News Release:

Nucor Reports Results for Fourth Quarter and Year Ended 2016

CHARLOTTE, N.C., Jan. 31, 2017 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $159.6 million, or $0.50 per diluted share, for the fourth quarter of 2016 and $796.2 million, or $2.48 per diluted share, for fiscal 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.

Comparative consolidated net earnings after the retrospective application of the change in accounting principle were $305.4 million, or $0.95 per diluted share, for the third quarter of 2016 and a net loss of $187.5 million or $0.59 per diluted share for the fourth quarter of 2015. Comparative consolidated net earnings after the retrospective application of the change in accounting principle were $80.7 million, or $0.25 per diluted share, for fiscal 2015.

Earnings (loss) before income taxes and noncontrolling interests presented after the retrospective application of the change in accounting principle by segment were as follows for the fourth quarter and full year 2016 and 2015 (in thousands):



Three Months (13 Weeks) Ended


Twelve Months (52 Weeks) Ended



December 31, 2016


December 31, 2015


December 31, 2016


December 31, 2015

Steel mills


$                321,270


$                (43,519)


$            1,724,168


$               629,256

Steel products

52,079


76,787


249,970


276,048

Raw materials

(18,881)


(161,160)


(95,121)


(283,938)

Corporate/eliminations

(99,428)


(67,151)


(580,358)


(379,500)



$                255,040


$              (195,043)


$            1,298,659


$               241,866










 

Included in the fourth quarter of 2016 results were the effects of a change in estimate related to the cost of certain inventories that resulted in a benefit of $77.6 million, or $0.16 per diluted share. Compensation costs in the fourth quarter of 2016 were $42.0 million ($0.09 per diluted share) higher than anticipated as a result of the effects of the change in accounting principle, the effects of the change in estimate, and slightly better than forecasted operating performance in December. Included in the third quarter of 2016 results were charges related to legal settlements of $33.7 million ($0.06 per diluted share) and a net benefit of $11.1 million ($0.02 per diluted share) related to fair value adjustments to assets in the corporate/eliminations segment. Included in the fourth quarter of 2015 results were impairment charges of $153.0 million ($0.47 per diluted share) related to our Duferdofin Nucor S.r.l. joint venture and an $84.1 million ($0.17 per diluted share) impairment charge on assets related to a blast furnace project that will not be utilized in the future.

Nucor's consolidated net sales decreased 8% to $3.96 billion in the fourth quarter of 2016 compared with $4.29 billion in the third quarter of 2016 and increased 14% compared with $3.46 billion in the fourth quarter of 2015. Average sales price per ton decreased 7% from the third quarter of 2016 and was consistent with the fourth quarter of 2015. Total tons shipped to outside customers were 5,815,000 tons in the fourth quarter of 2016, a 1% decrease from the third quarter of 2016 and an increase of 14% from the fourth quarter of 2015. Total fourth quarter steel mill shipments decreased 1% from the third quarter of 2016 and increased 16% from the fourth quarter of 2015. Fourth quarter downstream steel products shipments to outside customers decreased 11% from the third quarter of 2016 and remained consistent with the fourth quarter of 2015.

For fiscal 2016, Nucor's consolidated net sales decreased 1% to $16.21 billion, compared with $16.44 billion for fiscal 2015. Total tons shipped to outside customers in fiscal 2016 were 24,309,000, an increase of 7% from fiscal 2015, while average sales price per ton decreased 8%.

The average scrap and scrap substitute cost per ton used in the fourth quarter of 2016 was $236, a decrease of 6% from $252 in the third quarter of 2016 and an 8% increase from $219 in the fourth quarter of 2015. The average scrap and scrap substitute cost per ton used for the full year 2016 was $228, a 16% decrease from $270 in for the full year 2015.

Overall operating rates at our steel mills decreased to 74% in the fourth quarter of 2016 as compared to 76% in the third quarter of 2016 and increased compared to 68% in the fourth quarter of 2015. Steel mill operating rates for the full year 2016 increased to 80% as compared to 73% for the full year 2015. The utilization rates for the current and prior periods were revised during the fourth quarter of 2016 as a result of an updated analysis of our steel mill capacity.

Total steel mill energy costs in the fourth quarter of 2016 decreased approximately $1 per ton compared to the third quarter of 2016 and were comparable to the fourth quarter of 2015. Energy costs for the full year 2016 decreased $4 per ton from the full year 2015 due to improved productivity from increased production volumes and lower unit costs for electricity and natural gas.

Our liquidity position remains strong with $2.20 billion in cash and cash equivalents and short-term investments and an untapped $1.5 billion revolving credit facility that does not expire until April 2021.

In November, Nucor's board of directors declared a cash dividend of $0.3775 per share payable on February 10, 2017 to stockholders of record on December 30, 2016. This dividend is Nucor's 175th consecutive quarterly cash dividend, and it marks 44 consecutive years of an increased base dividend.

Nucor announced in December that it agreed to acquire Southland Tube, an independent manufacturer of hollow structural section (HSS) steel tubing, for $130 million, or approximately 8x average EBITDA over the 2011-2016 period. Southland Tube has one facility located in Birmingham, Alabama. With annual shipments of about 240,000 tons, Southland Tube has the third largest market share in HSS steel tubing. This acquisition is another step for Nucor to build a market leadership position in the HSS steel tubing market. The transaction closed on January 9, 2017.

Also in December, Nucor announced that it agreed to acquire Republic Conduit, a leading manufacturer of steel electrical conduit in North America, from Luxembourg-based Tenaris S.A. for approximately $335 million, or approximately 6x the average of its 2015 and projected 2016 EBITDA. Republic Conduit has two facilities located in Louisville, Kentucky, and Cedar Springs, Georgia. The transaction closed on January 20, 2017, and as a result, Nucor is a market leader in steel conduit.

The results of recent trade cases are having a positive impact as steel imports were down approximately 15% in 2016 compared to 2015. In mid-2016, affirmative final determinations were announced in three flat-rolled antidumping duty and countervailing duty cases involving corrosion-resistant, cold-rolled and hot-rolled steel products. These final determinations are an important step in returning fair trade to the U.S. flat-rolled steel market. In addition, the cut-to-length plate cases filed against twelve countries continue to progress through the trade case process. Affirmative final determinations have been announced on dumped steel from Brazil, South Africa, and Turkey, and earlier this month, the U.S. Department of Commerce announced its final determinations against China for illegally subsidizing and dumping plate. We expect all plate cases to conclude in the coming months. The Department of Commerce also announced the initiation of antidumping duty investigations of imports of steel concrete reinforcing bar from Japan, Taiwan, and Turkey, and a countervailing duty investigation of rebar imports from Turkey. We expect the rebar case to conclude in 2017.

Operating performance at the steel mills segment in the fourth quarter of 2016 decreased from the third quarter of 2016 due to lower margins in the steel mills segment, with the most significant impact at our sheet mills. The performance of the raw materials segment in the fourth quarter of 2016 declined compared to the third quarter of 2016 as it returned to a loss position due to lower pricing at our DRI facilities in the fourth quarter. We experienced decreased profitability for our steel products segment in the fourth quarter of 2016 as compared to the third quarter of 2016 due to end of year seasonality.

Earnings in the first quarter of 2017 are expected to increase compared to the fourth quarter of 2016. We believe full year 2017 profitability could significantly exceed the level achieved for 2016. Prices began to increase during the fourth quarter for our steel mills segment and we expect that trend to continue into the first quarter of 2017. We expect improved volume in the first quarter of 2017 as compared to the fourth quarter of 2016 for the steel mills segment, particularly at our sheet and plate mills. Scrap and other commodities prices increased through the end of 2016 and service center inventories remain low. Higher input costs and declining imports are now causing the market to find an improved and more sustainable level that we expect to benefit 2017. Due to purchase accounting charges that will be taken in the first quarter of 2017, we will not begin to experience the full financial benefit of our recent investments in tubular products until the second quarter of 2017. We expect decreased profitability for our steel products segment in the first quarter of 2017 as compared to the fourth quarter of 2016 due to typical seasonality. The raw materials segment is expected to return to profitability in the first quarter of 2017 as scrap prices increase and pricing improves at our DRI facilities as pig iron prices increase.

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 2015 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 fourth quarter results on January 31, 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)


















 Quarter Ended December 31,


 Year Ended December 31,




2016


2015


Percentage
Change


2016


2015


Percentage
Change

Steel mills production


4,990


4,398


13%


21,282


19,294


10%

Steel mills total shipments


5,151


4,459


16%


21,941


19,860


10%















Sales tons to outside customers:













Steel mills


4,400


3,823


15%


18,846


17,006


11%


Joist


123


117


5%


445


427


4%


Deck


110


110


0%


442


401


10%


Cold finished


98


95


3%


426


449


-5%


Fabricated concrete














reinforcing steel


258


265


-3%


1,115


1,190


-6%


Other


826


697


19%


3,035


3,207


-5%




5,815


5,107


14%


24,309


22,680


7%





























 

 


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)










Quarter Ended December 31,


Year Ended December 31,










2016


2015*


2016


2015*









Net sales

$     3,956,538


$     3,456,713


$      16,208,122


$ 16,439,276









Costs, expenses and other:








  Cost of products sold

3,513,112


3,288,618


14,182,215


15,325,386

  Marketing, administrative and other expenses

156,082


89,197


596,761


458,989

  Equity in earnings of








unconsolidated affiliates

(8,525)


(4,779)


(38,757)


(5,329)

  Impairments and losses on assets

-


237,133


-


244,833

  Interest expense, net

40,829


41,587


169,244


173,531


3,701,498


3,651,756


14,909,463


16,197,410

Earnings (loss) before income taxes and








noncontrolling interests

255,040


(195,043)


1,298,659


241,866

Provision for income taxes

79,855


(39,937)


398,243


48,836

Net earnings (loss)

175,185


(155,106)


900,416


193,030

Earnings attributable to








noncontrolling interests

15,546


32,375


104,145


112,306

Net earnings (loss) attributable to








Nucor stockholders

$        159,639


$       (187,481)


$          796,271


$       80,724









Net earnings (loss) per share:








  Basic

$0.50


($0.59)


$2.48


$0.25

  Diluted

$0.50


($0.59)


$2.48


$0.25









Average shares outstanding:








  Basic

319,921


320,629


319,563


320,565

  Diluted

320,396


320,629


319,822


320,679

















* - The Company changed its method of accounting for inventory from LIFO to FIFO for all businesses using LIFO.
This change is reflected for the periods presented.

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 (In thousands)














Dec. 31, 2016


Dec. 31, 2015*

 ASSETS






 Current assets:






 Cash and cash equivalents


$       2,045,961


$   1,939,469


 Short-term investments


150,000


100,000


 Accounts receivable, net


1,631,676


1,383,823


 Inventories, net


2,479,958


2,245,469


 Other current assets


198,798


185,644











 Total current assets


6,506,393


5,854,405









 Property, plant and equipment, net


5,078,650


4,891,153









 Goodwill



2,052,728


2,011,278









 Other intangible assets, net


866,835


770,672









 Other assets


718,912


799,461











 Total assets


$     15,223,518


$ 14,326,969









 LIABILITIES





 Current liabilities:






 Short-term debt


$           17,959


$       51,315


 Long-term debt due within one year


600,000


-


 Accounts payable


838,109


566,527


 Salaries, wages and related accruals


428,829


289,004


 Accrued expenses and other current liabilities


505,069


478,327











 Total current liabilities


2,389,966


1,385,173









 Long-term debt due after one year


3,739,141


4,337,145









 Deferred credits and other liabilities


839,703


754,774











 Total liabilities


6,968,810


6,477,092









 EQUITY






 Nucor stockholders' equity:






 Common stock


151,734


151,426


 Additional paid-in capital


1,974,672


1,918,970


 Retained earnings


7,630,916


7,316,910


 Accumulated other comprehensive loss,







 net of income taxes


(317,843)


(351,362)


 Treasury stock


(1,559,614)


(1,558,128)



 Total Nucor stockholders' equity


7,879,865


7,477,816









 Noncontrolling interests


374,843


372,061











 Total equity


8,254,708


7,849,877











 Total liabilities and equity


$     15,223,518


$ 14,326,969

















 * - The Company changed its method of accounting for inventory from LIFO to FIFO for all businesses using LIFO.
This change is reflected for the periods presented.









 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 (In thousands)
















Twelve Months (52 Weeks) Ended
















Dec. 31, 2016


Dec. 31, 2015*










Operating activities:







Net earnings



$               900,416


$               193,030


Adjustments:








Depreciation



613,192


625,757



Amortization



73,862


74,260



Stock-based compensation

56,511


45,794



Deferred income taxes


70,777


(246,836)



Distributions from affiliates

40,602


15,132



Equity in earnings of unconsolidated affiliates

(38,757)


(5,329)



Impairments and losses on assets

-


244,833



Changes in assets and liabilities (exclusive of






     acquisitions and dispositions):







Accounts receivable


(208,984)


655,489




Inventories


(132,639)


1,061,202




Accounts payable


228,036


(438,788)




Federal income taxes


3,555


62,656




Salaries, wages and related accruals

133,544


(56,267)




Other operating activities

(2,582)


(73,890)










Cash provided by operating activities

1,737,533


2,157,043










Investing activities:







Capital expenditures


(604,840)


(374,123)


Investment in and advances to affiliates

(63,167)


(80,409)


Divestiture of affiliates


135,000


-


Disposition of plant and equipment

18,571


29,390


Acquisitions (net of cash acquired)

(474,788)


(19,089)


Purchases of investments


(650,000)


(111,927)


Proceeds from the sale of investments

600,000


111,452


Other investing activities


14,106


3,010










Cash used in investing activities


(1,025,118)


(441,696)










Financing activities:







Net change in short-term debt


(33,360)


(155,816)


Repayment of long-term debt


-


(16,300)


Issuance of common stock


15,751


424


Excess tax benefits from stock-based compensation

2,784


2,000


Distributions to noncontrolling interests

(99,588)


(71,938)


Cash dividends



(481,083)


(479,432)


Acquisition of treasury stock


(5,173)


(66,505)


Other financing activities


(13,297)


(2,184)










Cash used in financing activities


(613,966)


(789,751)










Effect of exchange rate changes on cash

8,043


(10,271)










Increase in cash and cash equivalents

106,492


915,325










Cash and cash equivalents - beginning of year

1,939,469


1,024,144










Cash and cash equivalents - end of year

$            2,045,961


$            1,939,469










Non-cash investing activity:






Change in accrued plant and equipment purchases

$                 12,837


$                 (9,355)



















* - The Company changed its method of accounting for inventory from LIFO to FIFO for all businesses using LIFO.
This change is reflected for the periods presented.



















 

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SOURCE Nucor Corporation

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