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Nucor Reports Record Results for Second Quarter and First Half of 2008
CHARLOTTE, N.C., July 17, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Nucor Corporation
(NYSE: NUE) announced today record consolidated net earnings for the second
quarter of 2008 of $580.8 million ($1.94 per diluted share), an increase of
68% over $344.9 million ($1.14 per diluted share) earned in the second quarter
of 2007 and an increase of 42% over the $409.8 million ($1.41 per diluted
share) earned in the first quarter of 2008.
In the first half of 2008, Nucor's consolidated net earnings increased 36%
to a record $990.5 million ($3.36 per diluted share), compared with net
earnings of $725.9 million ($2.39 per diluted share) in last year's first
half.
In the second quarter of 2008, Nucor's consolidated net sales increased
70% to a record $7.09 billion, compared with $4.17 billion in the second
quarter of 2007 and increased 43% compared with $4.97 billion in the first
quarter of 2008. Average sales price per ton increased 24% over the second
quarter of 2007 and increased 19% over the first quarter of 2008. Total tons
shipped to outside customers were 7,734,000 tons in the second quarter of
2008, an increase of 38% over the second quarter of 2007 and an increase of
20% over the first quarter of 2008.
In the first half of 2008, Nucor's consolidated net sales increased 52% to
a record $12.06 billion, compared with $7.94 billion in last year's first
half. Average sales price per ton increased 21% while total tons shipped to
outside customers increased 26% from the first half of 2007.
The increases in sales and net earnings are also attributable to the
significant acquisitions made by Nucor in the last 18 months, specifically,
the acquisition of Harris Steel Group, Inc. ("Harris") in March 2007 and The
David J. Joseph Company ("DJJ") in February 2008. In addition, Nucor has used
these two companies as platforms for additional acquisitions to grow the rebar
fabrication and scrap businesses.
Nucor's performance is not tied to any one steel market due to our product
line diversity. With the acquisition of Harris and other downstream products
companies, Nucor's steel products annual capacity has more than doubled since
the beginning of 2007 to four million tons. In addition, these companies
provide our steel mills with a profitable base load of volume.
DJJ's scrap processing assets broaden Nucor's raw materials strategy and
provide a partial hedge to our steel mills against scrap market volatility,
allowing us to optimize Nucor's profitability.
The average scrap and scrap substitute cost per ton used in the second
quarter of 2008 was $456, an increase of 57% over $291 in the second quarter
of 2007 and an increase of 37% compared with $333 in the first quarter of
2008. The average scrap and scrap substitute cost per ton used in the first
half of 2008 was $396, an increase of 44% over $275 in the first half of 2007.
Total energy costs in the second quarter of 2008 increased $5 per ton from
the second quarter of 2007 and increased $2 per ton from the first quarter of
2008. During the first half of 2008, total energy costs increased $5 per ton
compared with the first half of 2007.
Nucor incurred a record charge to value inventories using the last-in,
first-out (LIFO) method of accounting of a $214.0 million ($0.42 per diluted
share, after tax) in the second quarter of 2008, compared with a charge of
$66.5 million ($0.13 per diluted share, after tax) in the second quarter of
2007 and a charge of $69.0 million ($0.14 per diluted share, after tax) in the
first quarter of 2008. The LIFO charge in the first half of 2008 was a record
$283.0 million ($0.57 per diluted share, after tax), compared with a charge of
$91.0 million ($0.18 per diluted share, after tax) in the first half of 2007.
The LIFO expense in the second quarter of 2008 was greater than the total LIFO
expense for all of 2007.
In the steel mills segment, steel production increased 7% to a record
11,874,000 tons in the first half of 2008, compared with 11,103,000 tons
produced in the first half of 2007.
Total steel shipments increased 9% to a record 12,068,000 tons in the
first half of 2008, compared with 11,067,000 tons in last year's first half.
Steel shipments to outside customers increased 5% to 10,597,000 tons in the
first half of 2008, compared with 10,119,000 tons in last year's first half.
In the steel products segment, steel joist production during the first
half of 2008 increased to 272,000 tons, compared with 265,000 tons in the
first half of 2007. Steel deck sales increased to a record 255,000 tons in
the first half of 2008, compared with 232,000 tons in last year's first half.
Cold finished steel sales increased to a record 279,000 tons, compared with
206,000 tons in the first half of 2007. Sales of fabricated concrete
reinforcing steel were 411,000 tons in the first half of 2008 compared to
204,000 in the first half of 2007.
In late May 2008, Nucor completed a public offering of 27,667,580 common
shares at an offering price of $74.00 per share. Gross proceeds of the
offering were approximately $2.05 billion, which Nucor intends to use for
general corporate purposes including acquisitions, capital expenditures,
working capital needs and repayment of debt. Also in early June 2008, Nucor
issued $1.00 billion in debt with interest rates ranging from 5% to 6.4% and
with maturities from 2013 to 2037. Nucor's long-term debt ratings of A+ by
Standard and Poor's and A1 by Moody's Investors Services are the highest
ratings of any metals and mining company in North America.
In June, Nucor's board of directors declared a supplemental dividend of
$0.20 per share in addition to the $0.32 per share base dividend. The total
dividend of $0.52 per share is payable on August 11, 2008 to stockholders of
record on June 30, 2008. Nucor began paying a supplemental dividend in the
second quarter of 2005, allowing stockholders to participate in our successful
pay-for-performance business model.
Also in June, Nucor announced that its wholly owned subsidiary, Harris
Steel, Inc., signed a Purchase Agreement to acquire all of the issued and
outstanding common shares of Ambassador Steel Corporation ("Ambassador") for a
cash purchase price of approximately $185 million. Based in Auburn, Indiana,
Ambassador is a fabricator and distributor of concrete reinforcing steel and
related products. The transaction is expected to close during the third
quarter of 2008 after satisfactory resolution of certain closing conditions.
In July, Nucor completed the acquisition of 50% of the stock of
Duferdofin - Nucor S.r.l., for the purchase price of euro 423.5 million
(approximately $658 million). The company will operate from its current
headquarters in San Zeno, Italy. Duferdofin - Nucor S.r.l. operates a steel
melting and bloom/billet caster in San Zeno as well as rolling mills in
Pallanzeno and Giammoro. Total production in 2007 was approximately one
million tons. A new merchant bar mill, which is expected to produce
approximately 450,000 tons, is under construction at the Giammoro plant and is
expected to be fully operational in late 2008.
Two other projects were also announced in the second quarter. Nucor
applied for a permit to build a $2 billion state-of-the-art iron-making
facility in St. James Parish, Louisiana. Sites outside of the United States
are still being considered, and the site selection and capital investment are
subject to approval by Nucor's board of directors. The facility is expected
to produce 3,000,000 tons of pig iron, employing the latest technologies to
reduce emissions.
Nucor also announced the signing of a memorandum of understanding with
Sidenor S.A. (ATH: SID) to purchase a 34% share of a new joint venture that
will be formed for the production and distribution of long steel products and
plate in the Balkans, Turkey, Cyprus and North Africa. Final agreement to
establish the joint venture is dependent upon execution of definitive
agreements, completion of due diligence and approval of regulatory bodies and
the boards of directors of both companies.
We expect that third quarter results will be strong, with earnings in the
range of $1.80 to $1.85 per diluted share. We expect continued strength in
our sheet, plate, beam and bar businesses due to the solid global demand for
steel. Although our downstream businesses will be challenged by rising steel
prices, we expect continued good results from this segment. The forecasted
range of $1.80 to $1.85 per diluted share for the third quarter reflects an
increase in the diluted average shares outstanding over the second quarter of
approximately 6% due to Nucor's common stock offering on May 29, 2008. (The
additional shares were outstanding only for a portion of the second quarter,
resulting in an increase of more than 3% in diluted shares outstanding from
the first quarter of 2008.)
Headquartered in Charlotte, N.C., Nucor makes more steel in America than
any other company. 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
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. 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, 2007 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 17,
2008 at 2:00 p.m. eastern time. The conference call will be available over
the Internet at www.nucor.com , under Investor Relations.
Unaudited figures are as follows:
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands, except per share data)
Six Months (26 Weeks) Three Months (13 Weeks)
Ended Ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
NET SALES $12,064,868 $7,936,995 $7,090,599 $4,168,110
COSTS, EXPENSES AND
OTHER:
Cost of products sold 9,951,247 6,395,503 5,879,655 3,403,905
Marketing,
administrative and
other expenses 389,886 285,135 220,172 148,925
Interest expense
(income), net 45,079 (4,183) 26,734 4,979
Minority interests 179,707 138,159 87,936 77,587
10,565,919 6,814,614 6,214,497 3,635,396
EARNINGS BEFORE
INCOME TAXES 1,498,949 1,122,381 876,102 532,714
Provision for
income taxes 508,441 396,502 295,348 187,864
NET EARNINGS $990,508 $725,879 $580,754 $344,850
NET EARNINGS PER SHARE:
Basic $3.38 $2.41 $1.95 $1.14
Diluted $3.36 $2.39 $1.94 $1.14
AVERAGE SHARES
OUTSTANDING:
Basic 293,291 301,168 298,262 301,302
Diluted 295,075 303,406 299,842 303,330
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
June 28, 2008 December 31, 2007
Assets
CURRENT ASSETS:
Cash and cash equivalents $2,791,880 $1,393,943
Short-term investments - 182,450
Accounts receivable, net 2,611,590 1,611,844
Inventories 2,498,018 1,601,600
Other current assets 282,269 283,412
Total current assets 8,183,757 5,073,249
PROPERTY, PLANT AND EQUIPMENT, NET 3,829,472 3,232,998
GOODWILL 1,743,025 847,887
OTHER INTANGIBLE ASSETS, NET 931,985 469,936
OTHER ASSETS 304,217 202,052
TOTAL ASSETS $14,992,456 $9,826,122
Liabilities and stockholders' equity
CURRENT LIABILITIES:
Short-term debt $1,439 $22,868
Long-term debt due within one year 175,000 -
Accounts payable 1,826,777 691,668
Federal income taxes payable 45,019 -
Salaries, wages and related accruals 435,464 436,352
Accrued expenses and other current
liabilities 318,667 431,148
Total current liabilities 2,802,366 1,582,036
LONG-TERM DEBT DUE AFTER ONE YEAR 3,091,600 2,250,300
DEFERRED CREDITS AND OTHER LIABILITIES 702,757 593,423
MINORITY INTERESTS 315,368 287,446
STOCKHOLDERS' EQUITY:
Common stock 149,566 149,302
Additional paid-in capital 1,606,541 256,406
Retained earnings 7,461,322 6,621,646
Accumulated other comprehensive
income, net of income taxes 260,261 163,362
9,477,690 7,190,716
Treasury stock (1,397,325) (2,077,799)
Total stockholders' equity 8,080,365 5,112,917
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $14,992,456 $9,826,122
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Six Months (26 Weeks) Ended
June 28, 2008 June 30, 2007
Operating activities:
Net earnings $990,508 $725,879
Adjustments:
Depreciation 231,232 196,149
Amortization 32,066 7,064
Stock-based compensation 31,148 23,386
Deferred income taxes (66,881) (52,976)
Minority interests 179,702 138,156
Settlement of derivative hedges 11,166 (3,873)
Changes in assets and
liabilities (exclusive of
acquisitions):
Accounts receivable (591,318) (196,132)
Inventories (570,570) (144,500)
Accounts payable 494,549 203,970
Federal income taxes 123,517 5,462
Salaries, wages and related
expenses (14,505) (142,558)
Other (22,375) (22,463)
Cash provided by operating activities 828,239 737,564
Investing activities:
Capital expenditures (501,669) (198,674)
Sale of interest in affiliates - 29,500
Investment in affiliates (27,903) (15,040)
Disposition of plant and equipment 6,551 740
Acquisitions (net of cash acquired) (1,591,817) (1,083,616)
Purchases of investments (209,605) (276,945)
Proceeds from the sale of investments 392,055 1,336,713
Proceeds from currency derivative
contracts 1,132,222 517,241
Settlement of currency derivative
contracts (1,114,652) (511,394)
Cash used in investing activities (1,914,818) (201,475)
Financing activities:
Net change in short-term debt (21,429) (64,231)
Proceeds from the issuance of long-
term debt 1,589,715 -
Repayments of long-term debt (600,000) -
Issuance of common stock 1,994,565 9,895
Bond issuance costs (6,937) -
Excess tax benefits from stock-
based compensation 9,200 9,500
Distributions to minority interests (153,218) (149,857)
Cash dividends (327,380) (365,836)
Acquisition of treasury stock - (136,755)
Cash provided by (used in) financing
activities 2,484,516 (697,284)
Increase (decrease) in cash and cash
equivalents 1,397,937 (161,195)
Cash and cash equivalents - beginning
of year 1,393,943 785,651
Cash and cash equivalents - end of six
months $2,791,880 $624,456
SOURCE Nucor Corporation
http://www.nucor.com
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