Nucor announces consolidated results for Q3 and 9 months 2014
Nucor Corporation announced consolidated net earnings of USD 245.4 million, or USD 0.76 per diluted share, for the Q3 of 2014. By comparison, Nucor reported net earnings of USD 147.0 million, or USD 0.46 per diluted share, in the Q2 of 2014 and net earnings of USD 147.6 million, or USD 0.46 per diluted share, in the Q3 of 2013.
Q3 of 2014 diluted net earnings per share of USD 0.76 was above our guidance range of USD 0.70 to USD 0.75 per diluted share due to better than forecasted performance in the steel mills segment partially offset by a larger than expected loss in the raw materials segment.
In the first nine months of 2014, Nucor reported consolidated net earnings of USD 503.5 million, or USD 1.57 per diluted share, compared with consolidated net earnings of USD 317.5 million, or USD 0.99 per diluted share, in the first nine months of last year.
Nucor's results include a credit of USD 14.5 million to value inventories using the last in, first out method of accounting in the Q3 of 2014, compared with no charge recorded in the Q2 of 2014 and a credit of USD 18.0 million recorded in the Q3 of 2013. As a result, the LIFO charges and credits netted to zero in the first nine months of 2014 and the first nine months of 2013. Included in the Q3 results is a USD 12.5 million charge related to the partial write down of assets within the steel mills segment. Earnings in the Q3 of 2013 included a net USD 14.0 million partial write down of inventory and fixed asset balances associated with the collapse of a storage dome at Nucor Steel Louisiana.
Nucor's consolidated net sales increased 8% to USD 5.70 billion in the third quarter of 2014 compared with USD 5.29 billion in the Q2 of 2014 and increased 15% compared with USD 4.94 billion in the Q3 of 2013. Average sales price per tonne increased 1% over the Q2 of 2014 and increased 5% over the Q3 of 2013. Total tonnes shipped to outside customers were 6,784,000 tonnes in the Q3 of 2014, a 6% increase over the Q2 of 2014 and an increase of 10% over the Q3 of 2013. Total Q3 steel mill shipments increased 5% over the Q2 of 2014 and 7% over the Q3 of 2013. Q3 downstream steel products shipments to outside customers increased 9% over the Q2 of 2014 and increased 18% over the Q3 of 2013.
In the first nine months of 2014, Nucor's consolidated net sales increased 14% to USD 16.10 billion, compared with USD 14.16 billion in last year's first nine months. Total tons shipped to outside customers increased 9% from the first nine months of 2013, while average sales price per ton increased 4%.
The average scrap and scrap substitute cost per ton used in the Q3 of 2014 was USD 379, a 1% decrease from USD 384 in the Q2 of 2014 and an increase of 2% over USD 372 in the Q3 of 2013. The average scrap and scrap substitute cost per ton used in the first nine months of 2014 was USD 387, an increase of 3% over USD 376 in the first nine months of 2013.
Overall operating rates at our steel mills increased to 81% in the Q3 of 2014 as compared with 79% in the Q2 of 2014 and 78% in the Q3 of 2013. Steel mill utilization increased to 78% in the first nine months of 2014 from 74% in the first nine months of 2013.
Total steel mill energy costs in the Q3 of 2014 increased approximately USD 1 per ton compared with the Q2 of 2014 and the Q3 of 2013. Energy costs for the first nine months of 2014 increased approximately USD 2 per tonne over the first nine months of 2013 due to increased natural gas and electricity unit costs.
Cash and cash equivalents and short-term investments totaled USD 1.40 billion as of the end of the Q3 of 2014. After the quarter ended, Nucor closed on its purchase of all the equity of Gallatin Steel Company for approximately USD 770 million, which was paid for in cash. Subsequent to the end of the Q3, Nucor issued approximately USD 300 million of commercial paper to help fund the Gallatin transaction. Nucor's liquidity position remains strong after the acquisition, and our undrawn USD 1.5 billion revolving credit facility does not expire until August 2018.
In September, Nucor's board of directors declared a cash dividend of USD 0.37 per share payable on November 10th 2014 to stockholders of record on September 30th 2014. This dividend is Nucor's 166th consecutive quarterly cash dividend, a record we expect to continue.
Overall operating performance at our steel mills segment for the Q3 was much improved compared to the Q2 of 2014 due to increased profitability in sheet, structural, bar and plate steel. Structural steel had no major outages in the third quarter, as compared to the planned three week outage at Nucor Yamato Steel in the Q2 associated with our USD 115 million sheet piling capital project. The strongest markets for the steel mills continue to be manufactured goods, including energy and automotive. Though third quarter results are much improved from the second quarter, imports remain at high levels, applying downward pressure on pricing.
Our fabricated construction products businesses (rebar fabrication, joist and decking and pre engineered metal buildings) also generated much stronger profits compared to the Q2 of 2014. This performance reflects improving conditions in the nonresidential construction markets, although nonresidential construction markets remain at historically low levels.
Source – Strategic Research Institute