Nucor (NUE) Q1 2015 earnings summary

Executive summary

• Q1 net sales fell 14% YoY to $4.40B; net earnings attributable to stockholders were $67.8M, or $0.21 diluted EPS, versus $111.0M and $0.35 in Q1 2014 and $210.4M and $0.65 in Q4 2014.

• Lower steel prices, shipments and mill utilization, high imports, and energy-sector destocking pressured results.

Financial highlights

• External shipments declined 9% YoY to 5.635M tons; average sales price per ton fell 5% YoY to $781.

• Operating cash flow was $563.7M versus $149.2M in Q1 2014; capital expenditures were $77.5M.

• Gross margin was $288.3M, or 7% of sales, versus $377.2M and 7% a year earlier; pretax earnings were $119.0M versus $207.5M.

• Q1 included a $16.5M LIFO credit, or $0.03 per diluted share, versus a $14.5M charge in Q1 2014.

Outlook and guidance

• Q2 earnings were expected to improve somewhat from Q1; steel margins faced continued pressure from imports and unsettled prices, while downstream performance was expected to improve significantly.

• H2 earnings were expected to improve with construction and downstream demand, stronger steel mills, and stabilizing or rebounding prices; improvement was expected from both margins and volume.

• FY2015 capital expenditures were projected at ~$500M; depreciation and amortization was estimated at ~$700M.

• U.S. nonresidential construction was expected to grow 7%-8% or more in 2015, while remaining nearly 40% below its 2007 peak.

• Scrap prices were expected to stabilize and remain broadly flat for the rest of 2015, with regional variation; lower-cost inputs were expected to benefit Q2.