Nucor Announces Third Quarter Results, Update on Operations
10/17/2013 - Nucor Corp. said its steel mills operating performance improved in the third quarter mainly due to better pricing for sheet steel, but it expects lower shipping volumes in the fourth quarter due to seasonal factors.
Nucor announced consolidated net earnings of US$147.6 million, or US$0.46 per diluted share, for the third quarter of 2013. By comparison, Nucor reported net earnings of US$85.1 million, or US$0.27 per diluted share, in the second quarter of 2013 and net earnings of US$110.3 million, or US$0.35 per diluted share, in the third quarter of 2012.
In the first nine months of 2013, Nucor reported consolidated net earnings of US$317.5 million, or US$0.99per diluted share, compared with consolidated net earnings of US$367.7 million, or US$1.15 per diluted share, in the first nine months of last year.
Third quarter of 2013 earnings were negatively affected by a net US$14.0 million (US$0.03 per diluted share) partial write down of inventory and fixed asset balances associated with the collapse of a storage dome at Nucor Steel Louisiana in St. James Parish on 25 September2013. There were no injuries sustained, and there was no environmental impact. Nucor Steel Louisiana was finishing construction of its new direct reduced iron (DRI) plant on the site and preparing to begin production. The start-up of operations will now be delayed until the end of the year.
Nucor recorded a credit to value inventories using the last-in, first-out (LIFO) method of accounting ofUS$18.0 million (US$0.03 per diluted share) in the third quarter of 2013, compared with no charge or credit recorded in the second quarter of 2013 and a credit of US$84.0 million (US$0.16 per diluted share) recorded in the third quarter of 2012. As a result, there is no LIFO charge in the first nine months of 2013, compared with a LIFO credit of US$84.0 million (US$0.16 per diluted share) in the first nine months of 2012. Third quarter of 2012 earnings were also affected by non-cash inventory purchase accounting adjustments following the acquisition of Skyline Steel LLC in June of 2012 of US$28.2 million (US$0.06 per diluted share) and a loss on the sale of assets of Nucor Wire Products Pennsylvania, Inc. of US$17.6 million (US$0.04 per diluted share).
Nucor's consolidated net sales increased 6% to US$4.94 billion in the third quarter of 2013 compared with US$4.67 billion in the second quarter of 2013 and increased 3% compared with US$4.80 billion in the third quarter of 2012. Average sales price per ton increased slightly from the second quarter of 2013 and decreased 4% from the third quarter of 2012. Total tons shipped to outside customers were 6,166,000 tons in the third quarter of 2013, a 6% increase over the second quarter of 2013 and a 7% increase over the third quarter of 2012. Total third quarter steel mill shipments increased 6% over the third quarter of 2012 and increased 7% from the second quarter of 2013. Third quarter downstream steel products shipments to outside customers decreased 4% from the third quarter of 2012 and increased 2% over the second quarter of 2013.
In the first nine months of 2013, Nucor's consolidated net sales decreased 5% to US$14.16 billion, compared with US$14.98 billion in last year's first nine months. Total tons shipped to outside customers increased 1% over the first nine months of 2012, while average sales price per ton decreased 6%.
The average scrap and scrap substitute cost per ton used in the third quarter of 2013 was US$372, a decrease of 1% from US$377 in the second quarter of 2013 and a decrease of 2% from US$380 in the third quarter of 2012. The average scrap and scrap substitute cost per ton used in the first nine months of 2013 was US$376, a decrease of 10% from US$418 in the first nine months of 2012.
Overall operating rates at our steel mills in the third quarter (78%) were up from the second quarter (73%) and from last year's third quarter (71%). Year-to-date steel mill utilization decreased from 75% in the third quarter of 2012 to 74% in the third quarter of 2013.
Our liquidity position has improved to US$1.77 billion in cash and cash equivalents, short-term investments, and restricted cash at the end of the third quarter, compared with US$749.2 million at the end of the second quarter. During the third quarter, we issued US$500.0 million of 4.00% notes due in 2023 and US$500.0 million of 5.20% notes due in 2043. The bond offering effectively refinanced US$900.0 million of debt that matured between the fourth quarter of 2012 and the second quarter of 2013. The weighted average interest rate of the new debt is 35 basis points lower than the retired debt, and the new debt also lengthens our debt maturity profile with its weighted average term to maturity of 20 years. In addition, our undrawn US$1.5 billion revolving credit facility has been amended and restated to extend the maturity date to August 2018. Cash flows from operations continue to be strong and wasUS$883.6 million through the third quarter of 2013.
In September, Nucor's board of directors declared a cash dividend of US$0.3675 per share payable onNovember 8, 2013 to stockholders of record on September 27, 2013. This dividend is Nucor's 162ndconsecutive quarterly cash dividend, a record we expect to continue.
Our third quarter operating performance in the steel mills segment improved significantly compared with second quarter performance mainly due to better pricing for sheet steel. Sheet steel profitability improved as a result of competitor supply disruptions, customer inventory restocking and some market demand improvement. Structural steel profitability also improved due to Nucor-Yamato Steel's higher production following its 17 day planned outage during the second quarter and customer inventory restocking. It is also worth noting that our fabricated construction products businesses (rebar fabrication, joist and decking, and pre-engineered metal buildings) have had operating profits in five of the last six quarters.
Although we expect stability in metal margins, we typically experience lower shipping volumes in the fourth quarter due to seasonal factors. Additionally, we expect extended planned outages during the fourth quarter at our SBQ mill in Norfolk, Neb., our sheet mill in Berkeley County, S.C., and our structural mill in Blytheville, Ark., in preparation for our previously announced capital expansion projects at those facilities. As a result, we currently expect to see moderately lower earnings for the fourth quarter of 2013.
Nucor and 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 ferroalloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.
In the first nine months of 2013, Nucor reported consolidated net earnings of US$317.5 million, or US$0.99per diluted share, compared with consolidated net earnings of US$367.7 million, or US$1.15 per diluted share, in the first nine months of last year.
Third quarter of 2013 earnings were negatively affected by a net US$14.0 million (US$0.03 per diluted share) partial write down of inventory and fixed asset balances associated with the collapse of a storage dome at Nucor Steel Louisiana in St. James Parish on 25 September2013. There were no injuries sustained, and there was no environmental impact. Nucor Steel Louisiana was finishing construction of its new direct reduced iron (DRI) plant on the site and preparing to begin production. The start-up of operations will now be delayed until the end of the year.
Nucor recorded a credit to value inventories using the last-in, first-out (LIFO) method of accounting ofUS$18.0 million (US$0.03 per diluted share) in the third quarter of 2013, compared with no charge or credit recorded in the second quarter of 2013 and a credit of US$84.0 million (US$0.16 per diluted share) recorded in the third quarter of 2012. As a result, there is no LIFO charge in the first nine months of 2013, compared with a LIFO credit of US$84.0 million (US$0.16 per diluted share) in the first nine months of 2012. Third quarter of 2012 earnings were also affected by non-cash inventory purchase accounting adjustments following the acquisition of Skyline Steel LLC in June of 2012 of US$28.2 million (US$0.06 per diluted share) and a loss on the sale of assets of Nucor Wire Products Pennsylvania, Inc. of US$17.6 million (US$0.04 per diluted share).
Nucor's consolidated net sales increased 6% to US$4.94 billion in the third quarter of 2013 compared with US$4.67 billion in the second quarter of 2013 and increased 3% compared with US$4.80 billion in the third quarter of 2012. Average sales price per ton increased slightly from the second quarter of 2013 and decreased 4% from the third quarter of 2012. Total tons shipped to outside customers were 6,166,000 tons in the third quarter of 2013, a 6% increase over the second quarter of 2013 and a 7% increase over the third quarter of 2012. Total third quarter steel mill shipments increased 6% over the third quarter of 2012 and increased 7% from the second quarter of 2013. Third quarter downstream steel products shipments to outside customers decreased 4% from the third quarter of 2012 and increased 2% over the second quarter of 2013.
In the first nine months of 2013, Nucor's consolidated net sales decreased 5% to US$14.16 billion, compared with US$14.98 billion in last year's first nine months. Total tons shipped to outside customers increased 1% over the first nine months of 2012, while average sales price per ton decreased 6%.
The average scrap and scrap substitute cost per ton used in the third quarter of 2013 was US$372, a decrease of 1% from US$377 in the second quarter of 2013 and a decrease of 2% from US$380 in the third quarter of 2012. The average scrap and scrap substitute cost per ton used in the first nine months of 2013 was US$376, a decrease of 10% from US$418 in the first nine months of 2012.
Overall operating rates at our steel mills in the third quarter (78%) were up from the second quarter (73%) and from last year's third quarter (71%). Year-to-date steel mill utilization decreased from 75% in the third quarter of 2012 to 74% in the third quarter of 2013.
Our liquidity position has improved to US$1.77 billion in cash and cash equivalents, short-term investments, and restricted cash at the end of the third quarter, compared with US$749.2 million at the end of the second quarter. During the third quarter, we issued US$500.0 million of 4.00% notes due in 2023 and US$500.0 million of 5.20% notes due in 2043. The bond offering effectively refinanced US$900.0 million of debt that matured between the fourth quarter of 2012 and the second quarter of 2013. The weighted average interest rate of the new debt is 35 basis points lower than the retired debt, and the new debt also lengthens our debt maturity profile with its weighted average term to maturity of 20 years. In addition, our undrawn US$1.5 billion revolving credit facility has been amended and restated to extend the maturity date to August 2018. Cash flows from operations continue to be strong and wasUS$883.6 million through the third quarter of 2013.
In September, Nucor's board of directors declared a cash dividend of US$0.3675 per share payable onNovember 8, 2013 to stockholders of record on September 27, 2013. This dividend is Nucor's 162ndconsecutive quarterly cash dividend, a record we expect to continue.
Our third quarter operating performance in the steel mills segment improved significantly compared with second quarter performance mainly due to better pricing for sheet steel. Sheet steel profitability improved as a result of competitor supply disruptions, customer inventory restocking and some market demand improvement. Structural steel profitability also improved due to Nucor-Yamato Steel's higher production following its 17 day planned outage during the second quarter and customer inventory restocking. It is also worth noting that our fabricated construction products businesses (rebar fabrication, joist and decking, and pre-engineered metal buildings) have had operating profits in five of the last six quarters.
Although we expect stability in metal margins, we typically experience lower shipping volumes in the fourth quarter due to seasonal factors. Additionally, we expect extended planned outages during the fourth quarter at our SBQ mill in Norfolk, Neb., our sheet mill in Berkeley County, S.C., and our structural mill in Blytheville, Ark., in preparation for our previously announced capital expansion projects at those facilities. As a result, we currently expect to see moderately lower earnings for the fourth quarter of 2013.
Nucor and 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 ferroalloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.
