

-

 

(1,408)

 

Purchases of investments

 

(100,000)

 

(100,000)

 

Proceeds from the sale of investments

 

100,000

 

27,529

 

Other investing activities

 

1,870

 

-

                 

Cash used in investing activities

 

(93,825)

 

(331,502)

                 

Financing activities:

         
 

Net change in short-term debt

 

(180,239)

 

(2,130)

 

Issuance of common stock

 

423

 

-

 

Excess tax benefits from stock-based compensation

200

 

300

 

Distributions to noncontrolling interests

(24,980)

 

(24,794)

 

Cash dividends

   

(119,712)

 

(118,680)

 

Other financing activities

 

(537)

 

(601)

                 

Cash used in financing activities 

 

(324,845)

 

(145,905)

                 

Effect of exchange rate changes on cash

 

(3,304)

 

(2,517)

                 

Increase (decrease) in cash and cash equivalents

141,720

 

(330,710)

                 

Cash and cash equivalents - beginning of year

1,024,144

 

1,483,252

                 

Cash and cash equivalents - end of three months

$                   1,165,864

 

$                   1,152,542

                 

Non-cash investing activity:

         
 

Change in accrued plant and equipment purchases

$                           (7,812)

 

$                        (60,864)

                 

 

 

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