Nucor (NUE) Q4 2016 earnings summary

Executive summary

• Q4 2016 net earnings attributable to stockholders were $159.6M, or $0.50 diluted EPS, versus a $187.5M loss, or $0.59 loss per share, in Q4 2015; FY 2016 net earnings were $796.2M, or $2.48 per share.

• Q4 adjusted earnings were slightly above the $0.30–$0.35/share guidance range after one-time items; management expected Q1 earnings to rise QoQ and FY 2017 profitability to significantly exceed FY 2016.

• Three tubular acquisitions added a growth platform, hot-rolled sheet downstream channels and leadership positions in HSS tubing and steel conduit.

Financial highlights

• Q4 net sales were $3.96B, up 14% YoY and down 8% QoQ; average selling price per ton was flat YoY and down 7% QoQ.

• FY net sales were $16.21B, down 1% YoY; outside shipments rose 7% to 24.309M tons while average selling price per ton fell 8%.

• Q4 earnings included a $0.16/share benefit from an inventory-cost estimate change; compensation costs were $0.09/share above expectations, including $0.07/share of employee profit sharing.

• After one-time items, Q4 earnings were slightly above the $0.30–$0.35/share guidance range, which assumed $0.07/share of LIFO expense.

• Excluding profits attributable to business partners, the effective tax rate was 33.3% for both Q4 and FY 2016.

Outlook and guidance

• Q1 2017 earnings expected to increase QoQ; FY 2017 profitability expected to significantly exceed FY 2016.

• Steel mill prices and volumes expected to improve in Q1, particularly at sheet and plate mills; full benefit from tubular investments expected from Q2 after Q1 purchase accounting charges.

• Sheet mills expected to benefit for a full year from recent trade actions; plate profitability expected to improve as pending trade cases conclude.

• Fabricated construction order books pointed to renewed non-residential construction momentum; steel products expected to post strong YoY growth, with full tubular investment benefits beginning Q2.

• 2017 capex forecast at ~$575M and depreciation and amortization at ~$715M.