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Nucor Reports Record Results for First Nine Months and Third Quarter of 2006

Posted on: Thursday, 19 October 2006, 09:00 CDT

CHARLOTTE, N.C., Oct. 19 /PRNewswire-FirstCall/ -- Nucor Corporation announced today record consolidated net earnings and sales for the first nine months and the third quarter of 2006. Net earnings through the first nine months of 2006 exceeded 2005's previous record annual earnings. Nucor's consolidated net earnings for the first nine months of 2006 were $1.35 billion ($4.33 per diluted share), an increase of 39% over net earnings of $969.3 million ($3.04 per diluted share) in last year's first nine months. Consolidated net earnings of $517.6 million ($1.68 per diluted share) in this year's third quarter increased 77% compared with $291.9 million ($0.93 per diluted share) earned in the third quarter of 2005 and increased 14% from the $452.8 million ($1.45 per diluted share) earned in the second quarter of 2006.

In the first nine months of 2006, Nucor's consolidated net sales increased 19% to $11.28 billion, compared with $9.49 billion in last year's first nine months. Average sales price per ton increased 7% while total tons shipped to outside customers increased 11% from the first nine months of 2005. In the third quarter of 2006, Nucor's consolidated net sales increased 30% to $3.93 billion, compared with $3.03 billion in the third quarter of 2005 and increased 3% compared with $3.81 billion in the second quarter of 2006. Average sales price per ton increased 23% from the third quarter of 2005 and increased 7% from the second quarter of 2006. Total tons shipped to outside customers were 5,603,000 tons in the third quarter of 2006, an increase of 6% over the third quarter of 2005 and a decrease of 4% from the second quarter of 2006.

The average scrap and scrap substitute cost per ton used increased 1% from $245 in the first nine months of 2005 to $247 in the first nine months of 2006, increased 18% from $217 in the third quarter of 2005 to $257 in the third quarter of 2006, and increased 4% from $247 in the second quarter of 2006. Total energy costs increased approximately $1 per ton from the first nine months of 2005 to the first nine months of 2006, decreased approximately $4 per ton from the third quarter of 2005 to the third quarter of 2006, and increased approximately $3 per ton from the second quarter of 2006 to the third quarter of 2006.

Nucor incurred a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $45.0 million in the first nine months of 2006, compared with a credit of $148.0 million in the first nine months of 2005. In the third quarter of 2006, the LIFO charge was $20.5 million, compared with a credit of $52.0 million in the third quarter of 2005 and a charge of $15.5 million in the second quarter of 2006.

In the steel mills segment, steel production increased 14% to 17,318,000 tons in the first nine months of 2006, compared with 15,136,000 tons produced in the first nine months of 2005. Total steel shipments increased 11% to 17,286,000 tons in the first nine months of 2006, compared with 15,504,000 tons in last year's first nine months. Steel shipments to outside customers increased 11% to 15,936,000 tons in the first nine months of 2006, compared with 14,295,000 tons in last year's first nine months. In the steel products segment, steel joist production during the first nine months of 2006 increased to 433,000 tons, compared with 413,000 tons in the first nine months of 2005. Steel deck sales decreased to 284,000 tons in the first nine months of 2006, compared with 285,000 tons in last year's first nine months. Cold finished steel sales remained flat at 261,000 tons when compared with the first nine months of 2005.

In September 2006, Nucor's Board of Directors declared a supplemental dividend of $0.50 per share in addition to the $0.10 per share base dividend. The total dividend of $0.60 per share is payable on November 10, 2006 to stockholders of record on September 29, 2006. Nucor's dividends paid to stockholders have increased more than nine-fold since 2003: $62 million paid in 2003, $70 million paid in 2004, $210 million paid in 2005, and $580 million to be paid in 2006.

Nucor repurchased approximately 6.3 million shares of its common stock at a cost of approximately $318.3 million under a publicly announced stock repurchase program during the third quarter of 2006, and repurchased approximately 10.1 million shares at a cost of about $515.0 million during the first nine months of 2006. Approximately 15.7 million shares remain authorized for repurchase under the current program. Since the first quarter of 2005, Nucor has repurchased approximately 21.3 million shares of common stock.

In September 2006, Nucor announced an agreement to purchase substantially all of the assets of Verco Manufacturing Company ("Verco") for a cash purchase price of approximately $180 million. This transaction is expected to close during the fourth quarter of 2006 and is expected to be immediately accretive to earnings. This facility produces steel floor and roof decking in three locations in the western United States. With the addition of the Verco facilities, Nucor's total annual deck capacity will exceed 500,000 tons.

Earnings for the fourth quarter will be strong, but they will be impacted by lower shipments due to normal seasonal issues and to the current inventory destocking by our service center customers. These high inventories are due in part to the unexpected continued high levels of imports in the third quarter. We expect margins to be strong in the fourth quarter. Margins will be negatively impacted by lower spot market prices for sheet and bars, but they will benefit from anticipated lower scrap costs. We will provide numerical guidance near the midpoint of the interval between quarterly earnings reports.

Nucor and affiliates are manufacturers of steel products, with operating facilities in seventeen states. Products produced are: carbon and alloy steel - in bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor is the nation's largest recycler.

Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. 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; (4) competitive pressure on sales and pricing, including pressure from imports and substitute materials; and (5) capital investments and their impact on our performance. These and other factors are outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2005 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 third quarter results on October 19, 2006 at 2:00 p.m. eastern time. The conference call will be available over the Internet at http://www.nucor.com/, under Investor Relations.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share data) Nine Months (39 Weeks) Three Months (13 Weeks) Ended Ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2006 2005 2006 2005 NET SALES $11,282,680 $9,493,535 $3,931,233 $3,025,911 COSTS, EXPENSES AND OTHER: Cost of products sold 8,631,598 7,598,996 2,926,581 2,445,676 Marketing, administrative and other expenses 450,266 323,178 160,464 107,730 Interest (income) expense, net (25,753) 7,396 (10,433) 922 Minority interests 148,036 76,595 59,104 24,915 Other income - (9,200) - - 9,204,147 7,996,965 3,135,716 2,579,243 EARNINGS BEFORE INCOME TAXES 2,078,533 1,496,570 795,517 446,668 Provision for income taxes 729,011 527,320 277,939 154,791 NET EARNINGS $1,349,522 $969,250 $517,578 $291,877 NET EARNINGS PER SHARE: Basic $4.37 $3.07 $1.70 $0.94 Diluted $4.33 $3.04 $1.68 $0.93 AVERAGE SHARES OUTSTANDING: Basic 308,569 315,730 304,835 311,665 Diluted 311,420 318,632 307,553 314,471 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) Sept. 30, 2006 Dec. 31, 2005 Assets CURRENT ASSETS: Cash and cash equivalents $832,597 $980,150 Short-term Investments 1,388,938 857,360 Accounts receivable, net 1,230,899 1,000,629 Inventories 1,154,243 945,054 Other current assets 225,343 288,360 Total current assets 4,832,020 4,071,553 PROPERTY, PLANT AND EQUIPMENT, NET 2,835,690 2,855,717 OTHER ASSETS 227,957 211,517 TOTAL ASSETS $7,895,667 $7,138,787 Liabilities and stockholders' equity CURRENT LIABILITIES: Long-term debt due within one year $- $1,250 Accounts payable 679,128 501,624 Federal income taxes payable 45,981 - Salaries, wages and related accruals 437,116 368,568 Accrued expenses and other current liabilities 496,455 384,257 Total current liabilities 1,658,680 1,255,699 LONG-TERM DEBT DUE AFTER ONE YEAR 922,300 922,300 DEFERRED CREDITS AND OTHER LIABILITIES 458,546 486,910 MINORITY INTERESTS 190,701 194,090 STOCKHOLDERS' EQUITY: Common stock 148,833 74,120 Additional paid-in capital 177,736 191,850 Retained earnings 5,581,878 4,709,111 Unearned compensation - (3,287) Accumulated other comprehensive income, net of income taxes 4,321 46,600 5,912,768 5,018,394 Treasury stock (1,247,328) (738,606) Total stockholders' equity 4,665,440 4,279,788 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,895,667 $7,138,787 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months (39 Weeks) Ended Sept. 30, 2006 Oct. 1, 2005 Operating activities: Net earnings $1,349,522 $969,250 Adjustments: Depreciation 273,678 281,499 Deferred income taxes (44,200) (44,910) Minority interests 148,022 76,583 Settlement of natural gas hedges (3,668) - Changes in (exclusive of acquisitions): Accounts receivable (214,474) (36,696) Inventories (181,482) 331,773 Accounts payable 157,668 89,111 Federal income taxes 106,955 (63,310) Salaries, wages and related accruals 67,481 13,990 Other 30,920 110,037 Cash provided by operating activities 1,690,422 1,727,327 Investing activities: Capital expenditures (240,175) (222,629) Investment in affiliates (34,241) (37,450) Disposition of plant and equipment 1,978 709 Acquisitions (net of cash acquired) (43,879) (154,864) Purchases of short-term investments (803,253) (112,590) Proceeds from sales of short-term investments 271,675 - Cash used in investing activities (847,895) (526,824) Financing activities: Repayment of long-term debt (1,250) - Issuance of common stock 46,373 29,768 Excess tax benefits from stock-based compensation 12,200 - Distributions to minority interests (151,411) (80,639) Cash dividends (395,793) (188,875) Acquisition of treasury stock (500,199) (245,158) Cash used in financing activities (990,080) (484,904) Increase (decrease) in cash and cash equivalents (147,553) 715,599 Cash and cash equivalents - beginning of year 980,150 779,049 Cash and cash equivalents - end of nine months $832,597 $1,494,648

Nucor Corporation

CONTACT: Nucor Executive Offices, +1-704-366-7000, or fax,+1-704-362-4208

Web site: http://www.nucor.com/

Source: PRNewswire-FirstCall

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