Nucor Reports Results for 2010 Q3, First Nine Months
10/22/2010 - Nucor Corp. announced consolidated net earnings of $23.5 million, or $0.07 per diluted share, for the third quarter of 2010, compared to net earnings of $91.0 million, or $0.29 per diluted share, in the previous quarter and a net loss of $29.5 million, or $0.10 per diluted share, in the third quarter of 2009.
Nucor Corp. announced consolidated net earnings of $23.5 million, or $0.07 per diluted share, for the third quarter of 2010, compared to net earnings of $91.0 million, or $0.29 per diluted share, in the previous quarter and a net loss of $29.5 million, or $0.10 per diluted share, in the third quarter of 2009.
In the first nine months of 2010, Nucor reported consolidated net earnings of $145.5 million, or $0.46 per diluted share, compared with a net loss of $352.5 million, or $1.12 per diluted share, in the same period last year.
In the third quarter of 2010, Nucor's consolidated net sales decreased 1% to $4.14 billion compared with $4.20 billion in Q2 and increased 33% compared with $3.12 billion in the third quarter of 2009. Average sales price per ton decreased 3% from the second quarter and increased 20% over the third quarter of 2009.
Total tons shipped to outside customers were 5,633,000 tons in Q3 2010, an increase of 1% over Q2 and an increase of 10% over Q3 2009. Total third-quarter steel mill shipments increased 9% compared to the third quarter of 2009 and increased 2% vs. the second quarter of 2010. Third-quarter downstream steel products shipments to outside customers increased 13% compared to last year and 5% over Q2 2010.
In the first nine months of 2010, Nucor's consolidated net sales increased 45% to $11.99 billion, compared with $8.25 billion in last year's first nine months. Average sales price per ton increased 13% while total tons shipped to outside customers increased 29% compared to the same period a year ago.
The average scrap and scrap substitute cost per ton used in the third quarter was $354, a decrease of 5% compared with $373 in the second quarter and an 18% increase over $299 in the third quarter of 2009. The average scrap and scrap substitute cost per ton used in the first nine months of 2010 increased 12% to $348 compared to $312 in the first nine months of 2009.
Nucor recorded a LIFO charge of $50 million in the third quarter of 2010, compared with a charge of $67 million in the second quarter and a credit of $120 million in Q3 2009. In the first nine months of 2010, the LIFO charge was $141 million compared to a credit of $350 million in the first nine months of 2009. Nucor says that the third-quarter LIFO charge was less than it anticipated when the company gave its quantitative guidance.
Overall operating rates at its steel mills in the third quarter (68%) were down from the second quarter (71%) and were flat compared to the third quarter of last year. Steel mill utilization increased from 53% in the first nine months of 2009 to 71% in the first nine months of 2010.
Pre-operating and start-up costs of new facilities decreased from $47.1 million in the third quarter of 2009 to $41.9 million in Q3 2010, and increased from $111.9 million in the first nine months of 2009 to $135.8 million in the first nine months of 2010. In 2010, these costs primarily related to the special bar quality (SBQ) mill in Memphis, Tenn., and the galvanizing line in Decatur, Ala.
In September, Nucor issued $600 million in debt maturing in 2022 with an interest rate of 4.125%. The company says its liquidity position remains strong with $2.01 billion in cash and cash equivalents and short-term investments and an undrawn $1.3 billion revolving credit facility that matures in November 2012.
In September, Nucor's board of directors declared a cash dividend of $0.36 per share payable on November 11, 2010, to stockholders of record on September 30, 2010. This dividend is Nucor's 150th consecutive quarterly cash dividend.
Outlook – Operating results excluding LIFO deteriorated from the second quarter, primarily due to lower margins stemming from lower realized selling prices on most steel mill products. The economy has entered into a period of increased uncertainty, both in the U.S. and globally. Nucor says the fourth quarter may turn out to be the most challenging quarter of the year.
The most challenging markets for its products, according to Nucor, continue to be those associated with residential and nonresidential construction, which continue to show little, if any, strength. This is true for the company’s downstream businesses, particularly rebar fabrication where pricing has continued to deteriorate because of extremely weak demand. It is also true for Nucor’s sheet and plate mills, which compete in an over-supplied market that has been further pressured by recent new sheet capacity.
Nucor says it will provide additional and more quantitative earnings guidance after the midpoint between its quarterly earnings releases.
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 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 The David J. Joseph Co., 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.
