Nucor Reports 3rd Quarter Results
10/19/2007 - Nucor reports consolidated net earnings of $381.2 million on consolidated net sales of $4.26 billion for the third quarter, and consolidated net earnings of $1.11 billion on consolidated net sales of $12.20 billion for the first nine months of 2007.
Nucor Corp. announced consolidated net earnings of $381.2 million on consolidated net sales of $4.26 billion for the third quarter, and consolidated net earnings of $1.11 billion on consolidated net sales of $12.20 billion for the first nine months of 2007.
Third Quarter Results—Consolidated net earnings of $381.2 million ($1.29 per diluted share) reflect an 11% increase from consolidated net earnings of $344.9 million ($1.14 per diluted share) earned in the second quarter of 2007 and a 27% decrease compared with consolidated net earnings of $521.6 million ($1.70 per diluted share) earned in the third quarter of 2006.
Consolidated net sales of $4.26 billion reflect an 8% increase compared with consolidated net sales of $3.93 billion in the third quarter of 2006, and a 2% increased compared with consolidated net sales of $4.17 billion in the second quarter of 2007.
Average sales price per ton increased 5% from the third quarter of 2006 and decreased 1% from the second quarter of 2007. Total tons shipped to outside customers were 5,771,000 tons, an increase of 3% over the third quarter of 2006 and an increase of 3% over the second quarter of 2007.
The average scrap and scrap substitute cost per ton used ($277) reflects an 8% increase from $257 in the third quarter of 2006 and a 5% decrease from $291 in the second quarter of 2007.
Nucor incurred an $11.0-million charge to value inventories using the last-in, first-out (LIFO) method of accounting in the third quarter, which compares with a charge of $20.5 million in the third quarter of 2006 and a charge of $66.5 million in the second quarter of 2007.
Nine Month Results—Consolidated net earnings of $1.11 billion ($3.68 per diluted share) reflect an 18% decrease from net earnings of $1.35 billion ($4.34 per diluted share) in last year's first nine months.
Consolidated net sales $12.20 billion, reflect an 8% increase compared with consolidated net sales of $11.28 billion in last year's first nine months. Average sales price per ton increased 8% while total tons shipped to outside customers remained flat compared to the first nine months of 2006.
The average scrap and scrap substitute cost per ton used ($275) reflects an 11% increase from $247 in the first nine months of 2006.
Nucor incurred a $102.0-million charge to value inventories using the last-in, first-out (LIFO) method of accounting in the first nine months of 2007, compared with a charge of $45.0 million in the first nine months of 2006.
Nine-Month Operating Results—In the steel mills segment, steel production decreased 5% to 16,503,000 tons, compared with 17,318,000 tons produced in the first nine months of 2006.
Total steel shipments decreased 4% to 16,663,000 tons, compared with 17,286,000 tons in last year's first nine months. Steel shipments to outside customers decreased 5% to 15,157,000 tons, compared with 15,936,000 tons in last year's first nine months.
In the steel products segment, steel joist production decreased to 409,000 tons, compared with 433,000 tons in the first nine months of 2006. Steel deck sales increased to 355,000 tons, compared with 284,000 tons in last year's first nine months. Cold finished steel sales increased to 322,000 tons compared to 261,000 tons in the first nine months of 2006. Sales of fabricated concrete reinforcing steel were 385,000 tons from the acquisition date of Harris Steel Group Inc. near the end of the first quarter of 2007 through the end of the third quarter (approximately six months).
Corporate Results—In September, Nucor's board of directors declared a supplemental dividend of $0.50 per share in addition to the $0.11 per share base dividend. Nucor began paying a supplemental dividend in the second quarter of 2005, allowing stockholders to participate in our successful pay-for-performance business model.
During the third quarter, Nucor repurchased approximately 11.6 million shares of its common stock at a cost of approximately $599.8 million, completing the previous repurchase authorization. During the first nine months, Nucor repurchased approximately 14.1 million shares at a cost of about $754.0 million. In September, the board of directors approved the repurchase of up to an additional 30 million shares of common stock, all of which remain available for repurchase.
In the third quarter, Nucor completed the acquisition of three downstream companies: Magnatrax Corp., as well as LMP Steel & Wire, and Consolidated Rebar, Inc. (acquired through Nucor's wholly owned subsidiary, Harris Steel Inc.). These acquisitions enhance Nucor's product diversification and are part of the execution of Nucor's strategy for profitable downstream growth.
Nucor announced two additional acquisitions in September that are expected to close in the fourth quarter. Nucor has entered into an agreement to acquire substantially all the assets of Nelson Steel, Inc., a producer of wire mesh and related products, with capacity of approximately 80,000 tons. In addition, Nucor's wholly owned subsidiary, Harris Steel Inc., has entered into an agreement with Barker Steel Co., Inc. to form a new entity that combines the two companies' rebar fabrication operations in the northeastern U.S. market. Harris will contribute two facilities located in Pennsylvania and Massachusetts, as well as cash, for a 90% equity interest in the new venture. In exchange for a 10% interest in the venture, Barker will contribute its eight northeastern U.S. facilities located in New York, New Hampshire, Connecticut, New Jersey, Massachusetts (3) and Rhode Island. The Barker facilities have total rebar fabrication capacity of approximately 218,000 tons. With the completion of the Barker joint venture, Harris Steel's annual rebar fabrication capacity will exceed 1 million tons.
Outlook—Nucor expects that the fourth quarter of 2007 will be “another good quarter” with earnings in the range of $1.10 to $1.20 per diluted share. The company anticipates continued strength in bar, beam, plate and many of its downstream businesses, noting that market conditions for sheet are slowly improving with more balance between customer inventories and demand. The company said that it is also “finally seeing a significant drop in imports, which has helped bring these inventories back into balance.”
Nucor said that fourth quarter shipments would be impacted by the usual seasonal and holiday factors, including scheduled shut-downs at many of our facilities for regular maintenance. “The biggest risks to our forecast for the fourth quarter and 2008 remain any further weakening in the economy and any significant reversal of the recent decreases in import levels.”
Nucor and affiliates manufacture steel products, with operating facilities primarily in the U.S. and Canada. Products include carbon and alloy steel bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor is North America's largest recycler.
