Nucor (NUE) Q2 2013 earnings summary

Executive summary

• Q2 net earnings attributable to stockholders were $85.1M, or $0.27/share, versus $112.3M, or $0.35/share, in Q2 2012; net sales were $4.666B.

• H1 net earnings were $169.9M, or $0.53/share, versus $257.4M, or $0.81/share; sales declined 9% to $9.216B.

• Lower steel prices, volumes and metal margins pressured results; modest Q3 earnings improvement was expected as sheet pricing and downstream businesses recovered.

Financial highlights

• Q2 gross margin was $313.1M, or 7% of sales, versus $399.9M, or 8%, in Q2 2012; H1 gross margin was $616.3M versus $780.5M.

• Q2 average sales price per ton was $799, down 7% YoY; outside shipments were 5.839M tons, down 1% YoY. H1 shipments declined 3% to 11.545M tons.

• H1 operating cash flow rose 9% to $485.0M; capital expenditures were $621.3M, up 62% YoY.

• Q2 had no LIFO charge; H1 included an $18.0M LIFO charge. No impairment charge was recorded in Q2 or H1 2013.

Outlook and guidance

• Q3 earnings were expected to improve modestly, supported by recovering sheet pricing and margins, stronger downstream results and scrap prices believed to have bottomed in Q2.

• 2013 capital expenditures were projected at ~$1.1B, with more than 80% directed to strategic projects; spending was expected to move closer to maintenance levels in 2014.

• Louisiana DRI startup costs were $6M in Q2 and could double in Q3; full production remained targeted by year-end, subject to startup execution.

• Natural-gas drilling expenditures were expected to exceed $700M over 2014–15, with investments expected to become cash-flow positive by 2016.