Nucor (NUE) Q1 2014 earnings summary

Executive summary

• Net sales rose 12% YoY to $5.11B; net earnings were $111.0M, or $0.35 per diluted share, versus $84.8M and $0.26 a year earlier.

• Severe weather, import competition and higher energy costs pressured results; Q2 earnings were expected to improve, excluding Q1 tax and asset-disposal charges.

Financial highlights

• Average selling price per ton rose 3% YoY to $825; outside shipments increased 8% to 6.189 million tons.

• Gross margin was $377.2M, or 7% of sales, versus $303.2M, also 7%, in Q1 2013; earnings before taxes and noncontrolling interests rose to $207.5M from $153.3M.

• Q1 included a $12.8M tax charge, primarily from New York tax legislation changes, and a $9.0M steel-mill asset-disposal loss; these totaled $0.06 per diluted share.

• Startup costs were $20.9M, including $20.7M at Louisiana DRI, versus $3.8M at Louisiana DRI in Q1 2013.

• Cash provided by operating activities was $149.2M, versus $128.8M in Q1 2013.

Outlook and guidance

• Q2 earnings were expected to improve from Q1, excluding tax and asset-disposal charges; higher profits were anticipated at steel mills and fabricated construction products.

• Imports were expected to continue pressuring steel-mill prices and margins; outlook remained cautiously optimistic for modest improvement in 2014 nonresidential construction.

• 2014 capital spending was projected at ~$600M, versus $1.2B in 2013; suspended new gas-well drilling reduced planned spending by ~$400M.

• Louisiana DRI startup costs were expected at $10M-$15M in Q2, with ~500,000 tons of production projected; profitability in H2 depended on raw-material prices remaining at current levels.

• Expected FY 2014 effective tax rate was ~32.6%; excluding business-partner profits, the rate was expected at 34%-35% over the balance of 2014.