Nucor Announces Guidance For Its Second Quarter Earnings

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Jun 20, 2014, 09:00 ET

CHARLOTTE, N.C., June 20, 2014 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today guidance for its second quarter ending July 5, 2014. Nucor expects second quarter results to be in the range of $0.35 to $0.40 per diluted share. This range represents an increase from the second quarter of 2013 earnings of $0.27 per diluted share and is comparable with first quarter of 2014 earnings of $0.35 per diluted share. This performance is at the low end of our expectations supporting the qualitative guidance presented in our first quarter of 2014 earnings release and conference call which stated, "We currently expect some improvement in second quarter of 2014 earnings from the first quarter of 2014, excluding the impact of the tax and disposal of assets charges incurred in the first quarter." Included in the first quarter of 2014 earnings was a $12.8 million ($0.04 per diluted share) charge primarily related to tax legislation changes in the state of New York. Also included in first quarter of 2014 results was a $9.0 million charge ($0.02 per diluted share) related to the disposal of assets within the steel mills segment. Included in the projected second quarter of 2014 results is approximately $21 million ($0.04 per diluted share) of additional employee stock-based compensation expense related to the timing of annual grants that are typically authorized in June of each year.

The performance of our raw materials segment includes an anticipated operating loss of $30 million ($0.06 per diluted share) at our new direct reduced iron (DRI) plant in St. James Parish, Louisiana. The Louisiana DRI plant has continued to exceed our volume expectations while producing excellent quality DRI units; however, yield loss remains higher than desired. A three week outage began in June to implement adjustments that will improve both yield and conversion costs. We expect significant improvements in the performance of the Louisiana DRI facility in the third quarter, with profitable performance anticipated by the end of the year. The David J. Joseph Company also experienced lower profits in the second quarter due to lower scrap selling prices.

Overall operating performance at our steel mills segment is expected to be slightly improved compared to the first quarter of 2014, as improvements in sheet and plate profitability are partially offset by lower profitability in structural steel. In June, Nucor-Yamato Steel is undergoing a planned three week outage associated with our $115 million sheet piling capital project. This planned outage will result in lower shipments for structural steel. Import levels continue to negatively impact pricing and margins, particularly at our bar and sheet mills. Additionally, the second quarter of fiscal 2014 is four days shorter than the first quarter of 2014, contributing to lower shipments. Steel demand continues to be strong, particularly for sheet and plate products.

Our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) returned to solid profitability in the second quarter of 2014, reflecting improving conditions in the nonresidential construction markets. Although nonresidential construction markets are at historically low levels, they are improving. Accordingly, we expect further increased operating profits in our fabricated construction products businesses going forward.

Projected second quarter of 2014 results include no charge to value inventories using the last-in, first-out (LIFO) method of accounting, compared to a charge of $14.5 million ($0.03 per diluted share) in the first quarter of 2014 and no charge to value inventories in the second quarter of 2013.

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 discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2013 Annual Report on Form 10-K, Item 1A. Risk Factors. 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.

SOURCE Nucor Corporation