Nucor Announces Guidance For Its Second Quarter Earnings

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Jun 18, 2015, 09:00 ET

CHARLOTTE, N.C., June 18, 2015 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today guidance for its second quarter ending July 4, 2015. Nucor expects second quarter results to be in the range of $0.20 to $0.25 per diluted share. This range is a decrease from the second quarter of 2014 earnings of $0.46 per diluted share and is comparable to the first quarter of 2015 earnings of $0.21 per diluted share.

Projected second quarter results include a LIFO credit of $91.5 million ($0.18 per diluted share), compared to a credit of $16.5 million ($0.03 per diluted share) in the first quarter of 2015 and no charge or credit in the second quarter of 2014.

Overall operating performance at the steel mills segment in the second quarter of 2015 is expected to decrease from the first quarter of 2015. Pricing has begun to stabilize, but we experienced some margin erosion as the decrease in average sales prices during the quarter slightly outpaced the decrease in the average cost of raw materials consumed. Pricing remains under pressure from exceptionally high levels of imports that continue to flood the domestic market in the second quarter of 2015. Imports accounted for an estimated 32% of the finished steel market in the first five months of 2015, compared with an estimated 26% in the first five months of 2014. We are somewhat encouraged to see a slight decrease in imports since the beginning of the year according to data published by the U.S. Department of Commerce. Energy markets remain challenging as domestic rig counts continue to decline and the destocking of the energy supply chain is not yet complete.

The operating performance of the downstream products segment has improved in the second quarter of 2015 as compared to the second quarter of 2014 and the first quarter of 2015 due to the continuing gradual improvement in nonresidential construction markets. The increased operating performance of the downstream products segment in the second quarter of 2015 compared to the first quarter of 2015 also benefited from typical seasonality in nonresidential construction markets as weather conditions have improved.

The performance of the raw materials segment is expected to be consistent with the first quarter of 2015. We anticipate an operating loss of approximately $20 million ($0.04 per diluted share) at Nucor Steel Louisiana in the second quarter of 2015, which is approaching the cash breakeven point. This compares with an operating loss of approximately $44 million ($0.09 per diluted share) in the first quarter of 2015. Nucor Steel Louisiana's expected second quarter results include the impact of working through higher cost iron ore inventory that was purchased in 2014. The ramp-up in production at the Louisiana direct reduced iron (DRI) facility has gone extremely well, with the facility producing DRI at world-class quality levels. The facility has operated near full capacity since mid-April. The raw materials segment performance is expected to benefit from improved performance of our scrap processing businesses. The performance of our DRI facility in Trinidad is expected to decrease in the second quarter of 2015 from the first quarter of 2015 due to a 20-day planned outage that occurred during the second quarter.

Nucor and its 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) competitive pressure on sales and pricing, including competition from imports and substitute materials; (2) 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; (3) market demand for steel products; and (4) energy costs and availability. These and other factors are discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's fiscal 2014 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