Nucor Corporation 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

 

Source:prnewswire.com

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