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Nucor Beats on Earnings, Revs in Q4

Zacks Equity Research

Steel giant Nucor Corporation’s (NUE) adjusted (excluding special items) earnings of 46 cents per share for the fourth quarter of 2013 surpassed the Zacks Consensus Estimate of 40 cents. The adjusted earnings exclude charges of $21.3 million or 7 cents a share associated with the correction to deferred tax balances.

Profit (as reported) for the quarter came in at $170.5 million (or 53 cents a share), up 24.5% from $136.9 million or 43 cents per share reported a year ago.

For the full year 2013, adjusted earnings (excluding special items) came in at $1.45 per share, which exceeded the Zacks Consensus Estimate of $1.40. Profit (as reported) for the year was $488 million, or $1.52 per share compared with earnings of $504.6 million, or $1.58 per share a year ago.

The Quarter in Details

Revenues increased 10% year over year in the fourth quarter to roughly $4,895 million, beating the Zacks Consensus Estimate of $4,667 million. Average sales price remained flat compared with the year ago quarter. Total tons shipped to outside customers rose 10% year over year to 6,019,000 tons in the reported quarter and total mill shipments increased 9% to 5,191,000 tons.

For the full year 2013, sales decreased 2% to $19.05 billion from $19.43 billion in 2012. It, however surpassed the Zacks Consensus Estimate of $18.89 billion.

Better pricing for sheet steel improved operating performance in the Steel Mills segment in the quarter. Profitability for sheet steel also improved due to competitor supply disruptions, and demand improvement. However, bar and structural steel mills demonstrated lower operating performance mainly due to extended planned outages during the fourth quarter.

The Raw Materials segment’s performance in the fourth quarter was negatively impacted by increased start-up costs at the new direct reduced iron (DRI) plant in Louisiana (where production began in late Dec) and additional costs incurred as a result of the storage dome collapse in Sep 2013.  

Financial Position

Nucor had ample liquidity on its books as of Dec 31, 2013, with $1,511.4 million in cash and cash equivalents and short-term investments compared with $1,157 million as of Dec 31, 2012. It also has an unused $1.5 billion revolving credit facility that will now mature in Aug 2018. Cash flow from operations was $1.1 billion for 2013, compared with $1.2 billion recorded a year ago.

Nucor’s Board declared a cash dividend of 37 cents per share in Dec 2013, which was the company’s 163rd consecutive quarterly cash dividend. The dividend is payable on Feb 11, 2014, to stockholders of record as of Dec 31, 2013.

Guidance

Nucor expects the first quarter of 2014 to be similar to the fourth quarter of 2013 (after excluding the impact of the fourth quarter out of period tax adjustment). The company believes that no major extended planned outages will take place at its steel mills. It also expects to incur lesser start-up costs at its Louisiana DRI facility leading to better operational performance.

However, Nucor believes that these positives will be offset by seasonally weaker performance in its fabricated construction products businesses, which will be further worsened by unusually bad weather.  

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

Other players in the steel industry worth considering are Companhia Siderurgica Nacional (SID) and ArcelorMittal (MT) and U.S. Steel Corp. (X). All of them carry a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on SID
Read the Full Research Report on MT
Read the Full Research Report on X


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