Nucor Reports Results for First Quarter of 2018

CHARLOTTE, N.C., April 19, 2018 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $354.2 million, or $1.10 per diluted share, for the first quarter of 2018. By comparison, Nucor reported consolidated net earnings of $383.9 million, or $1.20 per diluted share, for the fourth quarter of 2017 and $356.9 million, or $1.11 per diluted share, for the first quarter of 2017.

"Nucor's disciplined strategy for profitable growth is working," said John Ferriola, Nucor's Chairman, Chief Executive Officer and President. "Our 2017 earnings were Nucor's highest annual earnings since the cyclical peak year of 2008. The positive momentum has clearly carried over into 2018, as evidenced by our strong first quarter earnings and a bullish second quarter outlook."

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 release has been recast to reflect this change. Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the first quarters of 2018 and 2017 (in thousands):



Three Months (13 Weeks) Ended



March 31, 2018


April 1, 2017






Steel mills


$           560,503


$             644,183

Steel products


85,814


66,919

Raw materials


74,547


26,391

Corporate/eliminations


(204,952)


(188,518)



$           515,912


$             548,975






Financial Review
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. Included in the fourth quarter of 2017 results was a net benefit of $175.2 million, or $0.55 per diluted share, related to the impacts of U.S. federal tax legislation enacted in the fourth quarter of 2017. Included in the first quarter of 2017 results were 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 9% to $5.57 billion in the first quarter of 2018 compared with $5.09 billion in the fourth quarter of 2017 and increased 16% compared with $4.82 billion in the first quarter of 2017. Average sales price per ton in the first quarter of 2018 increased 3% compared with the fourth quarter of 2017 and increased 9% compared with the first quarter of 2017. Total tons shipped to outside customers were 6,967,000 tons in the first quarter of 2018, a 6% increase from both the fourth quarter of 2017 and the first quarter of 2017. Total steel mill shipments in the first quarter of 2018 increased 8% from the fourth quarter of 2017 and increased 7% from the first quarter of 2017. Downstream steel products shipments to outside customers in the first quarter of 2018 increased 1% from the fourth quarter of 2017 and increased 15% from the first quarter of 2017.

The average scrap and scrap substitute cost per ton used during the first quarter of 2018 was $337, a 6% increase compared to $317 in the fourth quarter of 2017 and an increase of 19% compared to $284 in the first quarter of 2017.

Overall operating rates at our steel mills increased to 92% in the first quarter of 2018 as compared to 82% in the fourth quarter of 2017 and 88% in the first quarter of 2017.

Total steel mill energy costs in the first quarter of 2018 increased approximately $1 per ton compared to both the fourth quarter of 2017 and first quarter of 2017 due to higher electricity unit costs.

Our liquidity position remains strong with $760.0 million in cash and cash equivalents as of March 31, 2018. Subsequent to the end of the first quarter, we amended and extended our untapped $1.5 billion revolving credit facility to mature in April 2023.

Recent Developments
In February 2018, Nucor's board of directors declared a cash dividend of $0.38 per share payable on May 11, 2018 to stockholders of record on March 29, 2018. This dividend is Nucor's 180th consecutive quarterly cash dividend, a record we expect to continue.

In March 2018, Nucor announced plans to build a rebar micro mill in Frostproof, Florida, which is located in Polk County. The micro mill is a $240 million investment that will have an estimated annual capacity of 350,000 tons and employ approximately 250 people. We anticipate the project will take approximately two years to complete. This location will provide a logistical advantage to Nucor and allow us to capitalize on a currently abundant supply of scrap, a good portion of which is handled by our scrap business, The David J. Joseph Company. This is the second rebar micro mill Nucor is constructing.  

First Quarter of 2018 Analysis
As expected, earnings in the steel mills segment in the first quarter of 2018 improved compared to the fourth quarter of 2017 due to higher selling prices and increased volumes for all of our steel mill products. The profitability of the steel products segment in the first quarter of 2018 decreased compared to the fourth quarter of 2017 due to typical seasonality. The performance of the raw materials segment improved from the fourth quarter of 2017 due to the much improved performance of our scrap processing operations as well as our direct reduced iron (DRI) facilities.

Second Quarter of 2018 Outlook
Earnings in the second quarter of 2018 are expected to increase significantly compared to the first quarter of 2018. It is worth noting that steel mill metal margins and profits in March were by far the strongest in the first quarter of 2018. The performance of the steel mills segment is expected to improve in the second quarter of 2018 as compared to the first quarter of 2018 as we continue to experience the benefit of announced price increases. We believe there is sustainable strength in steel end use markets, and we are encouraged by recent actions by the government to address the massive flood of dumped and illegally subsidized imports into the United States. We believe broad-based tariffs with few exceptions are needed to address the historic volume of unfairly traded imports and transshipping that is done to avoid trade duties. We expect improved performance for our steel products segment in the second quarter of 2018 as compared to the first quarter of 2018 as rising steel input costs are being passed on to customers.

About Nucor
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.

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 first quarter results on April 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




March 31, 2018


April 1, 2017


Percentage
Change

Steel mills total shipments








Sheet


2,698


2,705


-


Bars


2,242


1,957


15%


Structural


601


572


5%


Plate


596


577


3%


Other


131


74


77%




6,268


5,885


7%









Sales tons to outside customers:








Steel mills


5,016


4,860


3%


Joist


105


101


4%


Deck


106


106


-


Cold finished


147


122


20%


Fabricated concrete








reinforcing steel


290


247


17%


Piling


126


119


6%


Tubular products


284


223


27%


Other


893


806


11%




6,967


6,584


6%

 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)






  Three Months (13 Weeks) Ended 






March 31, 2018


April 1, 2017





Net sales

$      5,568,419


$         4,815,179





Costs, expenses and other:




  Cost of products sold

4,842,013


4,054,929

  Marketing, administrative and other expenses

182,960


176,426

  Equity in earnings of unconsolidated affiliates

(9,580)


(8,756)

  Interest expense, net

37,114


43,605


5,052,507


4,266,204

Earnings before income taxes and




noncontrolling interests

515,912


548,975

Provision for income taxes

135,800


171,327

Net earnings

380,112


377,648

Earnings attributable to




noncontrolling interests

25,933


20,749

Net earnings attributable to




Nucor stockholders

$          354,179


$            356,899





Net earnings per share:




  Basic

$1.11


$1.11

  Diluted

$1.10


$1.11





Average shares outstanding:




  Basic

319,421


320,224

  Diluted

320,474


321,146





 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 (In thousands)














March 31, 2018


Dec. 31, 2017

 ASSETS






 Current assets:






 Cash and cash equivalents


$          760,254


$        949,104


 Short-term investments


-


50,000


 Accounts receivable, net


2,371,758


2,028,545


 Inventories, net


3,708,503


3,461,686


 Other current assets


238,701


335,085











 Total current assets


7,079,216


6,824,420









 Property, plant and equipment, net


5,090,890


5,093,147









 Goodwill



2,195,565


2,196,058









 Other intangible assets, net


892,121


914,646









 Other assets


863,454


812,987











 Total assets


$    16,121,246


$   15,841,258









 LIABILITIES






 Current liabilities:






 Short-term debt


$            74,036


$           52,833


 Long-term debt due within one year


500,000


500,000


 Accounts payable


1,329,902


1,181,346


 Salaries, wages and related accruals


338,045


516,660


 Accrued expenses and other current liabilities


602,598


573,925











 Total current liabilities


2,844,581


2,824,764









 Long-term debt due after one year


3,242,865


3,242,242









 Deferred credits and other liabilities


710,881


689,464











 Total liabilities


6,798,327


6,756,470









 EQUITY






 Nucor stockholders' equity:






 Common stock


152,061


151,960


 Additional paid-in capital


2,041,297


2,021,339


 Retained earnings


8,696,007


8,463,709


 Accumulated other comprehensive loss,







 net of income taxes


(249,366)


(254,681)


 Treasury stock


(1,663,972)


(1,643,291)



 Total Nucor stockholders' equity


8,976,027


8,739,036









 Noncontrolling interests


346,892


345,752











 Total equity


9,322,919


9,084,788











 Total liabilities and equity


$    16,121,246


$   15,841,258









 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 (In thousands)
















Three Months (13 Weeks) Ended
















March 31, 2018


April 1, 2017










Operating activities:







Net earnings



$        380,112


$        377,648


Adjustments:








Depreciation



158,665


158,525



Amortization



22,453


22,368



Stock-based compensation


10,463


9,524



Deferred income taxes


29,988


(6,695)



Distributions from affiliates


25,150


30,249



Equity in earnings of unconsolidated affiliates

(9,580)


(8,756)



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







Accounts receivable


(343,982)


(290,261)




Inventories



(246,933)


(519,902)




Accounts payable


214,399


413,256




Federal income taxes


86,746


157,346




Salaries, wages and related accruals

(171,626)


(102,744)




Other operating activities


28,629


3,584










Cash provided by operating activities


184,484


244,142










Investing activities:







Capital expenditures



(228,766)


(94,535)


Investment in and advances to affiliates

(55,901)


(14,000)


Disposition of plant and equipment


5,967


8,870


Acquisitions (net of cash acquired)


-


(485,060)


Purchases of investments


-


(50,000)


Proceeds from the sale of investments


50,000


150,000


Other investing activities


975


-










Cash used in investing activities


(227,725)


(484,725)










Financing activities:







Net change in short-term debt


21,203


30,180


Issuance of common stock


15,312


7,432


Payment of tax withholdings on certain stock-based compensation

(4,430)


(1,349)


Distributions to noncontrolling interests

(24,793)


(61,544)


Cash dividends



(121,787)


(121,303)


Acquisition of treasury stock


(29,193)


-


Other financing activities


(1,844)


(518)










Cash used in financing activities


(145,532)


(147,102)










Effect of exchange rate changes on cash


(77)


(517)










(Decrease) increase in cash and cash equivalents

(188,850)


(388,202)










Cash and cash equivalents - beginning of year

949,104


2,045,961










Cash and cash equivalents - end of three months

$        760,254


$    1,657,759










Non-cash investing activity:







Change in accrued plant and equipment purchases and assets recorded





under capital lease arrangements


$         (65,959)


$         (11,222)










 


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SOURCE Nucor Corporation

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