Nucor Beats on Q1 Earnings, Revs - Analyst Blog
24 Aprile 2014 - 7:00PM
Zacks
Steel giant Nucor Corporation’s (NUE)
first-quarter 2014 adjusted earnings (excluding one-time items) of
41 cents per share surpassed the Zacks Consensus Estimate of 36
cents per share.
The adjusted earnings exclude charges of $12.8 million (or 4
cents a share) and $9 million (or 2 cents a share) associated with
tax legislation changes in New York and asset disposal within the
steel mills segment, respectively.
Profit (as reported) came in at $111 million (or 35 cents per
share), surging roughly 31% from $84.8 million (or 26 cents per
share) posted in the prior-year quarter.
First-quarter earnings results, when compared sequentially, were
affected by severe weather conditions, leading to lesser demand,
decrease in the availability of railcar and a weaker seasonal
performance of the company’s fabricated construction products
businesses. Moreover, imports have adversely affected the company’s
pricing and margins at its bar and sheet mills.
The Quarter in Detail
Nucor, which is among the prominent steel producing companies
along with ArcelorMittal (MT) and United
States Steel Corp. (X), registered revenues of $5,108.4
million in the quarter, up 12.3% from $4,550.8 million in the
year-ago quarter. Sales surpassed the Zacks Consensus Estimate of
$4,819 million.
Average sales price increased 3% compared with the year-ago
quarter. Total tons shipped to outside customers rose 8% year over
year to 6,189,000 tons in the reported quarter and total mill
shipments increased 7% to 5,432,000 tons.
The average scrap and scrap substitute cost per ton used in the
first quarter was $398, up 5% from $379 a year ago. Overall
operating rates at Nucor’s steel mills were 75%, up 3% compared
with the year-ago quarter.
Increases in the natural gas and electricity unit costs led to
increase the total steel mill energy costs in the first quarter by
roughly $5 per ton compared to the first quarter of 2013.
The progress of the new direct reduced iron (DRI) plant in St.
James Parish, LA, continued with 455,000 tons of production with
peak operating rates outpacing 90% of the name plate capacity, thus
achieving excellent metallization and carbon percentages.
Verdict vs. Nucor in Texas Antitrust Case
In Mar 2014, a Houston, TX-based jury returned a verdict against
Nucor and five other co-defendants in an antitrust lawsuit filed in
the Federal District Court in Houston, TX, by complainant MM Steel,
LP, a steel plate service center.
Per the verdict, all defendants jointly and severally are charged
$52 million for damages caused. The amount is subjected to triple
under the federal antitrust laws. The amount Nucor has to pay for
the damages, if any, is unknown at this point. However, Nucor is
pursuing every necessary post-trial motion and appeal to have the
verdict overturned.
Financial Position
Nucor ended the first quarter with $1,252.5 million in cash and
cash equivalents and short-term investments compared with $932.2
million in the year-ago quarter. It also has an unused $1.5 billion
revolving credit facility that will mature in Aug 2018. Cash flow
from operations was $149.2 million for first-quarter 2014, compared
with $128.8 million recorded a year ago.
Guidance
Nucor expects better performance in the second quarter of 2014
compared with the first quarter (after excluding the impact of tax
and disposal of assets expenses incurred). The company anticipates
better performance from steel mills and fabricated construction
product businesses (rebar fabrication, joist and decking and
pre-engineered metal buildings) despite the expected continued
pricing and margins pressure at the steel mills segment. Further,
Nucor expects modest improvements in the nonresidential
construction markets in 2014.
Nucor currently retains a Zacks Rank #3 (Hold).
Another player in the steel industry worth considering is
Companhia Siderurgica Nacional (SID), carrying a
Zacks Rank #1 (Strong Buy).
ARCELOR MITTAL (MT): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
CIA SIDERUR-ADR (SID): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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