Nucor Reports Record 1st Quarter Results
04/18/2008 - Nucor reports consolidated net earnings of $409.8 million on record consolidated net sales of $4.97 billion for the first quarter of 2008, marking the company’s fifth consecutive year of reporting record first-quarter earnings.
Nucor Corp. reported consolidated net earnings of $409.8 million on record consolidated net sales of $4.97 billion for the first quarter of 2008, marking the fifth consecutive year the company has reported record first-quarter earnings.
First Quarter Results—Consolidated net earnings of $409.8 million reflect an 8% increase compared to net earnings of $381.0 million for the year-ago first quarter, and a 12% increase compared to net earnings of $364.8 million for the fourth quarter of 2007. Diluted earnings per share, $1.41, reflect a 12% increase compared to EPS of $1.26 in the year-ago first quarter; this increase was partially due to the reduced number of shares outstanding following stock repurchases made in 2007.
Consolidated net sales—a record $4.97 billion—reflect a 32% increase compared with net sales of $3.77 billion in the year-ago first quarter due to a 15% increase in average steel sales price per ton, an 11% increase in average steel products sales price per ton, and a significant increase in steel products shipments attributable to acquisitions made in 2007. The company said the increase in sales is also due to its February acquisition of The David J. Joseph Co. (DJJ) and its affiliates, for a cash purchase price of approximately $1.4 billion. DJJ, which now operates as a wholly owned subsidiary of Nucor Corp., has been the broker of ferrous scrap to Nucor since 1969.
Consolidated net sales increased 13% over the previous quarter (fourth quarter of 2007) primarily due to an 8% increase in average steel sales price per ton and the acquisition of DJJ.
The average scrap and scrap-substitute cost per ton used, $333, reflects a 29% increase from $259 in the year-ago first quarter and a 17% increase 17% from $285 in the fourth quarter of 2007. Total energy costs increased approximately $4 per ton from the year-ago first quarter, and increased approximately $3 per ton from the previous quarter (4Q07).
Nucor incurred a $69.0 million charge to value inventories using the last-in, first-out (LIFO) method of accounting, which compares with a charge of $24.5 million in the year-ago first quarter and a charge of $92.3 million in the fourth quarter of 2007.
Segment Results—In the steel mills segment, steel production of 5,831,000 tons reflects a 4% increase compared with 5,585,000 tons produced in the year-ago first quarter, and a 4% increase over the 5,586,000 tons produced in the fourth quarter of 2007.
Total steel shipments, 5,951,000 tons, reflect a 5% increased compared with 5,660,000 tons in last year's first quarter, and a 5% increase over the 5,684,000 total tons shipped in the fourth quarter. Steel shipments to outside customers, 5,203,000 tons, remained flat compared with 5,229,000 tons in the year-ago first quarter, and increased 2% over the 5,078,000 tons shipped in the fourth quarter of 2007.
In the steel products segment, steel joist production was 132,000 tons, a 9% increase compared with 121,000 tons in the year-ago first quarter. Steel deck sales, 116,000 tons, reflect a 9% increase from 106,000 tons in the year-ago first quarter. Cold finished steel sales of 136,000 tons reflect a 51% increase compared with 90,000 tons in the year-ago first quarter. Sales of fabricated concrete reinforcing steel increased from 40,000 tons in the month of March 2007 (when Nucor acquired Harris Steel Group) to 179,000 tons in the first quarter of 2008.
Acquisitions—Subsequent to the first quarter Nucor completed two acquisitions, utilizing DJJ as a platform for continued growth in the scrap-processing industry. In April 2008, a wholly owned subsidiary of Nucor acquired substantially all the assets of Metal Recycling Services Inc. (MRS). Based in Monroe, N.C., MRS operates a full-service processing facility and two feeder yards and expects to process 220,000 tons annually. MRS will become part of DJJ and will operate under the Metal Recycling Services, LLC name.
Also in April 2008, DJJ acquired substantially all the assets of Galamba Metals Group. Galamba operated 16 full-service scrap processing facilities in Kansas, Missouri, and Arkansas, and processed over 500,000 tons annually. DJJ will operate the Galamba Metals Group facilities under the Advantage Metals Recycling, LLC name.
Nucor expects to soon conclude a 50/50 joint venture with the Duferco Group (Lugano, Switzerland) for the production of beams in Italy and the distribution of beams in Europe and North Africa. The joint venture will encompass the Duferco Group's Duferdofin subsidiary and associated distribution companies.
Outlook—Nucor said it expects second-quarter earnings to be in the range of $1.55 to $1.60 per diluted share. The company anticipates continued strength in its sheet, plate, beam, and bar businesses due to the solid global demand for steel.
In overall downstream businesses, Nucor expects conditions to continue to be good, particularly for rebar fabrication, cold finish bars, steel grating, and wire rod and mesh products. The company believes its upstream raw material businesses will be accretive in the second quarter. DJJ's net earnings for the one month that they were owned by Nucor were offset by purchase accounting adjustments in the period.
Starting with the May 9, 2008 dividend payment, Nucor is increasing its base quarterly cash dividend rate from $0.30 to $0.32 per share. In addition to the $0.32 per share base dividend amount, Nucor’s Board of Directors also approved the payment of a supplemental dividend of $0.20 per share, for a total dividend of $0.52 per share. Nucor has increased its regular base cash dividend every year since the company began paying dividends 35 years ago.
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, through DJJ, also brokers ferrous and nonferrous metals, pig iron and HRI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.
