NUE
$58.62
Nucor
($.56)
(.95%)
Earnings Details
3rd Quarter September 2018
Thursday, October 18, 2018 9:00:00 AM
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Summary

Nucor Misses

Nucor (NUE) reported 3rd Quarter September 2018 earnings of $2.33 per share on revenue of $6.7 billion. The consensus earnings estimate was $2.35 per share on revenue of $6.5 billion. The Earnings Whisper number was $2.40 per share. Revenue grew 30.4% on a year-over-year basis.

Nucor Corp and its affiliates are manufacturer of steel and steel products. It also produces direct reduced iron for use in the Company’s steel mills.

Results
Reported Earnings
$2.33
Earnings Whisper
$2.40
Consensus Estimate
$2.35
Reported Revenue
$6.74 Bil
Revenue Estimate
$6.49 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Nucor Reports Results for the Third Quarter and First Nine Months of 2018

CHARLOTTE, N.C., Oct. 18, 2018 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) today announced third quarter of 2018 consolidated net earnings of $676.7 million, or $2.13 per diluted share. Included in the third quarter of 2018 earnings is a non-cash impairment charge of $110.0 million, or $0.26 per diluted share, related to our proved producing natural gas well assets. This impairment charge was not included in our quantitative guidance range provided on September 14, 2018.  By comparison, Nucor reported consolidated net earnings of $683.2 million, or $2.13 per diluted share, for the second quarter of 2018 and $254.9 million, or $0.79 per diluted share, for the third quarter of 2017.

In the first nine months of 2018, Nucor reported consolidated net earnings of $1.71 billion, or $5.35 per diluted share, compared with consolidated net earnings of $934.8 million, or $2.90 per diluted share, in the first nine months of last year.

"The strong financial performance we have had this year continued into the third quarter, and we are on pace for 2018 to be a record year for earnings," said John Ferriola, Nucor's Chairman, Chief Executive Officer and President. "Our financial results are evidence that Nucor was primed and ready for this long-awaited upturn in the steel market. Our strategic initiatives, including capital projects, acquisitions and enhanced customer engagement, as well as our active participation in industry trade actions, have solidified our industry leading performance. Our extensive investments have grown our peak earnings power and enhanced our many competitive strengths."

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



Three Months (13 Weeks) Ended


Nine Months (39 Weeks) Ended



Sept. 29, 2018


Sept. 30, 2017


Sept. 29, 2018


Sept. 30, 2017

Steel mills


$  1,095,360


$   405,097


$  2,617,647


$  1,628,800

Steel products


138,688


86,908


380,268


237,463

Raw materials


(29,074)


9,957


180,468


102,575

Corporate/eliminations

(282,472)


(131,357)


(826,268)


(541,122)



$     922,502


$   370,605


$  2,352,115


$  1,427,716










Financial Review
Included in the third quarter of 2018 results were the previously mentioned non-cash impairment charge of $110.0 million, or $0.26 per diluted share, as well as a benefit of $24.8 million, or $0.06 per diluted share, related to insurance recoveries. Included in the second quarter of 2018 results was a benefit of $23.3 million, or $0.06 per diluted share, related to insurance recoveries.  Included in the third quarter of 2017 results was a net benefit of $13.2 million, or $0.04 per diluted share, related to tax return true-ups and state tax credits. Also included in the third quarter of 2017 results was an expense of $22.5 million, or $0.05 per diluted share, related to certain legal matters.

In our Form 10-Q for the second quarter of 2018 we stated the following related to the proved producing natural gas well assets impairment assessment we performed in the fourth quarter of 2017: "Changes in the natural gas industry or a continuation of the low-price environment beyond what had already been assumed in the analysis could cause management to revise the natural gas price assumptions, the estimated reserves or the estimated drilling production costs. Unfavorable revisions to these assumptions or estimates could possibly result in an impairment of some or all of the groups of proved well assets." Based on the continued deterioration in the outlook for pricing for our natural gas wells, we determined that a triggering event occurred related to the proved producing natural gas well assets requiring assessment for impairment in the third quarter. As a result of that assessment, we recorded a $110.0 million, or $0.26 per diluted share, non-cash impairment charge to the proved producing natural gas well assets.

Nucor's consolidated net sales increased 4% to $6.74 billion in the third quarter of 2018 compared with $6.46 billion in the second quarter of 2018 and increased 30% compared with $5.17 billion in the third quarter of 2017. Average sales price per ton in the third quarter of 2018 increased 7% compared with the second quarter of 2018 and increased 23% compared with the third quarter of 2017. Total tons shipped to outside customers were 7,048,000 tons in the third quarter of 2018, a 2% decrease from the second quarter of 2018 and a 6% increase from the third quarter of 2017. Total steel mill shipments in the third quarter of 2018 decreased 2% from the second quarter of 2018 and increased 7% from the third quarter of 2017. Downstream steel products shipments to outside customers in the third quarter of 2018 decreased 1% from the second quarter of 2018 and increased 6% from the third quarter of 2017.

In the first nine months of 2018, Nucor's consolidated net sales increased 24% to $18.77 billion, compared with $15.16 billion in last year's first nine months. Total tons shipped to outside customers in the first nine months of 2018 were 21,212,000, an increase of 6% from the first nine months of 2017, while average sales price per ton increased 16%.

The average scrap and scrap substitute cost per gross ton used during the third quarter of 2018 was $374, a slight increase compared to $373 in the second quarter of 2018 and an increase of 18% compared to $317 in the third quarter of 2017. The average scrap and scrap substitute cost per ton used in the first nine months of 2018 was $361, an increase of 19% from $304 in the first nine months of 2017.

The overall operating rate at our steel mills was 92% in the third quarter of 2018, which decreased compared to 95% in the second quarter of 2018 and increased compared to 84% in the third quarter of 2017. The operating rate for the first nine months of 2018 increased to 93% as compared with 87% for the first nine months of 2017.

Total steel mill energy costs in the third quarter of 2018 were similar to the second quarter of 2018 and decreased approximately $3 per ton compared to the third quarter of 2017 primarily due to lower natural gas unit costs and higher productivity resulting from increased steel production. Total steel mill energy costs for the first nine months of 2018 decreased approximately $1 per ton compared to the first nine months of 2017.

Our liquidity position remains strong with $1.9 billion in cash and cash equivalents as of September 29, 2018 and an untapped $1.5 billion revolving credit facility that does not expire until April 2023.

Recent Developments
In September 2018, Nucor's board of directors approved an investment of $650 million to expand the production capability of Nucor Steel Gallatin, the Company's flat-rolled sheet steel mill located in Ghent, Kentucky.  This investment will increase the production capability from 1,600,000 tons to approximately 3,000,000 tons annually and will increase the maximum coil width to approximately 73 inches. This expansion complements the $176 million investment currently underway to construct a hot band continuous pickle galvanizing line at Nucor Steel Gallatin, which is expected to be operational in the first half of 2019 and will produce approximately 500,000 tons per year of galvanized hot band steel. 

Also in September 2018, Nucor's board of directors declared a cash dividend of $0.38 per share payable on November 9, 2018 to stockholders of record on September 28, 2018. This dividend is Nucor's 182nd consecutive quarterly cash dividend, a record we expect to continue.

Additionally, in September 2018, the board of directors approved the repurchase of up to $2 billion of the Company's common stock.  Share repurchases will be made from time to time in the open market at prevailing market prices, through private transactions or block trades.  The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. The board of directors also terminated any previously authorized repurchase programs.

Third Quarter of 2018 Analysis
As expected, earnings in the third quarter of 2018 continued the trend of strong 2018 performance. The performance of our steel mills segment in the third quarter of 2018 increased compared to the second quarter of 2018 due primarily to higher earnings at our sheet mills and plate mills, despite the impact of both planned and weather-related outages at certain mills that occurred during the third quarter. The earnings of the steel products segment decreased in the third quarter of 2018 as compared to the second quarter of 2018. Our raw materials segment's earnings in the third quarter of 2018 decreased compared to the second quarter of 2018 due to the previously mentioned impairment charge to our natural gas well assets, decreased performance of our scrap brokerage and processing operations and the decreased performance of our DRI facilities as our Louisiana DRI facility experienced planned and unplanned outages in the third quarter.

Fourth Quarter of 2018 Outlook
Earnings in the fourth quarter of 2018 are expected to decrease across all three operating segments compared to the third quarter of 2018 (excluding the third quarter of 2018 impairment charge) due primarily to typical seasonality experienced in our fourth quarter. However, we expect the fourth quarter of 2018 to be another strong quarter as we believe earnings will be noticeably higher than those generated in the fourth quarter of 2017.  We continue to believe there is sustainable strength in steel end use markets.

About Nucor
Nucor and its affiliates are manufacturers of steel and 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 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 "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 third quarter results on October 18, 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 


 Nine Months (39 Weeks) Ended 



Sept. 29,
2018


Sept. 30,
2017


Percentage
Change


Sept. 29,
2018


Sept. 30,
2017


Percentage
Change

Steel mills total shipments:













Sheet 

2,733


2,617


4%


8,216


8,041


2%


Bars

2,265


2,069


9%


6,881


6,027


14%


Structural

595


488


22%


1,822


1,607


13%


Plate

633


553


14%


1,788


1,744


3%


Other

67


145


-54%


294


417


-29%



6,293


5,872


7%


19,001


17,836


7%














Sales tons to outside customers:













Steel mills

5,031


4,698


7%


15,125


14,508


4%


Joist

136


127


7%


355


332


7%


Deck

130


119


9%


352


329


7%


Cold finished

141


119


18%


437


361


21%


Fabricated concrete













reinforcing steel

324


319


2%


951


857


11%


Piling

152


156


-3%


438


420


4%


Tubular products

259


242


7%


829


692


20%


Other

875


838


4%


2,725


2,451


11%



7,048


6,618


6%


21,212


19,950


6%














 

 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In thousands, except per share data)










  Three Months (13 Weeks) Ended  


Nine Months (39 Weeks) Ended  










Sept. 29, 2018


Sept. 30, 2017


Sept. 29, 2018


Sept. 30, 2017









Net sales

$     6,742,202


$     5,170,117


$   18,771,395


$   15,160,065









Costs, expenses and other:








  Cost of products sold

5,452,052


4,591,153


15,588,249


13,111,226

  Marketing, administrative and other expenses

234,081


172,792


651,422


519,429

  Equity in earnings of unconsolidated affiliates

(13,634)


(7,743)


(34,157)


(29,801)

  Impairment of assets

110,000


-


110,000


-

  Interest expense, net

37,201


43,310


103,766


131,495


5,819,700


4,799,512


16,419,280


13,732,349

Earnings before income taxes and








noncontrolling interests

922,502


370,605


2,352,115


1,427,716

Provision for income taxes

216,215


104,500


552,101


442,239

Net earnings

706,287


266,105


1,800,014


985,477

Earnings attributable to








noncontrolling interests

29,631


11,255


86,026


50,680

Net earnings attributable to 








Nucor stockholders

$        676,656


$        254,850


$     1,713,988


$        934,797









Net earnings per share:








  Basic

$               2.13


$               0.79


$               5.37


$               2.91

  Diluted

$               2.13


$               0.79


$               5.35


$               2.90









Average shares outstanding:








  Basic

315,913


320,096


317,928


320,253

  Diluted

316,798


320,763


318,882


321,045

 

 

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 

 (In thousands) 












Sept. 29, 2018


Dec. 31, 2017

 ASSETS 





 Current assets: 





 Cash and cash equivalents 

$      1,932,155


$          949,104


 Short-term investments 

-


50,000


 Accounts receivable, net 

2,636,038


2,028,545


 Inventories, net 

4,105,714


3,461,686


 Other current assets 

170,344


335,085










 Total current assets 

8,844,251


6,824,420








 Property, plant and equipment, net 

5,151,302


5,093,147








 Goodwill 


2,194,231


2,196,058








 Other intangible assets, net 

847,569


914,646








 Other assets 

925,540


812,987










 Total assets 

$    17,962,893


$    15,841,258








 LIABILITIES 





 Current liabilities: 





 Short-term debt 

$            52,829


$            52,833


 Long-term debt due within one year 

-


500,000


 Accounts payable 

1,447,528


1,181,346


 Salaries, wages and related accruals 

679,954


516,660


 Accrued expenses and other current liabilities 

627,384


573,925










 Total current liabilities 

2,807,695


2,824,764








 Long-term debt due after one year 

4,232,760


3,242,242








 Deferred credits and other liabilities 

748,017


689,464










 Total liabilities 

7,788,472


6,756,470








 EQUITY 





 Nucor stockholders' equity: 





 Common stock 

152,061


151,960


 Additional paid-in capital 

2,065,299


2,021,339


 Retained earnings 

9,814,073


8,463,709


 Accumulated other comprehensive loss, 






 net of income taxes 

(274,607)


(254,681)


 Treasury stock 

(1,964,689)


(1,643,291)



 Total Nucor stockholders' equity 

9,792,137


8,739,036








 Noncontrolling interests 

382,284


345,752










 Total equity 

10,174,421


9,084,788










 Total liabilities and equity 

$    17,962,893


$    15,841,258








 

 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

 (In thousands) 











Nine Months (39 Weeks) Ended






Sept. 29, 2018


Sept. 30, 2017





Operating activities:





Net earnings 

$      1,800,014


$          985,477


Adjustments:






Depreciation

474,330


474,822



Amortization

66,684


68,394



Stock-based compensation

65,597


51,227



Deferred income taxes

54,162


(38,335)



Distributions from affiliates

29,325


48,037



Equity in earnings of unconsolidated affiliates

(34,157)


(29,801)



Impairment of assets

110,000


-



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







Accounts receivable

(615,118)


(406,582)




Inventories

(644,865)


(957,029)




Accounts payable

229,552


451,774




Federal income taxes

168,639


(30,859)




Salaries, wages and related accruals

173,732


74,306




Other operating activities

23,564


75,137








Cash provided by operating activities

1,901,459


766,568





Investing activities:





Capital expenditures

(624,739)


(292,312)


Investment in and advances to affiliates

(111,540)


(19,000)


Disposition of plant and equipment

27,964


19,420


Acquisitions (net of cash acquired)

-


(543,153)


Purchases of investments

-


(50,000)


Proceeds from the sale of investments

50,000


150,000


Other investing activities

25,347


(1,455)





Cash used in investing activities

(632,968)


(736,500)





Financing activities:





Net change in short-term debt

(5)


32,409


Proceeds from long-term debt, net of discount

995,710


-


Repayments of long-term debt

(500,000)


-


Bond issuance related costs

(7,625)


-


Issuance of common stock

24,102


5,417


Payment of tax withholdings on certain stock-based compensation

(22,123)


(13,960)


Distributions to noncontrolling interests

(49,495)


(85,094)


Cash dividends

(364,982)


(364,302)


Acquisition of treasury stock

(351,392)


(90,305)


Other financing activities

(5,247)


(1,703)










Cash used in financing activities 

(281,057)


(517,538)





Effect of exchange rate changes on cash

(4,383)


17,453





Increase (decrease) in cash and cash equivalents

983,051


(470,017)





Cash and cash equivalents - beginning of year

949,104


2,045,961





Cash and cash equivalents - end of nine months

$      1,932,155


$      1,575,944





Non-cash investing activity:





Change in accrued plant and equipment purchases and assets 





recorded under capital lease arrangements

$            40,996


$            42,810





 

Cision View original content:http://www.prnewswire.com/news-releases/nucor-reports-results-for-the-third-quarter-and-first-nine-months-of-2018-300733593.html

SOURCE Nucor Corporation