Nucor Announces Guidance For Its Second Quarter Earnings

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Jun 15, 2016, 09:00 ET

CHARLOTTE, N.C., June 15, 2016 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today guidance for its second quarter ending July 2, 2016. Nucor expects second quarter results to be in the range of $0.65 to $0.70 per diluted share. This range is an increase compared to the second quarter of 2015 earnings of $0.39 per diluted share and the first quarter of 2016 consolidated net earnings of $0.22 per diluted share.

Projected second quarter of 2016 results include an estimated LIFO expense of $19.0 million ($0.03 per diluted share), compared to an expense of $27.5 million ($0.05 per diluted share) in the first quarter of 2016 and a credit of $95.5 million ($0.19 per diluted share) in the second quarter of 2015. LIFO charges or credits for interim periods are based on management's current estimates of both inventory costs and quantities expected at year-end, and that full year estimate is incurred ratably over the remainder of the year. Also included in the first quarter of 2016 earnings are out-of-period non-cash gains totaling $13.4 million ($0.04 per diluted share) related to a noncontrolling interest adjustment and to tax adjustments. Included in the second quarter of 2015 earnings were a $9.3 million ($0.03 per diluted share) benefit related to state tax credits and a $10.0 million ($0.02 per diluted share) benefit related to a payment of warranty claims at Nucor Steel Louisiana.

Flat-rolled trade cases are having a positive impact as steel imports are down in the first four months of this year compared to the same period last year and preliminary duties are in place and being collected. Affirmative final determinations in the antidumping duty and countervailing duty cases of corrosion-resistant steel products were announced by the Department of Commerce in May. Over the next few months, final determinations will be announced in all three flat-rolled trade cases. We are confident that once all the facts are known, final determinations by the Department of Commerce will fully address all dumping and subsidies associated with these cases. Our expectation is that the final determinations in these cases will result in higher duties than the preliminary duties currently being collected. Nucor and other domestic steel producers recently filed trade cases against cut-to-length steel plate imports from 12 countries because of injury that has occurred from unfairly traded imports in this market. We believe these cases should provide positive results as they work their way through the legal process over the next year.

The performance of the steel mills segment in the second quarter of 2016 is expected to be much improved compared to the first quarter of 2016 due to higher average selling prices and improved volumes. The profitability of our sheet, bar and plate mills for the second quarter of 2016 is expected to increase compared to the first quarter of 2016, with the largest improvement by the sheet mills. The sheet mills have benefited from lower inventory levels in the supply chain, mainly at service centers, and decreased levels of imports. Average sheet product pricing has increased significantly in the second quarter of 2016. However, since contract pricing represents over 50% of our sheet steel shipments, and a portion of our contract sales are priced on a lagging quarterly basis, we still have not realized the full benefit of the current improved pricing environment for sheet steel. We therefore expect a further improvement in sheet steel pricing and margins in the third quarter of 2016. Energy, heavy equipment and agricultural markets remain weak. The automotive markets remain strong.

The performance of our downstream products segment is expected to improve from the first quarter of 2016 due to seasonal factors and the gradual improvement in nonresidential construction markets. We believe that the performance of the downstream products segment for the full year 2016 will be improved compared to 2015, despite higher expected steel costs in the current year and minimal benefits from the 2015 highway bill, which we believe we will have a greater impact on future years' performance. The profitability of the raw materials segment in the second quarter of 2016 will be improved compared to the first quarter of 2016 due to increased pricing at both our scrap processing businesses and DRI facilities.

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 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 2015 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