Nucor's 1Q13 Earnings Beat, Sales Miss

Zacks

Steel giant Nucor Corporation’s (NUE) adjusted (excluding special items) earnings of 29 cents per share for the first quarter of 2013 surpassed the Zacks Consensus Estimate of 25 cents. The adjusted earnings exclude an inventory related charge of $18 million or 3 cents a share.

Profit (as reported) for the quarter came in at $84.8 million (or 26 cents a share), down 41.5% compared with $145.1 million or 46 cents per share reported a year ago.

A 7% fall in average sales price weighed on Nucor’s revenues in the first quarter. Revenues decreased 10.3% year over year to $4,550 million, missing the Zacks Consensus Estimate of $4,622 million. Total tons shipped to outside customers fell 3.6% year over year to 5,706,000 tons in the reported quarter and total mill shipments decreased 3.1% to 5,075,000 tons.

Nucor’s volumes and pricings reflects lesser improvements seasonally as the company’s steel products segment experienced a modest loss in the quarter. An unplanned 18 day outage at the Trinidad DRI facility and unfavorable weather conditions resulted in weaker results at Nucor’s raw materials segment.

The average scrap and scrap substitute cost per ton used in the first quarter was $379, down 15% from $445 a year ago. Overall operating rates at Nucor’s steel mills were 72%, down 7% compared with the year-ago quarter.

The company had ample liquidity on its books as of Mar 30, 2013, with $1.08 billion in cash and cash equivalents, short-term investments and restricted cash and investments. It also has an unused $1.5 billion revolving credit facility that will mature in Dec 2016.

Nucor's Board declared a cash dividend of 36.75 cents per share in Feb 2013, which was the company’s 160th quarterly cash dividend on the trot. The dividend is payable on May 10, 2013, to stockholders of record as of Mar 28, 2013.

Nucor, which is among the prominent steel companies along with AK Steel Holding Corporation (AKS), expects second-quarter 2013 earnings to show improvements driven by improved performances from fabricated construction products businesses, raw materials businesses and most steel mill product groups, partially offset by weaker performance in sheet steel.

Challenging economic and political conditions and high import levels can negatively impact the company’s expectations. Though manufactured goods market including energy and automotive continues to be Nucor’s strongest end market, it expects the non-residential construction markets to recover slowly in 2013.

Nucor currently retains a short-term Zacks Rank #3 (Hold).

Other companies in the steel industry with favorable Zacks Ranks are Gibraltar Industries Inc. (ROCK) and Shiloh Industries Inc. (SHLO). All of them carry a Zacks Rank #1 (Strong Buy).

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