Nucor (NUE) Q2 2015 earnings summary

Executive summary

• Q2 net earnings attributable to stockholders were $124.8M, or $0.39 per diluted share, above guidance of $0.20-$0.25 on better-than-forecast steel mills performance.

• H1 net earnings were $192.6M, or $0.60 per diluted share, versus $258.1M and $0.80 in H1 2014; first-half segment profitability more than doubled YoY in downstream products.

Financial highlights

• Q2 net sales were $4.36B, down 18% YoY; H1 sales were $8.76B, down 16%. Q2 diluted EPS was $0.39 versus $0.46 a year earlier.

• Q2 outside shipments rose 7% QoQ to 6.055M tons and fell 5% YoY; H1 shipments declined 7% YoY. Average sales price per ton fell 13% YoY in Q2 and 10% in H1.

• Q2 gross margin was $386.3M, or 9% of sales, versus $415.9M, or 8%, YoY; a $95.5M LIFO credit supported the quarter.

• H1 cash from operations was $1.195B versus $443.3M in H1 2014; trailing four-quarter operating cash flow was $2.1B.

Outlook and guidance

• Q3 earnings were expected to improve QoQ, led by steel mills and supported by lower-cost starting inventories; downstream products were also expected to improve, with raw materials comparable to Q2.

• 2015 nonresidential construction activity was expected to grow 5%-6%; automotive and construction were identified as the strongest end markets.

• FY2015 capital expenditures were projected at ~$450M; the full-year effective tax rate was expected at ~29.2%.

• Louisiana DRI was expected to reach cash break-even and become cash positive by year-end; remaining higher-cost iron ore inventory was expected to clear by late Q3.

• Scrap prices were expected to be flat to slightly lower in Q3; 2016 EPS of $2.95 was described as within the range of possibilities amid high cyclical uncertainty.