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Nucor Reports Results For Second Quarter And First Half Of 2012

July 19, 2012

CHARLOTTE, N.C., July 19, 2012 /PRNewswire/ — Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $112.3 million, or $0.35 per diluted share, for the second quarter of 2012. By comparison, Nucor reported net earnings of $145.1 million, or $0.46 per diluted share, in the first quarter of 2012 and net earnings of $299.8 million, or $0.94 per diluted share, in the second quarter of 2011.

In the first half of 2012, Nucor reported consolidated net earnings of $257.4 million, or $0.81 per diluted share, compared with consolidated net earnings of $459.6 million, or $1.44 per diluted share, in the first half of last year.

In late June 2012, Nucor completed the acquisition of the entire equity interest in Skyline Steel LLC (“Skyline”) and its subsidiaries for the purchase price of approximately $684 million including our most current working capital adjustment estimates. Our second quarter results were negatively impacted by non-cash charges of $8.5 million, or $.02 per diluted share, which were not factored into our second quarter earnings guidance that was announced prior to the acquisition. These charges include the impact of purchase accounting adjustments and the elimination of profit associated with our steel mills’ sales to Skyline post-acquisition. Based on our current projections, the costs associated with inventory-related purchase accounting adjustments will conclude in November 2012. Skyline is now a wholly owned subsidiary of Nucor Corporation and will maintain its main office in Parsippany, New Jersey. It is a premier steel foundation distributor serving the U.S., Canada, Mexico and the Caribbean. Skyline distributes products to service challenging applications including marine construction, bridge and highway construction, heavy civil construction, storm protection, underground commercial parking, and environment containment projects in the infrastructure and construction industries.

The second quarter 2012 results also include a non-cash impairment charge related to our Duferdofin Nucor S.r.l. joint venture of $30.0 million, or $0.09 per diluted share. Operating performance at Duferdofin Nucor has continued well below budgeted levels through the first half of 2012. This trend, combined with the recently escalated economic and political turmoil in Europe, caused Nucor to conclude that Duferdofin Nucor had a triggering event requiring assessment for impairment in the second quarter. The impairment charge reflects the impact on our fair value model of both deeper expected losses in the near term and a slower projected recovery to historic operating performance levels.

Nucor recorded a credit to value inventories using the last-in, first-out (LIFO) method of accounting of $14.5 million ($0.03 per diluted share) in the second quarter of 2012, compared with a charge of $14.5 million ($0.03 per diluted share) in the first quarter of 2012 and a charge of $32.0 million ($0.06 per diluted share) in the second quarter of 2011. As a result, there was no LIFO charge in the first half of 2012, compared with a charge of $63.0 million ($0.12 per diluted share) in the first half of 2011.

Nucor’s consolidated net sales increased 1% to $5.10 billion in the second quarter of 2012 compared with $5.07 billion in the first quarter of 2012 and decreased slightly compared with $5.11 billion in the second quarter of 2011. Average sales price per ton increased slightly from the first quarter of 2012 and decreased 6% from the second quarter of 2011. Total tons shipped to outside customers were 5,925,000 tons in the second quarter of 2012, a slight increase from the first quarter of 2012 and an increase of 6% over the second quarter of 2011. Total second quarter steel mill shipments increased 7% over the second quarter of 2011 and were down 1% from the first quarter of 2012. Second quarter downstream steel products shipments to outside customers increased 10% over the second quarter of 2011 and 19% over the first quarter of 2012.

In the first half of 2012, Nucor’s consolidated net sales increased 2% to $10.18 billion, compared with $9.94 billion in last year’s first half. Total tons shipped to outside customers increased 2% over the first half of 2011, while average sales price per ton was unchanged.

The average scrap and scrap substitute cost per ton used in the second quarter of 2012 was $427, a decrease of 4% from $445 in the first quarter of 2012 and a decrease of 4% from $444 in the second quarter of 2011. The average scrap and scrap substitute cost per ton used in the first half of 2012 was $436, an increase of 1% over $433 in the first half of 2011.

Overall operating rates at our steel mills in the second quarter (76%) were down from the first quarter (79%) and increased from last year’s second quarter (71%). Steel mill utilization increased from 75% in the first half of 2011 to 77% in the first half of 2012.

Construction is going well on our 2,500,000-ton DRI facility in Louisiana. The majority of the equipment will arrive in 2012, and we are on schedule for completion of construction and beginning of start-up in mid-2013.

Nucor-Yamato Steel Company, a joint venture between Nucor and Yamato Kogyo Co. Ltd., has approved an estimated $115 million plan to expand the production of hot rolled sheet piling. This project is expected to be completed at Nucor’s steel mill in Blytheville, Arkansas, in early 2014. The project will add several new sheet piling sections, increasing the single sheet widths by 22% and providing a lighter stronger sheet covering more area at a lower installed cost.

Our liquidity position remains strong with $2.17 billion in cash and cash equivalents, short-term investments, and restricted cash and investments and an untapped $1.5 billion revolving credit facility that matures in December 2016.

In June, Nucor’s board of directors declared a cash dividend of $0.365 per share payable on August 10, 2012 to stockholders of record on June 29, 2012. This dividend is Nucor’s 157(th) consecutive quarterly cash dividend, a record we expect to continue.

Our second quarter performance reflected a balance of mixed trends resulting from our diverse steel and steel products portfolio. Our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) are generally showing improving trends and we expect the profitability that they experienced in May and June to continue in the third quarter. Our sheet mills experienced the most severe downward trend during the quarter with profitability in April 2012 that was more than double profits earned in June 2012. The negative factors impacting our steel mills include an import surge across most products that began late in 2011 and continued through the first half of 2012, undercutting seasonal pricing momentum that is normally experienced early in the year. In addition, U.S. sheet steel markets have been negatively impacted by new domestic supply that began ramping up production in 2011, while a combination of political and economic uncertainty is beginning to affect steel buyer confidence for all products. Lower scrap pricing has reduced the profitability of our scrap processing business. We believe that this weakened scrap pricing trend bottomed in early July with a pick-up in scrap export activity, but only time will tell if the early July scrap pricing was a true bottom followed by stability.

We currently expect to see a modest reduction in earnings exclusive of one-time charges for the third quarter of 2012. Continued slow domestic growth, coupled with continued or worsening global economic uncertainty may both become increasing negative factors. The construction market continues to be very challenging. The two-year $60 billion per year extension of the highway bill is good news, but far short of the $400 billion per year needed for the next five to six years to rebuild our crumbling domestic infrastructure, according to the American Society of Civil Engineers’ 2009 Report Card for America’s Infrastructure. Dan DiMicco, Nucor’s Chairman and CEO, stated, “These are investments that must be made and will provide returns many times over during the next 50 years. They must be started now as we are years behind, and we need the millions of jobs and economic growth that are proven to come with REAL infrastructure investments.”

We do see our third quarter results benefiting from lower scrap costs in transit and in inventory combined with the positive impact on steel mill customer buying patterns if scrap prices stabilize. It is worth noting several positive factors for sheet steel that should drive favorable pricing momentum by the end of the third quarter. The positive factors include recent reductions in sheet steel imports and shuttered and reduced operating rates by newer domestic market entrants. Markets such as automotive, heavy equipment, energy and general manufacturing remain improved, primarily benefiting demand for special bar quality, sheet and plate products.

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 ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America’s largest recycler.

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) 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; (2) market demand for steel products; (3) energy costs and availability; and (4) competitive pressure on sales and pricing, including competition from imports and substitute materials. These and other factors are outlined in Nucor’s regulatory filings with the Securities and Exchange Commission, including those in Nucor’s December 31, 2011 Annual Report on Form 10-K. 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.

You are invited to listen to the live broadcast of Nucor’s conference call in which management will discuss Nucor’s second quarter results on July 19, 2012 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                                                     Six Months (26 Weeks) Ended
                                                                                -----------------------------                                                     ---------------------------
                                                                                June 30, 2012                                   July 2, 2011                              Percentage Change                                June 30, 2012                                   July 2, 2011                              Percentage Change
                                                                                -------------                                   ------------                              -----------------                                -------------                                   ------------                              -----------------
    Steel mills production                                                                           5,061                                        4,667                                           8%                                           10,320                                        9,886                                           4%
    Steel mills total shipments                                                                    5,202                                        4,864                                           7%                                           10,437                                       10,064                                           4%

    Sales tons to outside customers:
                                           Steel mills                                             4,264                                        4,052                                           5%                                            8,688                                        8,470                                           3%
                                           Joist                                                      75                                           70                                           7%                                              139                                          137                                           1%
                                           Deck                                                       76                                           79                                          -4%                                              141                                          151                                          -7%
                                           Cold finished                                             132                                          129                                           2%                                              270                                          263                                           3%
                                           Fabricated concrete
                                           reinforcing steel                                         322                                          275                                          17%                                              572                                          496                                          15%
                                           Other                                                   1,056                                          993                                           6%                                            2,036                                        2,059                                          -1%
                                                              5,925                                             5,598                                            6%                                     11,846                                            11,576                                            2%
                                                              =====                                             =====                                                                                   ======                                            ======

                                                                   CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
                                                                   --------------------------------------------------------
                                                                             (In thousands, except per share data)

                                                    Three Months (13 Weeks) Ended                  Six Months (26 Weeks) Ended
                                                   -----------------------------                  ---------------------------

                                                           June 30, 2012                                  July 2, 2011           June 30, 2012            July 2, 2011
                                                           -------------                                  ------------           -------------            ------------

    Net sales                                                            $5,104,199                                  $5,107,809               $10,176,793            $9,941,743
                                                                         ----------                                  ----------               -----------            ----------

    Costs, expenses and other:
      Cost of products sold                                               4,704,269                                   4,458,359                 9,396,336             8,868,558
      Marketing, administrative and other expenses                          112,528                                     130,246                   219,647               240,950
      Equity in losses (earnings) of
    unconsolidated affiliates                                                   158                                      (1,267)                    6,832                 2,943
      Impairment of non-current assets                                       30,000                                           -                    30,000                     -
      Interest expense, net                                                  41,051                                      43,184                    82,723                85,750
                                                                             ------                                      ------                    ------                ------
                                                                          4,888,006                                   4,630,522                 9,735,538             9,198,201
                                                                          ---------                                   ---------                 ---------             ---------
    Earnings before income taxes and
    noncontrolling interests                                                216,193                                     477,287                   441,255               743,542
    Provision for income taxes                                               76,626                                     155,709                   138,276               240,842
                                                                             ------                                     -------                   -------               -------
    Net earnings                                                            139,567                                     321,578                   302,979               502,700
    Earnings attributable to
    noncontrolling interests                                                 27,268                                      21,805                    45,576                43,086
                                                                             ------                                      ------                    ------                ------
    Net earnings attributable to
    Nucor stockholders                                                     $112,299                                    $299,773                  $257,403              $459,614
                                                                           ========                                    ========                  ========              ========

    Net earnings per share:
      Basic                                                                   $0.35                                       $0.94                     $0.81                 $1.45
                                                                              =====                                       =====                     =====                 =====
      Diluted                                                                 $0.35                                       $0.94                     $0.81                 $1.44
                                                                              =====                                       =====                     =====                 =====

    Average shares outstanding:
      Basic                                                                 317,975                                     316,811                   317,832               316,702
      Diluted                                                               318,040                                     317,022                   317,910               316,948

                                                     CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                                                     ------------------------------------------------
                                                                      (In thousands)

                                                                                      June 30, 2012                                 Dec. 31, 2011
                                                                                      -------------                                 -------------
     ASSETS
     Current assets:
                           Cash and cash
                            equivalents                          $1,111,989                                    $1,200,645
                           Short-term
                            investments                             569,421                                     1,362,641
                           Accounts
                            receivable, net                       1,919,465                                     1,710,773
                           Inventories, net                       2,406,122                                     1,987,257
                           Other current
                            assets                                  479,347                                       446,765

                           Total current
                            assets                                6,486,344                                     6,708,081

     Property, plant and equipment, net                                                            3,959,279                                    3,755,604

     Restricted cash and investments                                                                 491,640                                      585,833

     Goodwill                                                                                      1,988,874                                    1,830,661

     Other intangible assets, net                                                                    990,224                                      784,640

     Other assets                                                                                    850,205                                      905,531
                                                                                                     -------                                      -------

                           Total assets                         $14,766,566                                   $14,570,350
                                                                ===========                                   ===========

     LIABILITIES
     Current liabilities:
                           Short-term debt                           $7,109                                        $1,826
                           Long-term debt
                            due within one
                            year                                    900,000                                       650,000
                           Accounts payable                       1,127,471                                       958,645
                           Salaries, wages
                            and related
                            accruals                                255,960                                       333,341
                           Accrued expenses
                            and other current
                            liabilities                             466,748                                       452,247

                           Total current
                            liabilities                           2,757,288                                     2,396,059

     Long-term debt due after one year                                                             3,380,200                                    3,630,200

     Deferred credits and other liabilities                                                          846,519                                      837,511
                                                                                                     -------                                      -------

                           Total
                            liabilities                           6,984,007                                     6,863,770
                                                                  ---------                                     ---------

     EQUITY
     Nucor stockholders' equity:
                           Common stock                             150,730                                       150,496
                           Additional paid-
                            in capital                            1,794,457                                     1,756,534
                           Retained earnings                      7,135,753                                     7,111,566
                           Accumulated other
                            comprehensive
                            loss,
                           net of income
                            taxes                                   (20,351)                                      (38,177)
                           Treasury stock                       (1,502,425)                                   (1,505,534)

                           Total Nucor
                            stockholders'
                            equity                                7,558,164                                     7,474,885

     Noncontrolling interests                                                                        224,395                                      231,695
                                                                                                     -------                                      -------

                           Total equity              7,782,559                                     7,706,580
                                                     ---------                                     ---------

                           Total liabilities
                            and equity                          $14,766,566                                   $14,570,350
                                                                ===========                                   ===========

                                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                                ----------------------------------------------------------
                                                                      (In thousands)

                                                                                           Six Months (26 Weeks)
                                                                                                   Ended
                                                                                          ----------------------

                                                                                              June 30, 2012                             July 2, 2011
                                                                                              -------------                             ------------

    Operating activities:
                        Net earnings                                        $302,979                                  $502,700
                        Adjustments:
                        Depreciation                              260,968                                   256,059
                        Amortization                               33,122                                    34,680
                         Stock-based
                         compensation                              37,312                                    31,531
                         Deferred
                         income taxes                             (23,144)                                  (22,885)
                         Equity in
                         losses of
                         unconsolidated
                         affiliates                                 6,832                                     2,943
                         Impairment of
                         non-current
                         assets                                    30,000                                         -
                         Changes in assets
                         and liabilities
                         (exclusive of
                         acquisitions):
                                               Accounts
                                               receivable         (76,245)                                 (392,950)
                                              Inventories        (152,494)                                 (661,337)
                                               Accounts
                                               payable             42,394                                   245,572
                                               Federal
                                               income taxes         3,364                                   136,985
                                               Salaries,
                                               wages and
                                               related
                                               accruals           (82,991)                                   90,366
                                              Other                64,389                                    69,058
                                                                   ------                                    ------

    Cash provided by operating activities                                                                   446,486                                 292,722
                                                                                                            -------                                 -------

    Investing activities:
                         Capital
                         expenditures                            (383,448)                                 (212,893)
                         Investment in and
                         advances to
                         affiliates                               (57,771)                                  (49,839)
                         Repayment of
                         advances to
                         affiliates                                15,000                                         -
                         Disposition of
                         plant and
                         equipment                                 21,026                                    18,409
                         Acquisitions (net
                         of cash acquired)                       (746,410)                                        -
                         Purchases of
                         investments                             (409,403)                                 (141,461)
                         Proceeds from the
                         sale of
                         investments                            1,200,153                                   202,400
                         Proceeds from the
                         sale of
                         restricted
                         investments                               87,115                                         -
                         Changes in
                         restricted cash                            7,078                                    21,949

    Cash used in investing activities                                                                      (266,660)                               (161,435)
                                                                                                           --------                                --------

    Financing activities:
                         Net change in
                         short-term debt                            5,234                                     1,357
                         Issuance of common
                         stock                                      6,156                                     3,206
                         Excess tax benefits
                         from stock-based
                         compensation                 3,877                     (200)
                         Distributions to
                         noncontrolling
                         interests                                (52,812)                                  (43,272)
                        Cash dividends                           (232,766)                                 (230,561)
                         Other financing
                         activities                                   670                                         -

    Cash used in financing activities                                                                      (269,641)                               (269,470)
                                                                                                           --------                                --------

    Effect of exchange rate changes on cash                                                                   1,159                                   2,321
                                                                                                              -----                                   -----

    Decrease in cash and cash equivalents                                                                   (88,656)                               (135,862)

    Cash and cash equivalents - beginning of year                                                         1,200,645                               1,325,406
                                                                                                          ---------                               ---------

    Cash and cash equivalents - end of six months                                                        $1,111,989                              $1,189,544
                                                                                                         ==========                              ==========

SOURCE Nucor Corporation


Source: PR Newswire