UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017July 1, 2023
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to.
Commission file numberFile Number: 1-4119
NUCOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 13-1860817 | |
(State or other jurisdiction of | ||
incorporation or organization) | (I.R.S. Employer Identification No.) | |
1915 Rexford Road, Charlotte, North Carolina | 28211 | |
(Address of principal executive offices) | (Zip Code) |
(704)(704) 366-7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.40 per share | NUE | New York Stock Exchange |
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes☒ No ☐
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).
Yes ☐ No ☒
317,916,674248,722,494 shares of the registrant’s common stock were outstanding at September 30, 2017.July 1, 2023.
Nucor Corporation
Quarterly Report on Form 10-Q
September 30, 2017For the Three Months and Six Months Ended July 1, 2023
Table of Contents
Page | ||||||||||
1 | ||||||||||
2 | ||||||||||
3 | ||||||||||
4 | ||||||||||
5 | ||||||||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |||||||||
24 | ||||||||||
25 | ||||||||||
27 | ||||||||||
26 | ||||||||||
26 | ||||||||||
27 | ||||||||||
28 | ||||||||||
29 | ||||||||||
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Nucor Corporation Condensed Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended |
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| |||||||||||||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 |
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| |||||||||||||||||
Net sales | $ | 5,170,117 | $ | 4,290,236 | $ | 15,160,065 | $ | 12,251,584 |
| $ | 9,523,256 |
|
| $ | 11,794,474 |
|
| $ | 18,233,236 |
|
| $ | 22,287,756 |
| ||||||||
|
|
|
| |||||||||||||||||||||||||||||
Costs, expenses and other: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Cost of products sold | 4,591,153 | 3,608,000 | 13,111,226 | 10,669,103 |
|
| 7,021,582 |
|
|
| 7,690,211 |
|
|
| 13,733,360 |
|
|
| 14,725,354 |
| ||||||||||||
Marketing, administrative and other expenses | 172,792 | 169,223 | 519,429 | 440,679 |
|
| 453,388 |
|
|
| 563,211 |
|
|
| 843,283 |
|
|
| 1,087,795 |
| ||||||||||||
Equity in earnings of unconsolidated affiliates | (7,743 | ) | (14,168 | ) | (29,801 | ) | (30,232 | ) |
|
| (6,094 | ) |
|
| (7,113 | ) |
|
| (4,754 | ) |
|
| (14,808 | ) | ||||||||
Interest expense, net | 43,310 | 43,009 | 131,495 | 128,415 |
|
| 4,598 |
|
|
| 57,763 |
|
|
| 14,781 |
|
|
| 100,898 |
| ||||||||||||
|
|
|
|
|
| 7,473,474 |
|
|
| 8,304,072 |
|
|
| 14,586,670 |
|
|
| 15,899,239 |
| |||||||||||||
4,799,512 | 3,806,064 | 13,732,349 | 11,207,965 | |||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Earnings before income taxes and noncontrolling interests | 370,605 | 484,172 | 1,427,716 | 1,043,619 |
|
| 2,049,782 |
|
|
| 3,490,402 |
|
|
| 3,646,566 |
|
|
| 6,388,517 |
| ||||||||||||
Provision for income taxes | 104,500 | 152,807 | 442,239 | 318,388 |
|
| 462,707 |
|
|
| 763,165 |
|
|
| 827,862 |
|
|
| 1,434,165 |
| ||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Net earnings | 266,105 | 331,365 | 985,477 | 725,231 | ||||||||||||||||||||||||||||
Net earnings before noncontrolling interests |
|
| 1,587,075 |
|
|
| 2,727,237 |
|
|
| 2,818,704 |
|
|
| 4,954,352 |
| ||||||||||||||||
Earnings attributable to noncontrolling interests | 11,255 | 25,918 | 50,680 | 88,599 |
|
| 125,721 |
|
|
| 166,004 |
|
|
| 220,808 |
|
|
| 297,496 |
| ||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Net earnings attributable to Nucor stockholders | $ | 254,850 | $ | 305,447 | $ | 934,797 | $ | 636,632 |
| $ | 1,461,354 |
|
| $ | 2,561,233 |
|
| $ | 2,597,896 |
|
| $ | 4,656,856 |
| ||||||||
|
|
|
| |||||||||||||||||||||||||||||
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic | $ | 0.79 | $ | 0.95 | $ | 2.91 | $ | 1.99 |
| $ | 5.82 |
|
| $ | 9.69 |
|
| $ | 10.28 |
|
| $ | 17.34 |
| ||||||||
Diluted | $ | 0.79 | $ | 0.95 | $ | 2.90 | $ | 1.99 |
| $ | 5.81 |
|
| $ | 9.67 |
|
| $ | 10.26 |
|
| $ | 17.30 |
| ||||||||
Average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic | 320,096 | 319,737 | 320,253 | 319,444 |
|
| 250,144 |
|
|
| 263,221 |
|
|
| 251,876 |
|
|
| 267,416 |
| ||||||||||||
Diluted | 320,763 | 320,028 | 321,045 | 319,632 |
|
| 250,524 |
|
|
| 263,719 |
|
|
| 252,334 |
|
|
| 268,066 |
| ||||||||||||
Dividends declared per share | $ | 0.3775 | $ | 0.3750 | $ | 1.1325 | $ | 1.1250 |
See notes to condensed consolidated financial statements.
1
Nucor Corporation Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended | |||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 | |||||||||||||
Net earnings | $ | 266,105 | $ | 331,365 | $ | 985,477 | $ | 725,231 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income (loss): | ||||||||||||||||
Net unrealized income (loss) on hedging derivatives, net of income taxes of $300 and ($300) for the third quarter of 2017 and 2016, respectively, and ($700) and $600 for the first nine months of 2017 and 2016, respectively | 405 | (600 | ) | (1,301 | ) | 912 | ||||||||||
Reclassification adjustment for loss on settlement of hedging derivatives included in net income, net of income taxes of $0 and $1,200 for the third quarter of 2017 and 2016, respectively, and $300 and $4,800 for the first nine months of 2017 and 2016, respectively | 195 | 2,000 | 851 | 8,288 | ||||||||||||
Foreign currency translation gain (loss), net of income taxes of $0 for the third quarter of 2017 and 2016, and $0 for the first nine months of 2017 and 2016 | 74,479 | (8,606 | ) | 100,437 | 53,578 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
75,079 | (7,206 | ) | 99,987 | 62,778 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income | 341,184 | 324,159 | 1,085,464 | 788,009 | ||||||||||||
Comprehensive income attributable to noncontrolling interests | (11,255 | ) | (25,918 | ) | (50,680 | ) | (88,599 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income attributable to Nucor stockholders | $ | 329,929 | $ | 298,241 | $ | 1,034,784 | $ | 699,410 | ||||||||
|
|
|
|
|
|
|
|
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||
|
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| ||||
Net earnings before noncontrolling interests |
| $ | 1,587,075 |
|
| $ | 2,727,237 |
|
| $ | 2,818,704 |
|
| $ | 4,954,352 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net unrealized income (loss) on hedging derivatives, |
|
| (4,428 | ) |
|
| 16,138 |
|
|
| (29,003 | ) |
|
| 69,614 |
|
Reclassification adjustment for settlement of hedging |
|
| 6,228 |
|
|
| (15,136 | ) |
|
| 6,403 |
|
|
| (20,526 | ) |
Foreign currency translation gain (loss), net of income |
|
| 34,586 |
|
|
| (27,308 | ) |
|
| 31,145 |
|
|
| (4,616 | ) |
|
| 36,386 |
|
|
| (26,306 | ) |
|
| 8,545 |
|
|
| 44,472 |
| |
Comprehensive income |
|
| 1,623,461 |
|
|
| 2,700,931 |
|
|
| 2,827,249 |
|
|
| 4,998,824 |
|
Comprehensive income attributable to noncontrolling |
|
| 125,721 |
|
|
| 166,004 |
|
|
| 220,808 |
|
|
| 297,496 |
|
Comprehensive income attributable to Nucor stockholders |
| $ | 1,497,740 |
|
| $ | 2,534,927 |
|
| $ | 2,606,441 |
|
| $ | 4,701,328 |
|
See notes to condensed consolidated financial statements.
2
2
Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
Sept. 30, 2017 | Dec. 31, 2016 |
| July 1, 2023 |
|
| Dec. 31, 2022 |
| |||||||||
ASSETS |
|
|
|
|
| |||||||||||
Current assets: |
|
|
|
|
| |||||||||||
Cash and cash equivalents | $ | 1,575,944 | $ | 2,045,961 |
| $ | 4,510,563 |
|
| $ | 4,280,852 |
| ||||
Short-term investments | 50,000 | 150,000 |
|
| 870,475 |
|
|
| 576,946 |
| ||||||
Accounts receivable, net | 2,113,890 | 1,631,676 |
|
| 3,874,933 |
|
|
| 3,591,030 |
| ||||||
Inventories, net | 3,522,199 | 2,479,958 |
|
| 5,632,324 |
|
|
| 5,453,531 |
| ||||||
Other current assets | 238,614 | 198,798 |
|
| 402,213 |
|
|
| 789,325 |
| ||||||
|
| |||||||||||||||
Total current assets | 7,500,647 | 6,506,393 |
|
| 15,290,508 |
|
|
| 14,691,684 |
| ||||||
Property, plant and equipment, net | 5,095,880 | 5,078,650 |
|
| 10,093,399 |
|
|
| 9,616,920 |
| ||||||
Restricted cash and cash equivalents |
|
| 12,665 |
|
|
| 80,368 |
| ||||||||
Goodwill | 2,208,246 | 2,052,728 |
|
| 3,926,197 |
|
|
| 3,920,060 |
| ||||||
Other intangible assets, net | 940,305 | 866,835 |
|
| 3,205,881 |
|
|
| 3,322,265 |
| ||||||
Other assets | 758,756 | 718,912 |
|
| 851,266 |
|
|
| 847,913 |
| ||||||
|
| |||||||||||||||
Total assets | $ | 16,503,834 | $ | 15,223,518 |
| $ | 33,379,916 |
|
| $ | 32,479,210 |
| ||||
|
| |||||||||||||||
LIABILITIES |
|
|
|
|
|
| ||||||||||
Current liabilities: |
|
|
|
|
|
| ||||||||||
Short-term debt | $ | 50,370 | $ | 17,959 |
| $ | 33,339 |
|
| $ | 49,081 |
| ||||
Long-term debt due within one year | 1,100,000 | 600,000 | ||||||||||||||
Current portion of long-term debt and finance lease obligations |
|
| 25,087 |
|
|
| 28,582 |
| ||||||||
Accounts payable | 1,312,817 | 838,109 |
|
| 1,855,502 |
|
|
| 1,649,523 |
| ||||||
Salaries, wages and related accruals | 499,177 | 428,829 |
|
| 1,043,967 |
|
|
| 1,654,210 |
| ||||||
Accrued expenses and other current liabilities | 593,102 | 505,069 |
|
| 1,046,279 |
|
|
| 948,348 |
| ||||||
|
| |||||||||||||||
Total current liabilities | 3,555,466 | 2,389,966 |
|
| 4,004,174 |
|
|
| 4,329,744 |
| ||||||
Long-term debt due after one year | 3,241,488 | 3,739,141 | ||||||||||||||
Long-term debt and finance lease obligations due after one year |
|
| 6,620,686 |
|
|
| 6,613,687 |
| ||||||||
Deferred credits and other liabilities | 861,066 | 839,703 |
|
| 1,814,128 |
|
|
| 1,965,873 |
| ||||||
|
| |||||||||||||||
Total liabilities | 7,658,020 | 6,968,810 |
|
| 12,438,988 |
|
|
| 12,909,304 |
| ||||||
|
| |||||||||||||||
Commitments and contingencies |
|
|
|
|
|
| ||||||||||
EQUITY |
|
|
|
|
|
| ||||||||||
Nucor stockholders’ equity: | ||||||||||||||||
Nucor stockholders' equity: |
|
|
|
|
|
| ||||||||||
Common stock | 151,943 | 151,734 |
|
| 152,061 |
|
|
| 152,061 |
| ||||||
Additionalpaid-in capital | 2,013,158 | 1,974,672 |
|
| 2,149,693 |
|
|
| 2,143,520 |
| ||||||
Retained earnings | 8,201,667 | 7,630,916 |
|
| 27,095,661 |
|
|
| 24,754,873 |
| ||||||
Accumulated other comprehensive loss, net of income taxes | (217,856 | ) | (317,843 | ) |
|
| (128,972 | ) |
|
| (137,517 | ) | ||||
Treasury stock | (1,643,527 | ) | (1,559,614 | ) |
|
| (9,314,764 | ) |
|
| (8,498,243 | ) | ||||
|
| |||||||||||||||
Total Nucor stockholders’ equity | 8,505,385 | 7,879,865 | ||||||||||||||
Total Nucor stockholders' equity |
|
| 19,953,679 |
|
|
| 18,414,694 |
| ||||||||
Noncontrolling interests | 340,429 | 374,843 |
|
| 987,249 |
|
|
| 1,155,212 |
| ||||||
|
| |||||||||||||||
Total equity | 8,845,814 | 8,254,708 |
|
| 20,940,928 |
|
|
| 19,569,906 |
| ||||||
|
| |||||||||||||||
Total liabilities and equity | $ | 16,503,834 | $ | 15,223,518 |
| $ | 33,379,916 |
|
| $ | 32,479,210 |
| ||||
|
|
See notes to condensed consolidated financial statements.
3
3
Nucor Corporation Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months (39 Weeks) Ended |
| Six Months (26 Weeks) Ended |
| |||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 |
| July 1, 2023 |
|
| July 2, 2022 |
| |||||||||
Operating activities: |
|
|
|
|
| |||||||||||
Net earnings | $ | 985,477 | $ | 725,231 | ||||||||||||
Net earnings before noncontrolling interests |
| $ | 2,818,704 |
|
| $ | 4,954,352 |
| ||||||||
Adjustments: |
|
|
|
|
|
| ||||||||||
Depreciation | 474,822 | 459,109 |
|
| 448,836 |
|
|
| 397,270 |
| ||||||
Amortization | 68,394 | 54,066 |
|
| 117,231 |
|
|
| 87,267 |
| ||||||
Stock-based compensation | 51,227 | 44,210 |
|
| 83,587 |
|
|
| 74,219 |
| ||||||
Deferred income taxes | (38,335 | ) | 86,821 |
|
| (44,609 | ) |
|
| (36,220 | ) | |||||
Distributions from affiliates | 48,037 | 38,474 |
|
| 18,621 |
|
|
| 2,287 |
| ||||||
Equity in earnings of unconsolidated affiliates | (29,801 | ) | (30,232 | ) |
|
| (4,754 | ) |
|
| (14,808 | ) | ||||
Changes in assets and liabilities (exclusive of acquisitions and dispositions): |
|
|
|
|
|
| ||||||||||
Accounts receivable | (406,582 | ) | (328,000 | ) |
|
| (270,314 | ) |
|
| (648,569 | ) | ||||
Inventories | (957,029 | ) | (289,257 | ) |
|
| (174,437 | ) |
|
| (157,976 | ) | ||||
Accounts payable | 451,774 | 216,218 |
|
| 242,071 |
|
|
| 198,062 |
| ||||||
Federal income taxes | (30,859 | ) | 28,915 |
|
| 396,341 |
|
|
| 33,441 |
| |||||
Salaries, wages and related accruals | 70,231 | 103,324 |
|
| (573,993 | ) |
|
| (252,758 | ) | ||||||
Other operating activities | 75,137 | 73,211 |
|
| 70,313 |
|
|
| 97,174 |
| ||||||
|
| |||||||||||||||
Cash provided by operating activities | 762,493 | 1,182,090 |
|
| 3,127,597 |
|
|
| 4,733,741 |
| ||||||
|
| |||||||||||||||
Investing activities: |
|
|
|
|
|
| ||||||||||
Capital expenditures | (292,312 | ) | (327,436 | ) |
|
| (1,057,086 | ) |
|
| (968,795 | ) | ||||
Investment in and advances to affiliates | (19,000 | ) | (48,167 | ) |
|
| (35,078 | ) |
|
| (227 | ) | ||||
Disposition of plant and equipment | 19,420 | 14,883 |
|
| 5,289 |
|
|
| 15,996 |
| ||||||
Acquisitions (net of cash acquired) | (543,153 | ) | (48,105 | ) |
|
| - |
|
|
| (3,465,866 | ) | ||||
Purchases of investments | (50,000 | ) | (650,000 | ) |
|
| (701,639 | ) |
|
| (330,278 | ) | ||||
Proceeds from the sale of investments | 150,000 | 100,000 |
|
| 408,854 |
|
|
| 219,996 |
| ||||||
Other investing activities | (1,455 | ) | 13,350 |
|
| - |
|
|
| (7,096 | ) | |||||
|
| |||||||||||||||
Cash used in investing activities | (736,500 | ) | (945,475 | ) |
|
| (1,379,660 | ) |
|
| (4,536,270 | ) | ||||
|
| |||||||||||||||
Financing activities: |
|
|
|
|
|
| ||||||||||
Net change in short-term debt | 32,409 | (21,520 | ) |
|
| (15,742 | ) |
|
| (7,214 | ) | |||||
Issuance of common stock | 9,492 | 5,727 | ||||||||||||||
Proceeds from issuance of long-term debt, net of discount |
|
| - |
|
|
| 2,091,934 |
| ||||||||
Repayment of long-term debt |
|
| (5,000 | ) |
|
| (506,000 | ) | ||||||||
Bond issuance costs |
|
| - |
|
|
| (13,138 | ) | ||||||||
Proceeds from exercise of stock options |
|
| 7,123 |
|
|
| 18,819 |
| ||||||||
Payment of tax withholdings on certain stock-based compensation | (13,960 | ) | (10,410 | ) |
|
| (42,120 | ) |
|
| (58,218 | ) | ||||
Excess tax benefits from stock-based compensation | — | 1,507 | ||||||||||||||
Distributions to noncontrolling interests | (85,094 | ) | (86,808 | ) |
|
| (388,771 | ) |
|
| (268,535 | ) | ||||
Cash dividends | (364,302 | ) | (360,675 | ) |
|
| (259,894 | ) |
|
| (272,038 | ) | ||||
Acquisition of treasury stock | (90,305 | ) | (5,173 | ) |
|
| (876,698 | ) |
|
| (1,707,893 | ) | ||||
Proceeds from government incentives |
|
| - |
|
|
| 125,000 |
| ||||||||
Other financing activities | (1,703 | ) | (5,212 | ) |
|
| (8,296 | ) |
|
| (17,059 | ) | ||||
|
| |||||||||||||||
Cash used in financing activities | (513,463 | ) | (482,564 | ) |
|
| (1,589,398 | ) |
|
| (614,342 | ) | ||||
|
| |||||||||||||||
Effect of exchange rate changes on cash | 17,453 | 11,187 |
|
| 3,469 |
|
|
| (817 | ) | ||||||
|
| |||||||||||||||
Decrease in cash and cash equivalents | (470,017 | ) | (234,762 | ) | ||||||||||||
Cash and cash equivalents—beginning of year | 2,045,961 | 1,939,469 | ||||||||||||||
|
| |||||||||||||||
Cash and cash equivalents—end of nine months | $ | 1,575,944 | $ | 1,704,707 | ||||||||||||
|
| |||||||||||||||
Increase (decrease) in cash and cash equivalents and |
|
| 162,008 |
|
|
| (417,688 | ) | ||||||||
Cash and cash equivalents and restricted cash and cash |
|
| 4,361,220 |
|
|
| 2,508,658 |
| ||||||||
Cash and cash equivalents and restricted cash and cash |
| $ | 4,523,228 |
|
| $ | 2,090,970 |
| ||||||||
Non-cash investing activity: |
|
|
|
|
|
| ||||||||||
Change in accrued plant and equipment purchases and assets acquired by capital lease arrangements | $ | 42,810 | $ | 140,347 | ||||||||||||
|
| |||||||||||||||
Change in accrued plant and equipment purchases |
| $ | (36,580 | ) |
| $ | (23,583 | ) |
See notes to condensed consolidated financial statements.
4
4
Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Interim Presentation
Recently Adopted Accounting Pronouncements –In the first quarter of 2017, Nucor adopted new accounting guidance that amends the accounting for employee share-based payment transactions. The new guidance requires income statement recognition of all tax effects, including all excess tax benefits and tax deficiencies, resulting from the settlement of share-based awards in the reporting periodopinion of management, necessary to make a fair statement of the results for the interim periods presented and are of a normal and recurring nature unless otherwise noted. The information furnished has not been audited; however, the December 31, 2022 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited condensed consolidated financial statements included in this Item 1 should be read in conjunction with the audited consolidated financial statements and the notes thereto included in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2022.
2. Inventories
Inventories consisted of approximately 36% raw materials and supplies and 64% finished and semi-finished products at July 1, 2023 (37% and 63%, respectively, at December 31, 2022). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which they occur. The new guidance also requires that alltax-related cash flows resulting from share-based payments, includingproducts are sold to customers at various stages throughout the excess tax benefits and tax deficiencies related to the settlement of stock-based awards,process. Since most steel products can be classified as cash flows from operating activities,either finished or semi-finished products, these two categories of inventory are combined.
3. Property, Plant and that cash paid by directly withholding shares for tax purposes be classified as a financing activity in the statement of cash flows. The new guidance also allows companies to make an accounting policy election to either estimate the number of awards that are expected to vest, consistent with current guidance, or account for forfeitures as they occur. This new guidance, with the exception of the presentation of cash paid by directly withholding shares for tax purposes on the statement of cash flows,Equipment
Property, plant and equipment is applied prospectively for the Company beginning on January 1, 2017. The presentation of cash paid by directly withholding shares for tax purposes on the statement of cash flows as a financing activity requires retrospective application beginning January 1, 2017. As a result of the retrospective application of this new guidance, $10.4 million was reclassified from other operating activities to payment of tax withholdings on certain stock-based compensation in the condensed consolidated statement of cash flows for the nine months ended October 1, 2016. The adoption of this new guidance did not have a material effect on the Company’s consolidated financial statements. There is no change to our accounting policy with respect to the estimation of awards that are expected to vest.
In January 2017, new guidance was issued regarding the simplification of the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test and will require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The new guidance is effective for the Company for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company early adopted this new guidance in the first quarter of 2017. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements.
In August 2017, new guidance was issued regarding improvements to accounting and reporting for hedging activities to better reflect the economic results of an entity’s risk management activities. The new guidance reduces limitations on hedge designation and updates measurement guidance for qualifying hedging relationships. The new guidance also simplifies financial statement reporting for qualifying hedging relationships and aligns the recognition and presentation of the effects of the hedging instrument and hedged item within the financial statements. The new guidance is effective for the Company for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company early adopted this new guidance in the third quarter of 2017. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements.
5
Recently Issued Accounting Pronouncements – In May 2014, new accounting guidance was issued that will supersede nearly all existing accounting guidance related to revenue recognition. The new guidance provides that an entity recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The Financial Accounting Standards Board has also issued a number of updates to this new accounting guidance. The Company will adopt the new revenue recognition guidance effective January 1, 2018. Using the modified retrospective approach, the Company will recognize the cumulative effect of the adoption, if any, as an adjustment to the opening balance of retained earnings. The Company does not expect the adoption of this new guidance to have a material effect on the Company’s consolidated financial statements.
In January 2016, new accounting guidance was issued regarding the recognition and measurement of financial assets and financial liabilities. Changes to the current accounting guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the Financial Accounting Standards Board clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses onavailable-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities and financial liabilities, is largely unchanged. The new guidance is effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company does not expect the adoption of this new guidance to have a material effect on the Company’s consolidated financial statements.
In February 2016, new accounting guidance was issued regarding the accounting for leases. The new guidance requires all lessees to recognize on the balance sheet right to use assets and lease liabilities for the rights and obligations created by lease arrangements with terms greater than 12 months. The new guidance is effective for the Company for annual and interim reporting periods beginning after December 15, 2018. The Company is evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements, but it expects that assets and liabilities will increase on the consolidated balance sheet.
In August 2016, new accounting guidance was issued regarding the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The new guidance addresses specific cash flow presentation issues in order to reduce diversity in existing practice. The new guidance is effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company is evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.
In October 2016, new accounting guidance was issued regarding intra-entity transfers of assets other than inventory. The new guidance requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance is effective for the Company for annual and interim reporting periods beginning after December 15, 2017. The Company is evaluating the impact that the adoption of this new guidance will have on its consolidated financial statements.
Prior Year Change in Accounting Principle –In the fourth quarter of 2016, the Company changed its accounting method for valuing its inventories held by the parent company and Nucor-Yamato Steel Company to thefirst-in,first-out (FIFO) method of accounting from thelast-in,first-out (LIFO) method. All inventories held by other subsidiaries of the parent company were previously and continue to be valued using the FIFO method.
6
The effects of the change in accounting principle from LIFO to FIFO have been retrospectively applied to all periods presented. As a result of the retrospective application of the change in accounting principle, certain financial statement line items in the Company’s condensed consolidated statements of earnings for the three- and nine-month periods ended October 1, 2016 and condensed consolidated statement of cash flows (no impact on total cash provided by operating activities) for the nine-month period ended October 1, 2016 were adjusted as follows:
(in thousands, except per share data) | As Originally Reported | Effect of Change | As Currently Reported | |||||||||
Condensed Consolidated Statement of Earnings for the Three Months (13 Weeks) Ended October 1, 2016: | ||||||||||||
Cost of products sold | $ | 3,665,900 | $ | (57,900 | ) | $ | 3,608,000 | |||||
Provision for income taxes | 131,788 | 21,019 | 152,807 | |||||||||
Net earnings | 294,484 | 36,881 | 331,365 | |||||||||
Earnings attributable to noncontrolling interests | 24,448 | 1,470 | 25,918 | |||||||||
Net earnings attributable to Nucor stockholders | 270,036 | 35,411 | 305,447 | |||||||||
Net earnings per share: | ||||||||||||
Basic | $ | 0.84 | $ | 0.11 | $ | 0.95 | ||||||
Diluted | $ | 0.84 | $ | 0.11 | $ | 0.95 | ||||||
(in thousands, except per share data) | As Originally Reported | Effect of Change | As Currently Reported | |||||||||
Condensed Consolidated Statement of Earnings for the Nine Months (39 Weeks) Ended October 1, 2016: | ||||||||||||
Cost of products sold | $ | 10,774,040 | $ | (104,937 | ) | $ | 10,669,103 | |||||
Provision for income taxes | 281,401 | 36,987 | 318,388 | |||||||||
Net earnings | 657,281 | 67,950 | 725,231 | |||||||||
Earnings attributable to noncontrolling interests | 82,719 | 5,880 | 88,599 | |||||||||
Net earnings attributable to Nucor stockholders | 574,562 | 62,070 | 636,632 | |||||||||
Net earnings per share: | ||||||||||||
Basic | $ | 1.79 | $ | 0.20 | $ | 1.99 | ||||||
Diluted | $ | 1.79 | $ | 0.20 | $ | 1.99 | ||||||
(in thousands) | ||||||||||||
Condensed Consolidated Statement of Cash Flows for the Nine Months (39 Weeks) Ended October 1, 2016: | ||||||||||||
Net earnings | $ | 657,281 | $ | 67,950 | $ | 725,231 | ||||||
Changes in inventories | (184,320 | ) | (104,937 | ) | (289,257 | ) | ||||||
Changes in deferred income taxes | 49,834 | 36,987 | 86,821 |
We have allocated the purchase price for Republic to its individual assets acquired and liabilities assumed. While the purchase price allocation is substantially complete, it is still preliminary and subject to change.
7
The following table summarizes the fair values of the assets acquired and liabilities assumed of Republic as of the date of acquisition (in thousands):
Cash | $ | 206 | ||
Accounts receivable | 39,177 | |||
Inventory | 33,561 | |||
Other current assets | 1,101 | |||
Property, plant and equipment | 67,412 | |||
Goodwill | 115,562 | |||
Other intangible assets | 89,200 | |||
Other assets | 3,118 | |||
|
| |||
Total assets acquired | 349,337 | |||
|
| |||
Current liabilities | 17,743 | |||
|
| |||
Total liabilities assumed | 17,743 | |||
|
| |||
Net assets acquired | $ | 331,594 | ||
|
|
The following table summarizes the purchase price allocation to the identifiable intangible assets of Republic as of the date of acquisition (in thousands, except years):
Weighted - Average Life | ||||||||
Customer relationships | $ | 80,800 | 12 years | |||||
Trademarks and trade names | 8,400 | 13 years | ||||||
|
| |||||||
$ | 89,200 | |||||||
|
|
The goodwill of approximately $115.6 million is calculated as the excess of the purchase price over the fair values of the assets acquired and liabilities assumed and has been allocated to the steel mills segment (see Note 5). Goodwill recognized for tax purposes was $118.6 million, all of which is deductible for such purposes.
Other acquisitions, exclusive of purchase price adjustments of acquisitions made andrecorded net of cash acquired, totaled $212.7 million in the first nine monthsaccumulated depreciation of 2017$11.52 billion at July 1, 2023 ($48.1 million in the first nine months of 2016). Included in the 2017 amount is the January 9, 2017 acquisition of Southland Tube (Southland) and the September 1, 2017 acquisition of St. Louis Cold Drawn, Inc. (St. Louis Cold Drawn). Nucor used cash on hand to acquire Southland and St. Louis Cold Drawn for purchase prices of approximately $130 million and $60 million, respectively. Southland is a manufacturer of hollow structural section tubing, which is primarily used in nonresidential construction markets. Southland had shipments of approximately 240,000 tons in 2016 and has one manufacturing facility in Birmingham, Alabama. St. Louis Cold Drawn is a manufacturer of cold drawn rounds, hexagons, squares, and special sections that mainly serves the U.S. and Mexican automotive and industrial markets. St. Louis Cold Drawn has two manufacturing locations, one in St. Louis, Missouri and the other in Monterrey, Mexico, that have a combined annual capacity of 200,000 tons.
million at September 30, 2017 ($2.2 million11.12 billion at December 31, 2016)2022).
4. Goodwill and Other Intangible Assets
8
Given the natural gas pricing environment, Nucor performed an impairment assessment of its proved producing natural gas well assets in December 2016. One of the main assumptions that most significantly affects the undiscounted cash flows determination is management’s estimate of future natural gas prices. The pricing used in this impairment assessment was developed by management based on projected natural gas market supply and demand dynamics, in conjunction with a review of projections by numerous sources of market data. This analysis was performed on each of Nucor’s three groups of wells, with each group defined by common geographic location. Each of Nucor’s three groups of wells passed the impairment test. One of the groups of wells had estimated undiscounted cash flows that were noticeably closer to its carrying value, which was $80.8 million as of December 31, 2016, than the other groups of wells. The carrying value of that group of wells was $74.0 million at September 30, 2017. The carrying value of the other groups of wells was $183.9 million as of September 30, 2017. Changeschange in the natural gas industry or a prolonged low price environment beyond what had already been assumed innet carrying amount of goodwill for the analysis could cause management to revise the natural gas price assumptions, which could possibly result in an impairment of some or all of the groups of proved well assets.six months ended July 1, 2023 by segment was as follows (in thousands):
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
| ||||
Balance at December 31, 2022 |
| $ | 675,186 |
|
| $ | 2,510,045 |
|
| $ | 734,829 |
|
| $ | 3,920,060 |
|
Acquisitions |
|
| - |
|
|
| (3,740 | ) |
|
| - |
|
|
| (3,740 | ) |
Translation |
|
| - |
|
|
| 9,877 |
|
|
| - |
|
|
| 9,877 |
|
Balance at July 1, 2023 |
| $ | 675,186 |
|
| $ | 2,516,182 |
|
| $ | 734,829 |
|
| $ | 3,926,197 |
|
Steel Mills | Steel Products | Raw Materials | Total | |||||||||||||
Balance at December 31, 2016 | $ | 620,156 | $ | 702,995 | $ | 729,577 | $ | 2,052,728 | ||||||||
Acquisitions | 125,328 | 7,157 | — | 132,485 | ||||||||||||
Translation | — | 23,033 | — | 23,033 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance at September 30, 2017 | $ | 745,484 | $ | 733,185 | $ | 729,577 | $ | 2,208,246 | ||||||||
|
|
|
|
|
|
|
|
Nucor completed its most recent annual goodwill impairment testing duringas of the first day of the fourth quarter of 20162022 and concluded that as of such date there was no impairment of goodwill for any of its reporting units.
The annual assessment performed in 2022 for one of the Company’s reporting units, Rebar Fabrication, used forward-looking projections in future cash flows. The fair value of this reporting unit exceeded its carrying value by approximately 34% in the most recent assessment. If our assessment of the relevant facts and circumstances changes, including if the expected future performance of this reporting unit declines from the most recent assessment, non-cash impairment charges may be required. Total goodwill associated with the Rebar Fabrication reporting unit was $356.3 million as of July 1, 2023 ($347.6 million as of December 31, 2022). An impairment of goodwill may also lead us to record an impairment of other intangible assets. Total finite-lived intangible assets associated with the Rebar Fabrication reporting unit were $33.3 million as of July 1, 2023 ($36.3 million as of December 31, 2022). There have been no triggering events requiring an interim assessment for impairment of the Rebar Fabrication reporting unit since the most recent annual goodwill impairment testing date.
5
Intangible assets with estimated useful lives of five to 2225 years are amortized on a straight-line or accelerated basis and were comprisedconsisted of the following as of September 30, 2017July 1, 2023 and December 31, 20162022 (in thousands):
September 30, 2017 | December 31, 2016 |
| July 1, 2023 |
|
| December 31, 2022 |
| |||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Gross Amount | Accumulated Amortization |
| Gross Amount |
|
| Accumulated |
|
| Gross Amount |
|
| Accumulated |
| |||||||||||||||||
Customer relationships | $ | 1,422,569 | $ | 622,440 | $ | 1,295,803 | $ | 566,884 |
| $ | 4,175,432 |
|
| $ | 1,191,801 |
|
| $ | 4,174,724 |
|
| $ | 1,087,834 |
| ||||||||
Trademarks and trade names | 176,950 | 74,551 | 161,851 | 66,494 |
|
| 364,245 |
|
|
| 153,691 |
|
|
| 364,106 |
|
|
| 142,363 |
| ||||||||||||
Other | 62,807 | 25,030 | 62,807 | 20,248 |
|
| 109,746 |
|
|
| 98,050 |
|
|
| 109,746 |
|
|
| 96,114 |
| ||||||||||||
|
|
|
|
| $ | 4,649,423 |
|
| $ | 1,443,542 |
|
| $ | 4,648,576 |
|
| $ | 1,326,311 |
| |||||||||||||
$ | 1,662,326 | $ | 722,021 | $ | 1,520,461 | $ | 653,626 | |||||||||||||||||||||||||
|
|
|
|
Intangible asset amortization expense in the thirdsecond quarter of 20172023 and 20162022 was $23.0$58.4 million and $18.5$45.9 million, respectively, and was $68.4$117.2 million and $54.1$87.3 million in the first ninesix months of 20172023 and 2016,2022, respectively. Annual amortization expense is estimated to be $91.2$233.5 million in 2017; $89.62023; $233.4 million in 2018; $86.72024; $232.4 million in 2019; $84.42025; $229.4 million in 2020;2026; and $83.1$225.1 million in 2021.2027.
5. Current Liabilities
9
NUMIT
Nucor has a 50% economic and voting interestBook overdrafts, included in NuMit LLC (NuMit). NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 25 sheet processing facilities located throughout the United States, Canada and Mexico. Nucor accounts for the investment in NuMit (on aone-month lag basis) under the equity method, as control and risk of loss are shared equally between the members. Nucor’s investment in NuMit at September 30, 2017 was $311.9 million ($325.1 million at December 31, 2016). Nucor received distributions from NuMit of $0.1 million during the third quarter of 2017 and $47.0 million during the first nine months of 2017. NuMit distributions were $0.5 million during the third quarter of 2016 and $37.5 million during the first nine months of 2016.
DUFERDOFIN NUCOR
Nucor owns a 50% economic and voting interest in Duferdofin Nucor S.r.l. (Duferdofin Nucor), an Italian steel manufacturer, and accounts for the investment (on aone-month lag basis) under the equity method, as control and risk of loss are shared equally between the members.
Nucor’s investment in Duferdofin Nucor at September 30, 2017 was $280.8 million ($256.6 million at December 31, 2016). Nucor’s 50% share of the total net assets of Duferdofin Nucor was $112.6 million at September 30, 2017, resulting in a basis difference of $168.2 million due to thestep-up to fair value of certain assets and liabilities attributable to Duferdofin Nucor, as well as the identification of goodwill ($91.0 million) and finite-lived intangible assets. This basis difference, excluding the portion attributable to goodwill, is being amortized based on the remaining estimated useful lives of the various underlying net assets, as appropriate. Amortization expense associated with the fair valuestep-up was $2.3 million and $2.2 million in the third quarter of 2017 and 2016, respectively, and was $6.6 million in the first nine months of 2017 and 2016.
As of September 30, 2017, Nucor had outstanding notes receivable of €35.0 million ($41.3 million) from Duferdofin Nucor (€35.0 million, or $36.9 million, as of December 31, 2016). The notes receivable bear interest at 0.83% and reset annually on September 30 to the 12-month Euro Interbank Offered Rate (Euribor) plus 1% per year. The principal amounts are due on January 31, 2019. As of September 30, 2017 and December 31, 2016, the notes receivable were classified in other assetspayable in the condensed consolidated balance sheets.sheets, were $152.4 million at July 1, 2023 ($163.6 million at December 31, 2022). Dividends payable, included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, were $127.7 million at July 1, 2023 ($130.5 million at December 31, 2022).
Nucor has issued a guarantee, the6. Fair Value Measurements
The following table summarizes information regarding Nucor’s financial assets and financial liabilities that were measured at fair value of which is immaterial, for its ownership percentage (50%) of Duferdofin Nucor’s borrowings under Facility A of a Structured Trade Finance Facilities Agreement (Facility A). The maximum amount Duferdofin Nucor could have borrowed under Facility A was €122.5 million ($144.6 million) as of September 30, 2017. As of September 30, 2017, there was €122.5 million ($144.6 million) outstanding under that facility (€107.0 million, or $112.7 million, as ofJuly 1, 2023 and December 31, 2016)2022 (in thousands). Facility A was amended in 2015 to extend the maturity date to October 12, 2018. If Duferdofin Nucor fails to pay when duedoes not have any amounts for which it is obligated under Facility A, Nucor could be required to pay 50% of such amounts pursuant to and in accordance with the terms of its guarantee. Any indebtedness of Duferdofin Nucor to Nucor is effectively subordinated to the indebtedness of Duferdofin Nucor under Facility A. Nucor has not recorded any liability associated with this guarantee.
10
ALL EQUITY INVESTMENTS
Nucor reviews its equity investments for impairment if and when circumstances indicatenon-financial assets or non-financial liabilities that a decline in value below their carrying amounts may have occurred. Nucor last assessed its equity investment in Duferdofin Nucor for impairment in 2015 due to the protracted challenging steel market conditions caused by excess global overcapacity, which increased in 2015, and the difficult economic environment in Europe. After completing its assessment, the Company determined that the carrying amount exceeded its estimatedare measured at fair value and incurredon a partial impairmentrecurring basis.
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
| ||||||||||
Description |
| Carrying |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| ||||
As of July 1, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash equivalents |
| $ | 3,980,583 |
|
| $ | 3,980,583 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 870,475 |
|
|
| 870,475 |
|
|
| - |
|
|
| - |
|
Restricted cash and cash equivalents |
|
| 12,665 |
|
|
| 12,665 |
|
|
| - |
|
|
| - |
|
Derivative contracts |
|
| 7,263 |
|
|
| - |
|
|
| 7,263 |
|
|
| - |
|
Total assets |
| $ | 4,870,986 |
|
| $ | 4,863,723 |
|
| $ | 7,263 |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative contracts |
| $ | (621 | ) |
| $ | - |
|
| $ | (621 | ) |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
As of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash equivalents |
| $ | 3,182,631 |
|
| $ | 3,182,631 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 576,946 |
|
|
| 576,946 |
|
|
| - |
|
|
| - |
|
Restricted cash and cash equivalents |
|
| 80,368 |
|
|
| 80,368 |
|
|
| - |
|
|
| - |
|
Derivative contracts |
|
| 34,400 |
|
|
| - |
|
|
| 34,400 |
|
|
| - |
|
Total assets |
| $ | 3,874,345 |
|
| $ | 3,839,945 |
|
| $ | 34,400 |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative contracts |
| $ | (1,370 | ) |
| $ | - |
|
| $ | (1,370 | ) |
| $ | - |
|
6
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | Carrying Amount in Condensed Consolidated Balance Sheets | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
As of September 30, 2017 | ||||||||||||||||
Assets: | ||||||||||||||||
Cash equivalents | $ | 1,143,259 | $ | 1,143,259 | $ | — | $ | — | ||||||||
Short-term investments | 50,000 | 50,000 | — | — | ||||||||||||
Commodity contracts | 400 | — | 400 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 1,193,659 | $ | 1,193,259 | $ | 400 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Commodity and foreign exchange contracts | $ | (2,318 | ) | $ | — | $ | (2,318 | ) | $ | — | ||||||
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2016 | ||||||||||||||||
Assets: | ||||||||||||||||
Cash equivalents | $ | 1,609,523 | $ | 1,609,523 | $ | — | $ | — | ||||||||
Short-term investments | 150,000 | 150,000 | — | — | ||||||||||||
Commodity and foreign exchange contracts | 2,029 | — | 2,029 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 1,761,552 | $ | 1,759,523 | $ | 2,029 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Commodity contracts | $ | (605 | ) | $ | — | $ | (605 | ) | $ | — | ||||||
|
|
|
|
|
|
|
|
11
Fair value measurements for Nucor’s cash equivalents, and short-term investments and restricted cash and cash equivalents are classified under Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Our short-term investments are held in similar short-term investment instruments as described in Note 4 to the audited consolidated financial statements included in Nucor’s Annual Report on Form10-K for the year ended December 31, 2016.at July 1, 2023 consisted of certificates of deposit, commercial paper and corporate notes. Fair value measurements for Nucor’s derivatives, which are typically commodity or foreign exchange contracts, are classified under Level 2 because such measurements are based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices, and spot and future exchange rates. There were no transfers between the levels in the fair value hierarchy for the periods presented.
The fair value of short-term and long-term debt, including current maturities, was approximately $4.75$5.96 billion at September 30, 2017 ($4.70July 1, 2023 (approximately $5.93 billion at December 31, 2016)2022). The debt fair value estimates are classified under Level 2 because such estimates are based on readily available market prices of our debt at September 30, 2017July 1, 2023 and December 31, 2016,2022, or similar debt with the same maturities, ratings and interest rates.
7. Contingencies
We are from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position or cash flows. Nucor maintains liability insurance with self-insurance limits for certain risks that is subject to certain self-insurance limits.risks.
8. Stock-Based Compensation
Stock Options
A summary of activity under Nucor’s stock option plans for the first ninesix months of 20172023 is as follows (in thousands, except years(shares and aggregate intrinsic value in thousands):
|
|
|
|
| Weighted- |
|
| Weighted- |
|
|
| |||
|
|
|
|
| Average |
|
| Average |
| Aggregate |
| |||
|
|
|
|
| Exercise |
|
| Remaining |
| Intrinsic |
| |||
|
| Shares |
|
| Price |
|
| Contractual Life |
| Value |
| |||
Number of shares under stock options: |
|
|
|
|
|
|
|
|
|
|
| |||
Outstanding at beginning of year |
|
| 837 |
|
| $ | 66.76 |
|
|
|
|
|
| |
Granted |
|
| 91 |
|
| $ | 133.03 |
|
|
|
|
|
| |
Exercised |
|
| (131 | ) |
| $ | 54.49 |
|
|
|
| $ | 15,539 |
|
Canceled |
|
| - |
|
| $ | - |
|
|
|
|
|
| |
Outstanding at July 1, 2023 |
|
| 797 |
|
| $ | 76.32 |
|
| 7.5 years |
| $ | 69,890 |
|
Stock options exercisable at July 1, 2023 |
|
| 512 |
|
| $ | 49.84 |
|
| 6.7 years |
| $ | 58,494 |
|
For the 2023 stock option grant, the grant date fair value of $49.62 per share amounts):was calculated using the Black-Scholes options pricing model with the following assumptions:
Shares | Weighted - Average Exercise Price | Weighted - Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||
Number of shares under stock options: | ||||||||||||||||
Outstanding at beginning of year | 3,591 | $ | 45.32 | |||||||||||||
Granted | 698 | $ | 59.07 | |||||||||||||
Exercised | (144 | ) | $ | 37.54 | $ | 3,618 | ||||||||||
Canceled | — | — | ||||||||||||||
|
| |||||||||||||||
Outstanding at September 30, 2017 | 4,145 | $ | 47.90 | 7.1 years | $ | 35,842 | ||||||||||
|
| |||||||||||||||
Stock options exercisable at September 30, 2017 | 1,848 | $ | 43.37 | 5.2 years | $ | 23,415 | ||||||||||
|
|
Exercise price |
| $ | 133.03 |
|
Expected dividend yield |
|
| 1.53 | % |
Expected stock price volatility |
|
| 37.55 | % |
Risk-free interest rate |
|
| 3.66 | % |
Expected life (in years) |
|
| 6.5 |
|
12
Stock options granted to employees who are eligible for retirement on the date of grant are expensed immediately since these awards vest upon retirement from the Company. Retirement, for purposes of vesting in these stock options, means termination of employment after satisfying age and years of service requirements. Similarly, stock options granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible. Compensation expense for stock options granted to employees who will not become retirement-eligible prior to the end of the vesting term is recognized on a straight-line basis over the vesting period. Compensation expense for stock options was $0.4$3.4 million and $0.3$3.9 million in the thirdsecond quarter of 20172023 and 2016,2022, respectively, and $7.9$3.9 million and $7.6$4.4 million in the first ninesix months of 20172023 and 2016,2022, respectively. As of September 30, 2017,July 1, 2023, unrecognized compensation expense related to stock options was $2.5$2.8 million, which is expectedwe expect to be recognizedrecognize over a weighted-average period of 2.2 years.
7
Restricted Stock Units–Nucor annually grants restricted stock units (RSUs) to key employees, officers andnon-employee directors. The RSUs typically vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date. A portion of the RSUs awarded to an officer vests upon the officer’s retirement. Retirement, for purposes of vesting in these RSUs only, means termination of employment with approval of the Compensation and Executive Development Committee of the Board of Directors after satisfying age and years of service requirements. RSUs granted to anon-employee director are fully vested on the grant date and are payable to thenon-employee director in the form of common stock after the termination of the director’s service on the Board of Directors.
RSUs granted to employees who are eligible for retirement on the date of grant are expensed immediately, and RSUs granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since these awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who will not become retirement-eligible prior to the end of the vesting term is recognized on a straight-line basis over the vesting period.
Cash dividend equivalents are paid to holders of RSUs each quarter. Dividend equivalents paid on RSUs expected to vest are recognized as a reduction in retained earnings.
The fair value of an RSU is determined based on the closing stock price of Nucor’s common stock on the date of the grant.A summary of Nucor’s RSUrestricted stock unit (“RSU”) activity for the first ninesix months of 20172023 is as follows (shares in thousands):
Shares | Grant Date Fair Value |
| Shares |
|
| Grant Date |
| |||||||||
Restricted stock units: |
|
|
|
|
|
| ||||||||||
Unvested at beginning of year | 1,040 | $ | 48.47 |
|
| 1,003 |
|
| $ | 98.66 |
| |||||
Granted | 721 | $ | 59.07 |
|
| 831 |
|
| $ | 133.03 |
| |||||
Vested | (634 | ) | $ | 53.21 |
|
| (863 | ) |
| $ | 102.49 |
| ||||
Canceled | (13 | ) | $ | 50.21 |
|
| (10 | ) |
| $ | 96.92 |
| ||||
| ||||||||||||||||
Unvested at September 30, 2017 | 1,114 | $ | 52.61 | |||||||||||||
| ||||||||||||||||
Shares reserved for future grants (stock options and RSUs) | 7,268 | |||||||||||||||
| ||||||||||||||||
Unvested at July 1, 2023 |
|
| 961 |
|
| $ | 124.96 |
|
Compensation expense for RSUs was $6.1$48.5 million and $5.7$41.9 million in the thirdsecond quarter of 20172023 and 2016,2022, respectively, and $32.2$60.7 million and $28.9$50.9 million in the first ninesix months of 20172023 and 2016,2022, respectively. As of September 30, 2017,July 1, 2023, unrecognized compensation expense related to unvested RSUs was $40.4$111.9 million, which is expectedwe expect to be recognizedrecognize over a weighted-average period of 2.31.8 years.
13
Restricted Stock Awards–Nucor’s Senior Officers Long-Term Incentive Plan (LTIP) and Senior Officers Annual Incentive Plan (AIP) authorize the award of shares of common stock to officers subject to certain conditions and restrictions.
The LTIP provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period.One-third of the LTIP restricted stock award vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age 55 while employed by Nucor. Although participants are entitled to cash dividends and may vote such awarded shares, the sale or transfer of such shares is limited during the restricted period.
The AIP provides for the payment of annual cash incentive awards. An AIP participant may elect, however, to defer payment of up toone-half of an AIP award. In such event, the deferred AIP award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock units, equal to 25% of the number of common stock units attributable to the deferred AIP award. Common stock units attributable to deferred AIP awards are fully vested. Common stock units credited as a deferral incentive vest upon the AIP participant’s attainment of age 55 while employed by Nucor. Vested common stock units are paid to AIP participants in the form of shares of common stock following their termination of employment with Nucor.
A summary of Nucor’s restricted stock activity under the AIPNucor Corporation Senior Officers Annual Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “AIP”) and the LTIPNucor Corporation Senior Officers Long-Term Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “LTIP”) for the first ninesix months of 20172023 is as follows (shares in thousands):
|
|
|
|
| Grant Date |
| ||
|
| Shares |
|
| Fair Value |
| ||
Restricted stock units and restricted stock awards: |
|
|
|
|
|
| ||
Unvested at beginning of year |
|
| 209 |
|
| $ | 108.55 |
|
Granted |
|
| 414 |
|
| $ | 171.38 |
|
Vested |
|
| (406 | ) |
| $ | 152.68 |
|
Canceled |
|
| (7 | ) |
| $ | 171.38 |
|
Unvested at July 1, 2023 |
|
| 210 |
|
| $ | 144.98 |
|
Shares | Grant Date Fair Value | |||||||
Restricted stock awards and units: | ||||||||
Unvested at beginning of year | 67 | $ | 45.77 | |||||
Granted | 172 | $ | 60.62 | |||||
Vested | (144 | ) | $ | 51.69 | ||||
Canceled | — | — | ||||||
Unvested at September 30, 2017 | 95 | $ | 54.45 | |||||
|
| |||||||
Shares reserved for future grants | 683 | |||||||
|
|
Compensation expense for common stock and common stock units awarded under the AIP and the LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $3.6$11.7 million and $0.7$1.8 million in the thirdsecond quarter of 20172023 and 2016,2022, respectively, and $11.1$19.4 million and $7.7$18.8 million in the first ninesix months of 20172023 and 2016,2022, respectively. As of September 30, 2017,July 1, 2023, unrecognized compensation expense related to unvested restricted stock awards was $1.3$10.7 million, which is expectedwe expect to be recognizedrecognize over a weighted-average period of 1.92.0 years.
9. Employee Benefit Plan
Nucor makes contributions to a Profit Sharing and Retirement Savings Plan for qualified employees based on the profitability of the Company. Nucor’s expense for these benefits totaled $194.4 million and $333.0 million in the second quarter of 2023 and 2022, respectively, and $356.6 million and $619.9 million in the first six months of 2023 and 2022, respectively. The related liability for these benefits is included in salaries, wages and related accruals in the condensed consolidated balance sheets.
8
10. Interest Expense (Income)
The components of net interest expense for the second quarter and first six months of 2023 and 2022 are as follows (in thousands):
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||
|
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| ||||
Interest expense |
| $ | 60,806 |
|
| $ | 63,514 |
|
| $ | 123,488 |
|
| $ | 107,590 |
|
Interest income |
|
| (56,208 | ) |
|
| (5,751 | ) |
|
| (108,707 | ) |
|
| (6,692 | ) |
Interest expense, net |
| $ | 4,598 |
|
| $ | 57,763 |
|
| $ | 14,781 |
|
| $ | 100,898 |
|
11. Income Taxes
14The effective tax rate for the second quarter of 2023 was 22.6% compared to 21.9% for the second quarter of 2022.
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended | |||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 | |||||||||||||
Interest expense | $ | 47,621 | $ | 46,519 | $ | 141,486 | $ | 137,370 | ||||||||
Interest income | (4,311 | ) | (3,510 | ) | (9,991 | ) | (8,955 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Interest expense, net | $ | 43,310 | $ | 43,009 | $ | 131,495 | $ | 128,415 | ||||||||
|
|
|
|
|
|
|
|
The Internal Revenue Service (the “IRS”) is currently examining Nucor’s 2015, 2019 and 2020 federal income tax returns. Nucor has concluded U.S. federal income tax matters for tax years through 2013.2014, and for tax years 2016 and 2018. The tax years 2014 through 20162017 and 2021 remain open to examination by the Internal Revenue Service.IRS. The Canada Revenue Agency has substantially concluded its examination of the 20122015 through 2021 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates and is now examiningare currently under examination by the 2013 Canadian returns.Canada Revenue Agency. The tax years 20102016 through 20162022 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).
Non-current deferred tax assets included in other assets in the condensed consolidated balance sheets were $0.6$10.6 million at September 30, 2017 (noneJuly 1, 2023 ($19.3 million at December 31, 2016)2022).Non-current deferred tax liabilities included in deferred credits and other liabilities in the condensed consolidated balance sheets were $516.0 million$1.24 billion at September 30, 2017July 1, 2023 ($558.6 million1.30 billion at December 31, 2016)2022).
9
12. Stockholders’ Equity
The following tables reflect the changes in stockholders’ equity attributable to Nucor and the noncontrolling interests of Nucor’s joint ventures, Nucor-Yamato Steel Company (Limited Partnership) (“NYS”) and California Steel Industries, Inc. (“CSI”), in both of which Nucor owns 51%, for the three months and six months ended July 1, 2023 and July 2, 2022 (in thousands):
15
|
|
|
|
| Three Months (13 Weeks) Ended July 1, 2023 |
|
|
|
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| Total |
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
| |||||||||||||
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||
BALANCES, April 1, 2023 |
| $ | 19,929,870 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,168,770 |
|
| $ | 25,762,032 |
|
| $ | (165,358 | ) |
|
| 128,930 |
|
| $ | (8,900,124 | ) |
| $ | 19,017,381 |
|
| $ | 912,489 |
|
Net earnings before noncontrolling interests |
|
| 1,587,075 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,461,354 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,461,354 |
|
|
| 125,721 |
|
Other comprehensive income (loss) |
|
| 36,386 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 36,386 |
|
|
| - |
|
|
| - |
|
|
| 36,386 |
|
|
| - |
|
Stock options exercised |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
Stock option expense |
|
| 3,447 |
|
|
| - |
|
|
| - |
|
|
| 3,447 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,447 |
|
|
| - |
|
Issuance of stock under award plans, |
|
| 16,149 |
|
|
| - |
|
|
| - |
|
|
| (24,025 | ) |
|
| - |
|
|
| - |
|
|
| (566 | ) |
|
| 40,174 |
|
|
| 16,149 |
|
|
| - |
|
Amortization of unearned |
|
| 1,501 |
|
|
| - |
|
|
| - |
|
|
| 1,501 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,501 |
|
|
| - |
|
Treasury stock acquired |
|
| (454,814 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,067 |
|
|
| (454,814 | ) |
|
| (454,814 | ) |
|
| - |
|
Cash dividends declared |
|
| (127,725 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (127,725 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (127,725 | ) |
|
| - |
|
Distributions to noncontrolling |
|
| (50,961 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (50,961 | ) |
BALANCES, July 1, 2023 |
| $ | 20,940,928 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,149,693 |
|
| $ | 27,095,661 |
|
| $ | (128,972 | ) |
|
| 131,431 |
|
| $ | (9,314,764 | ) |
| $ | 19,953,679 |
|
| $ | 987,249 |
|
|
|
|
|
| Six Months (26 Weeks) Ended July 1, 2023 |
|
|
|
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| Total |
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
| |||||||||||||
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||
BALANCES, December 31, 2022 |
| $ | 19,569,906 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,143,520 |
|
| $ | 24,754,873 |
|
| $ | (137,517 | ) |
|
| 126,661 |
|
| $ | (8,498,243 | ) |
| $ | 18,414,694 |
|
| $ | 1,155,212 |
|
Net earnings before noncontrolling interests |
|
| 2,818,704 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,597,896 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,597,896 |
|
|
| 220,808 |
|
Other comprehensive income (loss) |
|
| 8,545 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,545 |
|
|
| - |
|
|
| - |
|
|
| 8,545 |
|
|
| - |
|
Stock options exercised |
|
| 7,123 |
|
|
| - |
|
|
| - |
|
|
| (1,749 | ) |
|
| - |
|
|
| - |
|
|
| (131 | ) |
|
| 8,872 |
|
|
| 7,123 |
|
|
| - |
|
Stock option expense |
|
| 3,922 |
|
|
| - |
|
|
| - |
|
|
| 3,922 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,922 |
|
|
| - |
|
Issuance of stock under award plans, |
|
| 59,969 |
|
|
| - |
|
|
| - |
|
|
| 735 |
|
|
| - |
|
|
| - |
|
|
| (889 | ) |
|
| 59,234 |
|
|
| 59,969 |
|
|
| - |
|
Amortization of unearned |
|
| 3,265 |
|
|
| - |
|
|
| - |
|
|
| 3,265 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,265 |
|
|
| - |
|
Treasury stock acquired |
|
| (884,627 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,790 |
|
|
| (884,627 | ) |
|
| (884,627 | ) |
|
| - |
|
Cash dividends declared |
|
| (257,108 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (257,108 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (257,108 | ) |
|
| - |
|
Distributions to noncontrolling |
|
| (388,771 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (388,771 | ) |
BALANCES, July 1, 2023 |
| $ | 20,940,928 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,149,693 |
|
| $ | 27,095,661 |
|
| $ | (128,972 | ) |
|
| 131,431 |
|
| $ | (9,314,764 | ) |
| $ | 19,953,679 |
|
| $ | 987,249 |
|
10
Attributable to Nucor Corporation | Attributable to Noncontrolling Interests | Total | ||||||||||
Stockholders’ equity at December 31, 2016 | $ | 7,879,865 | $ | 374,843 | $ | 8,254,708 | ||||||
Total comprehensive income | 1,034,784 | 50,680 | 1,085,464 | |||||||||
Stock options | 13,300 | — | 13,300 | |||||||||
Issuance of stock under award plans, net of forfeitures | 30,787 | — | 30,787 | |||||||||
Amortization of unearned compensation | 1,000 | — | 1,000 | |||||||||
Treasury stock acquired | (90,305 | ) | — | (90,305 | ) | |||||||
Dividends declared | (364,046 | ) | — | (364,046 | ) | |||||||
Distributions to noncontrolling interests | — | (85,094 | ) | (85,094 | ) | |||||||
|
|
|
|
|
| |||||||
Stockholders’ equity at September 30, 2017 | $ | 8,505,385 | $ | 340,429 | $ | 8,845,814 | ||||||
|
|
|
|
|
| |||||||
Attributable to Nucor Corporation | Attributable to Noncontrolling Interests | Total | ||||||||||
Stockholders’ equity at December 31, 2015 | $ | 7,477,816 | $ | 372,061 | $ | 7,849,877 | ||||||
Total comprehensive income | 699,410 | 88,599 | 788,009 | |||||||||
Stock options | 13,229 | — | 13,229 | |||||||||
Issuance of stock under award plans, net of forfeitures | 25,929 | — | 25,929 | |||||||||
Amortization of unearned compensation | 600 | — | 600 | |||||||||
Treasury stock acquired | (5,173 | ) | — | (5,173 | ) | |||||||
Dividends declared | (360,955 | ) | — | (360,955 | ) | |||||||
Distributions to noncontrolling interests | — | (86,808 | ) | (86,808 | ) | |||||||
Other | (602 | ) | (1,776 | ) | (2,378 | ) | ||||||
|
|
|
|
|
| |||||||
Stockholders’ equity at October 1, 2016 | $ | 7,850,254 | $ | 372,076 | $ | 8,222,330 | ||||||
|
|
|
|
|
|
In September 2015,
|
|
|
|
| Three Months (13 Weeks) Ended July 2, 2022 |
|
|
|
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| Total |
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
| |||||||||||||
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||
BALANCES, April 2, 2022 |
| $ | 16,143,120 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,163,129 |
|
| $ | 19,635,277 |
|
| $ | (44,504 | ) |
|
| 114,092 |
|
| $ | (6,701,401 | ) |
| $ | 15,204,562 |
|
| $ | 938,558 |
|
Net earnings before noncontrolling interests |
|
| 2,727,237 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,561,233 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,561,233 |
|
|
| 166,004 |
|
Other comprehensive income (loss) |
|
| (26,306 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (26,306 | ) |
|
| - |
|
|
| - |
|
|
| (26,306 | ) |
|
| - |
|
Stock options exercised |
|
| 2,233 |
|
|
| - |
|
|
| - |
|
|
| (802 | ) |
|
| - |
|
|
| - |
|
|
| (49 | ) |
|
| 3,035 |
|
|
| 2,233 |
|
|
| - |
|
Stock option expense |
|
| 3,964 |
|
|
| - |
|
|
| - |
|
|
| 3,964 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,964 |
|
|
| - |
|
Issuance of stock under award plans, |
|
| (3,546 | ) |
|
| - |
|
|
| - |
|
|
| (52,313 | ) |
|
| - |
|
|
| - |
|
|
| (775 | ) |
|
| 48,767 |
|
|
| (3,546 | ) |
|
| - |
|
Amortization of unearned |
|
| 1,200 |
|
|
| - |
|
|
| - |
|
|
| 1,200 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,200 |
|
|
| - |
|
Treasury stock acquired |
|
| (802,569 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,100 |
|
|
| (802,569 | ) |
|
| (802,569 | ) |
|
| - |
|
Cash dividends declared |
|
| (132,127 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (132,127 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (132,127 | ) |
|
| - |
|
Distributions to noncontrolling |
|
| (56,977 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (56,977 | ) |
Acquisition of noncontrolling interest in CSI |
|
| (3,421 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,421 | ) |
BALANCES, July 2, 2022 |
| $ | 17,852,808 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,115,178 |
|
| $ | 22,064,383 |
|
| $ | (70,810 | ) |
|
| 118,368 |
|
| $ | (7,452,168 | ) |
| $ | 16,808,644 |
|
| $ | 1,044,164 |
|
|
|
|
|
| Six Months (26 Weeks) Ended July 2, 2022 |
|
|
|
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
| Total |
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
| |||||||||||||
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||
BALANCES, December 31, 2021 |
| $ | 14,603,794 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,140,608 |
|
| $ | 17,674,100 |
|
| $ | (115,282 | ) |
|
| 107,742 |
|
| $ | (5,835,098 | ) |
| $ | 14,016,389 |
|
| $ | 587,405 |
|
Net earnings before noncontrolling interests |
|
| 4,954,352 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,656,856 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,656,856 |
|
|
| 297,496 |
|
Other comprehensive income (loss) |
|
| 44,472 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 44,472 |
|
|
| - |
|
|
| - |
|
|
| 44,472 |
|
|
| - |
|
Stock options exercised |
|
| 18,819 |
|
|
| - |
|
|
| - |
|
|
| (1,309 | ) |
|
| - |
|
|
| - |
|
|
| (359 | ) |
|
| 20,128 |
|
|
| 18,819 |
|
|
| - |
|
Stock option expense |
|
| 4,422 |
|
|
| - |
|
|
| - |
|
|
| 4,422 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,422 |
|
|
| - |
|
Issuance of stock under award plans, |
|
| 39,552 |
|
|
| - |
|
|
| - |
|
|
| (31,143 | ) |
|
| - |
|
|
| - |
|
|
| (1,163 | ) |
|
| 70,695 |
|
|
| 39,552 |
|
|
| - |
|
Amortization of unearned |
|
| 2,600 |
|
|
| - |
|
|
| - |
|
|
| 2,600 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,600 |
|
|
| - |
|
Treasury stock acquired |
|
| (1,707,893 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,148 |
|
|
| (1,707,893 | ) |
|
| (1,707,893 | ) |
|
| - |
|
Cash dividends declared |
|
| (266,573 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (266,573 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (266,573 | ) |
|
| - |
|
Distributions to noncontrolling |
|
| (268,535 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (268,535 | ) |
Acquisition of noncontrolling interest in CSI |
|
| 427,798 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 427,798 |
|
BALANCES, July 2, 2022 |
| $ | 17,852,808 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,115,178 |
|
| $ | 22,064,383 |
|
| $ | (70,810 | ) |
|
| 118,368 |
|
| $ | (7,452,168 | ) |
| $ | 16,808,644 |
|
| $ | 1,044,164 |
|
Dividends declared per share were $0.51 per share in the second quarter of 2023 ($0.50 per share in the second quarter of 2022) and $1.02 per share in the first six months of 2023 ($1.00 per share in the first six months of 2022).
On May 11, 2023, the Company announced that theits Board of Directors had approved a stocknew share repurchase program under which the Company is authorized to repurchase up to $900 million$4.00 billion of the Company’s common stock. This $900 millionstock and terminated all previously authorized share repurchase program has no stated expiration and replaced any previously authorized repurchase programs. As of September 30, 2017, the Company had approximately $738.0 million remaining available under the program. The Company expects any shareShare repurchases towill be made through purchases from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of any repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. As of July 1, 2023, the Company had $4.00 billion available for share repurchases under the program authorized by the Company’s Board of Directors.
11
13. Accumulated Other Comprehensive Income (Loss)
The following tables reflect the changes in accumulated other comprehensive income (loss) by component for the three months and six months ended July 1, 2023 and July 2, 2022 (in thousands):
16
|
| Three-Month (13-Week) Period Ended |
| |||||||||||||
|
| July 1, 2023 |
| |||||||||||||
|
| Gains and (Losses) on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
| ||||
|
| Hedging Derivatives |
|
| Gains (Losses) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive |
| $ | 1,700 |
|
| $ | (183,657 | ) |
| $ | 16,599 |
|
| $ | (165,358 | ) |
Other comprehensive income |
|
| (4,428 | ) |
|
| 34,586 |
|
|
| - |
|
|
| 30,158 |
|
Amounts reclassified from |
|
| 6,228 |
|
| - |
|
|
| - |
|
|
| 6,228 |
| |
Net current-period other |
|
| 1,800 |
|
|
| 34,586 |
|
|
| - |
|
|
| 36,386 |
|
Accumulated other comprehensive |
| $ | 3,500 |
|
| $ | (149,071 | ) |
| $ | 16,599 |
|
| $ | (128,972 | ) |
|
| Six-Month (26-Week) Period Ended |
| |||||||||||||
|
| July 1, 2023 |
| |||||||||||||
|
| Gains and (Losses) on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
| ||||
|
| Hedging Derivatives |
|
| Gains (Losses) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive |
| $ | 26,100 |
|
| $ | (180,216 | ) |
| $ | 16,599 |
|
| $ | (137,517 | ) |
Other comprehensive income |
|
| (29,003 | ) |
|
| 31,145 |
|
|
| - |
|
|
| 2,142 |
|
Amounts reclassified from |
|
| 6,403 |
|
|
| - |
|
|
| - |
|
|
| 6,403 |
|
Net current-period other |
|
| (22,600 | ) |
|
| 31,145 |
|
|
| - |
|
|
| 8,545 |
|
Accumulated other comprehensive |
| $ | 3,500 |
|
| $ | (149,071 | ) |
| $ | 16,599 |
|
| $ | (128,972 | ) |
12
|
| Three-Month (13-Week) Period Ended |
| |||||||||||||
|
| July 2, 2022 |
| |||||||||||||
|
| Gains and (Losses) on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
| ||||
|
| Hedging Derivatives |
|
| Gains (Losses) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive |
| $ | 49,198 |
|
| $ | (102,176 | ) |
| $ | 8,474 |
|
| $ | (44,504 | ) |
Other comprehensive income (loss) |
|
| 16,138 |
|
|
| (27,308 | ) |
|
| - |
|
|
| (11,170 | ) |
Amounts reclassified from |
|
| (15,136 | ) |
|
| - |
|
|
| - |
|
|
| (15,136 | ) |
Net current-period other |
|
| 1,002 |
|
|
| (27,308 | ) |
|
| - |
|
|
| (26,306 | ) |
Accumulated other comprehensive |
| $ | 50,200 |
|
| $ | (129,484 | ) |
| $ | 8,474 |
|
| $ | (70,810 | ) |
Three-Month (13 Week) Period Ended September 30, 2017 | ||||||||||||||||
Gains and Losses on Hedging Derivatives | Foreign Currency Gain (Loss) | Adjustment to Early Retiree Medical Plan | Total | |||||||||||||
Accumulated other comprehensive loss at July 1, 2017 | $ | (300 | ) | $ | (300,212 | ) | $ | 7,577 | $ | (292,935 | ) | |||||
Other comprehensive income (loss) before reclassifications | 405 | 74,479 | — | 74,884 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) into earnings(1) | 195 | — | — | 195 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net current-period other comprehensive income (loss) | 600 | 74,479 | — | 75,079 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated other comprehensive loss at September 30, 2017 | $ | 300 | $ | (225,733 | ) | $ | 7,577 | $ | (217,856 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Nine-Month (39 Week) Period Ended September 30, 2017 | ||||||||||||||||
Gains and Losses on Hedging Derivatives | Foreign Currency Gain (Loss) | Adjustment to Early Retiree Medical Plan | Total | |||||||||||||
Accumulated other comprehensive loss at December 31, 2016 | $ | 750 | $ | (326,170 | ) | $ | 7,577 | $ | (317,843 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (1,301 | ) | 100,437 | — | 99,136 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) into earnings(1) | 851 | — | — | 851 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net current-period other comprehensive income (loss) | (450 | ) | 100,437 | — | 99,987 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated other comprehensive loss at September 30, 2017 | $ | 300 | $ | (225,733 | ) | $ | 7,577 | $ | (217,856 | ) | ||||||
|
|
|
|
|
|
|
|
|
| Six-Month (26-Week) Period Ended |
| |||||||||||||
|
| July 2, 2022 |
| |||||||||||||
|
| Gains and (Losses) on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
| ||||
|
| Hedging Derivatives |
|
| Gains (Losses) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive |
| $ | 1,112 |
|
| $ | (124,868 | ) |
| $ | 8,474 |
|
| $ | (115,282 | ) |
Other comprehensive income (loss) |
|
| 69,614 |
|
|
| (4,616 | ) |
|
| - |
|
|
| 64,998 |
|
Amounts reclassified from |
|
| (20,526 | ) |
|
| - |
|
|
| - |
|
|
| (20,526 | ) |
Net current-period other |
|
| 49,088 |
|
|
| (4,616 | ) |
|
| - |
|
|
| 44,472 |
|
Accumulated other comprehensive |
| $ | 50,200 |
|
| $ | (129,484 | ) |
| $ | 8,474 |
|
| $ | (70,810 | ) |
14. Segments
Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate; steel trading and rebar distribution businesses; and Nucor’s equity method investments in NuMit LLC (“NuMit”) and Nucor-JFE Steel Mexico, S. de R.L. de C.V. ("NJSM"). The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, precision castings, steel fasteners, metal building systems, insulated metal panels, overhead doors, steel grating, tubular products, steel racking, piling products, wire and wire mesh, and utility towers and structures. The raw materials segment includes The David J. Joseph Company and its affiliates (“DJJ”), primarily a scrap broker and processor; Nu-Iron Unlimited and Nucor Steel Louisiana LLC (“Nucor Steel Louisiana”), two facilities that produce direct reduced iron (“DRI”) used by the steel mills; and our natural gas production operations.
17
Three-Month (13 Week) Period Ended October 1, 2016 | ||||||||||||||||
Gains and Losses on Hedging Derivatives | Foreign Currency Gain (Loss) | Adjustment to Early Retiree Medical Plan | Total | |||||||||||||
Accumulated other comprehensive loss at July 2, 2016 | $ | (3,900 | ) | $ | (289,481 | ) | $ | 12,003 | $ | (281,378 | ) | |||||
Other comprehensive income (loss) before reclassifications | (600 | ) | (8,606 | ) | — | (9,206 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) into earnings(2) | 2,000 | — | — | 2,000 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net current-period other comprehensive income (loss) | 1,400 | (8,606 | ) | — | (7,206 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated other comprehensive loss at October 1, 2016 | $ | (2,500 | ) | $ | (298,087 | ) | $ | 12,003 | $ | (288,584 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
Nine-Month (39 Week) Period Ended October 1, 2016 | ||||||||||||||||
Gains and Losses on Hedging Derivatives | Foreign Currency Gain (Loss) | Adjustment to Early Retiree Medical Plan | Total | |||||||||||||
Accumulated other comprehensive loss at December 31, 2015 | $ | (11,700 | ) | $ | (351,665 | ) | $ | 12,003 | $ | (351,362 | ) | |||||
Other comprehensive income (loss) before reclassifications | 912 | 53,578 | — | 54,490 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) into earnings(2) | 8,288 | — | — | 8,288 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net current-period other comprehensive income (loss) | 9,200 | 53,578 | — | 62,778 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated other comprehensive loss at October 1, 2016 | $ | (2,500 | ) | $ | (298,087 | ) | $ | 12,003 | $ | (288,584 | ) | |||||
|
|
|
|
|
|
|
|
18
Net interest expense other income,on long-term debt, charges and credits associated with changes in allowances to eliminate intercompany profit in inventory, profit sharing expense and stock-based compensation are shown under Corporate/eliminations.compensation. Corporate assets primarily include cash and cash equivalents, short-term investments, restricted cash and cash equivalents, allowances to eliminate intercompany profit in inventory, deferred income tax assets, federal and state income taxes receivable and investments in and advances to affiliates. The balance
13
Nucor’s results by segment for the thirdsecond quarter and first ninesix months of 20172023 and 20162022 were as follows (in thousands):
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended |
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| |||||||||||||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 |
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| |||||||||||||||||
Net sales to external customers: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Steel mills | $ | 3,639,488 | $ | 2,960,642 | $ | 10,982,636 | $ | 8,611,553 |
| $ | 5,565,772 |
|
| $ | 7,256,067 |
|
| $ | 10,545,029 |
|
| $ | 13,774,676 |
| ||||||||
Steel products | 1,089,519 | 1,011,602 | 2,919,992 | 2,763,335 |
|
| 3,442,862 |
|
|
| 3,842,948 |
|
|
| 6,718,859 |
|
|
| 7,166,036 |
| ||||||||||||
Raw materials | 441,110 | 317,992 | 1,257,437 | 876,696 |
|
| 514,622 |
|
|
| 695,459 |
|
|
| 969,348 |
|
|
| 1,347,044 |
| ||||||||||||
|
|
|
|
| $ | 9,523,256 |
|
| $ | 11,794,474 |
|
| $ | 18,233,236 |
|
| $ | 22,287,756 |
| |||||||||||||
$ | 5,170,117 | $ | 4,290,236 | $ | 15,160,065 | $ | 12,251,584 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Intercompany sales: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Steel mills | $ | 767,268 | $ | 567,854 | $ | 2,189,123 | $ | 1,592,512 |
| $ | 1,361,066 |
|
| $ | 1,763,563 |
|
| $ | 2,524,698 |
|
| $ | 3,356,821 |
| ||||||||
Steel products | 28,537 | 31,117 | 80,652 | 80,277 |
|
| 100,257 |
|
|
| 117,289 |
|
|
| 200,618 |
|
|
| 251,995 |
| ||||||||||||
Raw materials | 2,333,840 | 1,774,538 | 6,971,831 | 4,717,370 |
|
| 3,588,629 |
|
|
| 4,145,690 |
|
|
| 6,759,521 |
|
|
| 7,692,209 |
| ||||||||||||
Corporate/eliminations | (3,129,645 | ) | (2,373,509 | ) | (9,241,606 | ) | (6,390,159 | ) |
|
| (5,049,952 | ) |
|
| (6,026,542 | ) |
|
| (9,484,837 | ) |
|
| (11,301,025 | ) | ||||||||
|
|
|
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
| |||||||||||||
$ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Earnings (loss) before income taxes and noncontrolling interests: | ||||||||||||||||||||||||||||||||
Earnings before income taxes and |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Steel mills | $ | 432,718 | $ | 591,799 | $ | 1,734,245 | $ | 1,402,898 |
| $ | 1,403,547 |
|
| $ | 2,815,723 |
|
| $ | 2,241,935 |
|
| $ | 5,394,577 |
| ||||||||
Steel products | 59,225 | 72,578 | 131,956 | 197,891 |
|
| 1,010,789 |
|
|
| 1,129,932 |
|
|
| 1,981,591 |
|
|
| 1,814,799 |
| ||||||||||||
Raw materials | 9,957 | 14,313 | 102,575 | (76,240 | ) |
|
| 138,411 |
|
|
| 263,598 |
|
|
| 196,551 |
|
|
| 359,451 |
| |||||||||||
Corporate/eliminations | (131,295 | ) | (194,518 | ) | (541,060 | ) | (480,930 | ) |
|
| (502,965 | ) |
|
| (718,851 | ) |
|
| (773,511 | ) |
|
| (1,180,310 | ) | ||||||||
|
|
|
|
| $ | 2,049,782 |
|
| $ | 3,490,402 |
|
| $ | 3,646,566 |
|
| $ | 6,388,517 |
| |||||||||||||
$ | 370,605 | $ | 484,172 | $ | 1,427,716 | $ | 1,043,619 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Sept. 30, 2017 | Dec. 31, 2016 | |||||||||||||||||||||||||||||||
Segment assets: | ||||||||||||||||||||||||||||||||
Steel mills | $ | 9,272,209 | $ | 8,084,773 | ||||||||||||||||||||||||||||
Steel products | 2,893,703 | 2,544,344 | ||||||||||||||||||||||||||||||
Raw materials | 3,462,340 | 3,235,237 | ||||||||||||||||||||||||||||||
Corporate/eliminations | 875,582 | 1,359,164 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
$ | 16,503,834 | $ | 15,223,518 | |||||||||||||||||||||||||||||
|
|
|
| July 1, 2023 |
|
| Dec. 31, 2022 |
| ||
Segment assets: |
|
|
|
|
|
| ||
Steel mills |
| $ | 14,828,076 |
|
| $ | 14,157,229 |
|
Steel products |
|
| 11,487,936 |
|
|
| 12,087,145 |
|
Raw materials |
|
| 3,292,148 |
|
|
| 3,383,114 |
|
Corporate/eliminations |
|
| 3,771,756 |
|
|
| 2,851,722 |
|
|
| $ | 33,379,916 |
|
| $ | 32,479,210 |
|
15. Revenue
The following tables disaggregate our revenue by major source for the second quarter and first six months of 2023 and 2022 (in thousands):
|
| Three Months (13 Weeks) Ended July 1, 2023 |
|
| Six Months (26 Weeks) Ended July 1, 2023 |
| ||||||||||||||||||||||||||
|
| Steel |
|
| Steel |
|
| Raw |
|
| Total |
|
| Steel |
|
| Steel |
|
| Raw |
|
| Total |
| ||||||||
Sheet |
| $ | 2,645,817 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,645,817 |
|
| $ | 4,748,511 |
|
| $ | - |
|
| $ | - |
|
| $ | 4,748,511 |
|
Bar |
|
| 1,599,724 |
|
|
| - |
|
|
| - |
|
|
| 1,599,724 |
|
|
| 3,197,852 |
|
|
| - |
|
|
| - |
|
|
| 3,197,852 |
|
Structural |
|
| 581,952 |
|
|
| - |
|
|
| - |
|
|
| 581,952 |
|
|
| 1,220,259 |
|
|
| - |
|
|
| - |
|
|
| 1,220,259 |
|
Plate |
|
| 738,279 |
|
|
| - |
|
|
| - |
|
|
| 738,279 |
|
|
| 1,378,407 |
|
|
| - |
|
|
| - |
|
|
| 1,378,407 |
|
Tubular Products |
|
| - |
|
|
| 436,551 |
|
|
| - |
|
|
| 436,551 |
|
|
| - |
|
|
| 875,534 |
|
|
| - |
|
|
| 875,534 |
|
Rebar Fabrication |
|
| - |
|
|
| 615,814 |
|
|
| - |
|
|
| 615,814 |
|
|
| - |
|
|
| 1,113,931 |
|
|
| - |
|
|
| 1,113,931 |
|
Joist |
|
| - |
|
|
| 638,975 |
|
|
| - |
|
|
| 638,975 |
|
|
| - |
|
|
| 1,274,791 |
|
|
| - |
|
|
| 1,274,791 |
|
Deck |
|
| - |
|
|
| 473,775 |
|
|
| - |
|
|
| 473,775 |
|
|
| - |
|
|
| 959,218 |
|
|
| - |
|
|
| 959,218 |
|
Other Steel Products |
|
| - |
|
|
| 1,277,747 |
|
|
| - |
|
|
| 1,277,747 |
|
|
| - |
|
|
| 2,495,385 |
|
|
| - |
|
|
| 2,495,385 |
|
Raw Materials |
|
| - |
|
|
| - |
|
|
| 514,622 |
|
|
| 514,622 |
|
|
| - |
|
|
| - |
|
|
| 969,348 |
|
|
| 969,348 |
|
| $ | 5,565,772 |
|
| $ | 3,442,862 |
|
| $ | 514,622 |
|
| $ | 9,523,256 |
|
| $ | 10,545,029 |
|
| $ | 6,718,859 |
|
| $ | 969,348 |
|
| $ | 18,233,236 |
|
1914
Contract liabilities are primarily related to deferred revenue resulting from cash payments received in advance from customers to protect against credit risk. Contract liabilities totaled $350.5 million as of July 1, 2023 ($285.0 million as of December 31, 2022) and are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets. 16. Earnings Per Share The computations of basic and |
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended | |||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 | |||||||||||||
Basic net earnings per share: | ||||||||||||||||
Basic net earnings | $ | 254,850 | $ | 305,447 | $ | 934,797 | $ | 636,632 | ||||||||
Earnings allocated to participating securities | (900 | ) | (1,034 | ) | (3,239 | ) | (2,115 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net earnings available to common stockholders | $ | 253,950 | $ | 304,413 | $ | 931,558 | $ | 634,517 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Average shares outstanding | 320,096 | 319,737 | 320,253 | 319,444 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Basic net earnings per share | $ | 0.79 | $ | 0.95 | $ | 2.91 | $ | 1.99 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted net earnings per share: | ||||||||||||||||
Diluted net earnings | $ | 254,850 | $ | 305,447 | $ | 934,797 | $ | 636,632 | ||||||||
Earnings allocated to participating securities | (899 | ) | (1,034 | ) | (3,233 | ) | (2,116 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net earnings available to common stockholders | $ | 253,951 | $ | 304,413 | $ | 931,564 | $ | 634,516 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted average shares outstanding: | ||||||||||||||||
Basic shares outstanding | 320,096 | 319,737 | 320,253 | 319,444 | ||||||||||||
Dilutive effect of stock options and other | 667 | 291 | 792 | 188 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
320,763 | 320,028 | 321,045 | 319,632 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted net earnings per share | $ | 0.79 | $ | 0.95 | $ | 2.90 | $ | 1.99 | ||||||||
|
|
|
|
|
|
|
|
The following stock options were excluded from the computation of diluted net earnings per share for the thirdsecond quarter and first ninesix months of 20172023 and 2016 because their effect would have been anti-dilutive2022 are as follows (in thousands, except per share amounts):
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||
|
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| ||||
Basic net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic net earnings |
| $ | 1,461,354 |
|
| $ | 2,561,233 |
|
| $ | 2,597,896 |
|
| $ | 4,656,856 |
|
Earnings allocated to participating securities |
|
| (6,029 | ) |
|
| (11,041 | ) |
|
| (9,251 | ) |
|
| (19,380 | ) |
Net earnings available to common |
| $ | 1,455,325 |
|
| $ | 2,550,192 |
|
| $ | 2,588,645 |
|
| $ | 4,637,476 |
|
Basic average shares outstanding |
|
| 250,144 |
|
|
| 263,221 |
|
|
| 251,876 |
|
|
| 267,416 |
|
Basic net earnings per share |
| $ | 5.82 |
|
| $ | 9.69 |
|
| $ | 10.28 |
|
| $ | 17.34 |
|
Diluted net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted net earnings |
| $ | 1,461,354 |
|
| $ | 2,561,233 |
|
| $ | 2,597,896 |
|
| $ | 4,656,856 |
|
Earnings allocated to participating securities |
|
| (6,013 | ) |
|
| (10,997 | ) |
|
| (9,223 | ) |
|
| (19,302 | ) |
Net earnings available to common |
| $ | 1,455,341 |
|
| $ | 2,550,236 |
|
| $ | 2,588,673 |
|
| $ | 4,637,554 |
|
Diluted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic average shares outstanding |
|
| 250,144 |
|
|
| 263,221 |
|
|
| 251,876 |
|
|
| 267,416 |
|
Dilutive effect of stock options and other |
|
| 380 |
|
|
| 498 |
|
|
| 458 |
|
|
| 650 |
|
|
| 250,524 |
|
|
| 263,719 |
|
|
| 252,334 |
|
|
| 268,066 |
| |
Diluted net earnings per share |
| $ | 5.81 |
|
| $ | 9.67 |
|
| $ | 10.26 |
|
| $ | 17.30 |
|
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended | |||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 | |||||||||||||
Anti-dilutive stock options: | ||||||||||||||||
Weighted-average shares | 698 | — | 309 | 1,254 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted-average exercise price | $ | 59.07 | $ | — | $ | 59.07 | $ | 47.04 | ||||||||
|
|
|
|
|
|
|
|
The developmentsnumber of shares that ledwere not included in the diluted net earnings per share calculation, because to this change in estimate occurred after the Company issued a news release announcing the preliminary financial resultsdo so would have been anti-dilutive, was immaterial for the third quarter and first nine monthsall periods presented.
15
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements made in this quarterly report, or in other public filings, press releases, or other written or oral communications made by Nucor, which are not historical facts are forward-looking statements thatsubject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties.uncertainties which we expect will or may occur in the future and may impact our business, financial condition and results of operations. The words “anticipate,” “believe,” “expect,” “intend,” “project,” “may,” “will,” “should,” “could” and similar expressions are intended to identify those forward-looking statements. These forward-looking statements reflect the Company’s best judgment based on current information, and, although we base these statements on circumstances that we believe to be reasonable when made, there can be no assurance that future events will not affect the accuracy of such forward-looking information. As such, the forward-looking statements are not guarantees of future performance, and actual results may vary materially from the projected results and expectations discussed in this report. Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) competitive pressure on sales and pricing, including pressure from imports and substitute materials; (2) U.S. and foreign trade policies affecting steel imports or exports; (3) the sensitivity of the results of our operations to general market conditions, and in particular, prevailing market steel prices and changes in the supply and cost of raw materials, including pig iron, iron ore and scrap steel; (4) the availability and cost of electricity and natural gas, which could negatively affect our cost of steel production or could result in a delay or cancelationcancellation of existing or future drilling within our natural gas drilling programs; (5) critical equipment failures and business interruptions; (6) market demand for steel products, which, in the case of many of our products, is driven by the level of nonresidential construction activity in the U.S.;United States; (7) impairment in the recorded value of inventory, equity investments, fixed assets, goodwill or other long-lived assets; (8) uncertainties and volatility surrounding the global economy, including the severe economic downturn in construction markets and excess world capacity for steel production;production, inflation and interest rate changes; (9) fluctuations in currency conversion rates; (10) significant changes in laws or government regulations affecting environmental compliance, including legislation and regulations that result in greater regulation of greenhouse gas emissions that could increase our energy costs, and our capital expenditures and operating costs or cause one or more of our permits to be revoked or make it more difficult to obtain permit modifications; (11) the cyclical nature of the steel industry; (12) capital investments and their impact on our performance; and (13) our safety performance.performance; (14) our ability to integrate businesses we acquire; (15) the impact of the COVID-19 pandemic, any variants of the virus and any other similar pandemic or public health situation; and (16) the risks discussed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and elsewhere in this report.
Caution should be taken not to place undue reliance on the forward-looking statements included in this report. We assume no obligation to update any forward-looking statements except as may be required by law. In evaluating forward-looking statements, these risks and uncertainties should be considered, together with the other risks described from time to time in our reports and other filings with the United States Securities and Exchange Commission.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this report, as well as the audited consolidated financial statements and the notes thereto, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Nucor’s Annual Report on Form10-K for the year ended December 31, 2016.2022.
Overview
Nucor and its affiliates manufacture steel and steel products. Nucor also produces direct reduced iron (DRI)DRI for use in its steel mills. Through The David J. Joseph Company and its affiliates (DJJ),DJJ, the Company also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI. Most of Nucor’s operating facilities and customers are located in North America. Nucor’s operations include international trading and sales companies that buy and sell steel and steel products manufactured by the Company and others. Nucor is North America’s largest recycler, using scrap steel as the primary raw material in producing steel and steel products.
Nucor reports its results in threethe following segments: steel mills, steel products and raw materials. In the steel mills segment, Nucor produces sheet steel(hot-rolled, cold-rolled and galvanized), hollow structural section (HSS) tubing, electrical conduit, plate steel, structural steel (wide-flange beams, beam blanks,H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar and special bar quality). Nucor manufactures steel principally from scrap steel and scrap steel substitutes using electric arc furnaces, continuous casting and automated rolling mills. The steel mills segment also includes carbon and alloy steel in sheet, bars, structural and plate; steel trading and rebar distribution businesses; and Nucor’s equity method investments in Duferdofin Nucor S.r.l. (Duferdofin Nucor)NuMit and NuMit LLC (NuMit), as well as Nucor’s steel trading businesses and rebar distribution businesses. In theNJSM. The steel products segment Nucor producesincludes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, precision castings, steel fasteners, metal building systems, insulated metal panels, overhead doors, steel grating, and expanded
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metal, andtubular products, steel racking, piling products, wire and wire mesh. In the raw materials segment, Nucor produces DRI; brokers ferrousmesh, and nonferrous metals, pig iron, HBIutility towers and DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap metal.structures. The raw materials segment also includes DJJ, primarily a
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scrap broker and processor; Nu-Iron Unlimited and Nucor Steel Louisiana, two facilities that produce DRI used by the steel mills; and our natural gas drillingproduction operations.
The average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 86%82%, 64%67% and 64%76%, respectively, in the first ninesix months of 2017,2023 compared with 80%approximately 81%, 63%76% and 64%75%, respectively, in the first ninesix months of 2016. The steel mills segment’s utilization rate2022.
Results of Operations
Nucor reported net earnings attributable to Nucor stockholders of $1.46 billion, or $5.81 per diluted share, for the first nine months of 2016 was revised as part of our updated analysis of steel mill capacity performed in the fourthsecond quarter of 2016. The utilization rates of the steel mills segment for the first nine months of 2017 and the first nine months of 2016 are calculated using the same steel mill capacity2023, as calculated from that updated analysis.
On January 9, 2017, Nucor used cash on handcompared to acquire Southland Tube (Southland) for a purchase price of approximately $130 million. Southland is a manufacturer of HSS tubing, which is primarily used in nonresidential construction markets. Southland had shipments of approximately 240,000 tons in 2016 and has one manufacturing facility in Birmingham, Alabama.
Nucor further expanded its value-added product offerings to its customers within the pipe and tube market through the January 20, 2017 acquisition of Republic Conduit (Republic) for a purchase price of $331.6 million. Republic produces steel electrical conduit primarily used to protect and route electrical wiring in various nonresidential structures such as hospitals, office buildings and stadiums. With its two facilities located in Kentucky and Georgia, Republic’s annual shipment volume has averaged 146,000 tons during the past two years.
In March 2017, Nucor announced an investment of $85 million to upgrade the rolling mill at its steel bar mill in Marion, Ohio in order to maintain a cost competitive position by reducing operating costs.
In May 2017, Nucor announced that it is investing an estimated $176 million to build a hot band galvanizing and pickling line at its sheet mill in Ghent, Kentucky. The new galvanizing line will expand Nucor Steel Gallatin’s product capabilities and should have an annual capacity of 500,000 tons. Once the necessary approvals are obtained, it is expected to take two years to construct the galvanizing line and begin operations.
On September 1, 2017, Nucor completed its acquisition of St. Louis Cold Drawn, Inc. (St. Louis Cold Drawn) for a purchase price of approximately $60 million. St. Louis Cold Drawn is a manufacturer of cold drawn rounds, hexagons, squares and special sections that mainly serves the U.S. and Mexican automotive and industrial markets. St. Louis Cold Drawn employs 125 people and has two manufacturing locations, one in St. Louis, Missouri and the other in Monterrey Mexico, that have a combined annual capacity of 200,000 tons. The addition of these facilities increased the total capacity of Nucor’s cold finished bar and wire facilities to more than 1.1 million tons annually and helps advance our goal of growing our sales to automotive customers.
In September 2017, Nucor’s Board of Directors approved investments in Nucor’s bar mill business, including micro mill investments and the expansion of its existing merchant bar operations. Both of these projects are part of Nucor’s strategy for long-term, profitable growth. By leveraging Nucor’s existing operating abilities, we expect that these projects will help to maintain our position as alow-cost producer and will allow us to better serve our customers.
Nucor’s consolidated net earnings attributable to Nucor stockholders of $2.90$1.14 billion, or $4.45 per diluted share, for the first nine monthsquarter of 2017 exceed the reported annual2023, and $2.56 billion, or $9.67 per diluted earnings per share, for eachthe second quarter of 2022, which was the most profitable second quarter in Nucor's history.
The primary driver for the decrease in earnings in the second quarter of 2023 compared to the second quarter of 2022 was the decreased earnings of the previous eight years.steel mills segment. The results achieved duringsteel mills segment experienced lower shipping volumes in the past nine months aresecond quarter of 2023 compared to the second quarter of 2022. Average selling prices in the steel mills segment decreased at our sheet, bar, plate and structural mills in the second quarter of 2023 as compared to the second quarter of 2022. The decreases in average selling prices outpaced the decrease in scrap and scrap substitute costs in the second quarter of 2023 as compared to the second quarter of 2022, resulting in significantly lower metal margins. We believe end-use market demand was healthy in the second quarter of 2023 and the contrast in earnings when compared with the second quarter of 2022 was due to the ongoing executionhistorically favorable market conditions that existed in the second quarter of 2022.
The earnings of the steel products segment moderated in the second quarter of 2023 as compared to the second quarter of 2022, but overall market conditions in nonresidential construction remained elevated. The steel products segment had decreased earnings in the second quarter of 2023 as compared to the second quarter of 2022, which was partially offset by the strong performance of our strategy for long-term, profitable growth. In addition, conditionsrebar fabrication operations and the earnings from our overhead doors business, that we acquired on June 24, 2022 and had minimal impact on the second quarter of 2022.
The earnings of the raw materials segment decreased in the overall economysecond quarter and manyfirst six months of 2023 as compared to the second quarter and first six months of 2022 primarily due to margin compression at our scrap processing operations, our DRI facilities and our scrap brokerage operations.
Nucor reported net earnings attributable to Nucor stockholders of $2.60 billion, or $10.26 per diluted share, for the first six months of 2023, which is the second-most profitable first six months of a year in Nucor history. The only year that had a more profitable first six months of the markets we serve are much improved fromyear was 2022, in which Nucor reported net earnings attributable to Nucor stockholders of $4.66 billion, or $17.30 per diluted share.
The primary driver of the depressed levelsdecrease in earnings in the years that followedfirst six months of 2023 as compared to the Great Recession. Our business is cyclicalfirst six months of 2022 was due to the decreased performance of the steel mills segment, particularly at our sheet mills. Pricing for sheet mill products on average was significantly lower in the first six months of 2023 as compared to the first six months of 2022.
The earnings of the steel products segment increased in the first six months of 2023 as compared to the first six months of 2022, driven by the strong performance across several businesses including our joist, deck, tubular products, metal buildings and market conditions can change very rapidly, butrebar fabrication operations, and the addition of our overhead doors business.
The following discussion provides a greater quantitative and qualitative analysis of Nucor’s steady, long-term focus provides for strong financial performance that takes advantagein the second quarter and first six months of improved market conditions.
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Results of Operations
Net Sales –
Net sales to external customers by segment for the thirdsecond quarter and first ninesix months of 20172023 and 20162022 were as follows (in thousands):
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended |
| Three Months (13 Weeks) Ended |
| Six Months (26 Weeks) Ended | |||||||||||||||||||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | % Change | Sept. 30, 2017 | Oct. 1, 2016 | % Change |
| July 1, 2023 |
| July 2, 2022 |
| % Change |
| July 1, 2023 |
| July 2, 2022 |
| % Change | |||||||||||||||||||
Steel mills | $ | 3,639,488 | $ | 2,960,642 | 23 | % | $ | 10,982,636 | $ | 8,611,553 | 28 | % |
| $5,565,772 |
| $7,256,067 |
| -23% |
| $10,545,029 |
| $13,774,676 |
| -23% | ||||||||||||
Steel products | 1,089,519 | 1,011,602 | 8 | % | 2,919,992 | 2,763,335 | 6 | % |
| 3,442,862 |
| 3,842,948 |
| -10% |
| 6,718,859 |
| 7,166,036 |
| -6% | ||||||||||||||||
Raw materials | 441,110 | 317,992 | 39 | % | 1,257,437 | 876,696 | 43 | % |
| 514,622 |
| 695,459 |
| -26% |
| 969,348 |
| 1,347,044 |
| -28% | ||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
Net sales | $ | 5,170,117 | $ | 4,290,236 | 21 | % | $ | 15,160,065 | $ | 12,251,584 | 24 | % | ||||||||||||||||||||||||
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|
|
| |||||||||||||||||||||||||||||||||
Total net sales to external customers |
| $9,523,256 |
| $11,794,474 |
| -19% |
| $18,233,236 |
| $22,287,756 |
| -18% |
Net sales for the thirdsecond quarter of 2017 increased 21%2023 decreased 19% from the thirdsecond quarter of 2016.2022. Average sales price per ton increased 7%decreased 14% from $729$1,690 in the thirdsecond quarter of 20162022 to $781$1,446 in the thirdsecond quarter of 2017.2023. Total tons shipped to outside customers in the thirdsecond quarter of 20172023 were 6,618,000,approximately 6,588,000 tons, a 12% increase6% decrease from the thirdsecond quarter of 2016.2022.
Net sales for the first ninesix months of 2017 increased 24%2023 decreased 18% from the first ninesix months of 2016.2022. Average sales price per ton increased 15%decreased 16% from $662$1,667 in the first ninesix months of 20162022 to $760$1,399 in the first ninesix months of 2017, while total2023. Total tons shipped to outside customers in the first ninesix months of 20172023 were 19,950,000, an 8% increaseapproximately 13,031,000 tons, a 3% decrease from the first ninesix months of 2016.2022.
In the steel mills segment, sales tons for the thirdsecond quarter and first ninesix months of 20172023 and 20162022 were as follows (in thousands):
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended |
| Three Months (13 Weeks) Ended |
| Six Months (26 Weeks) Ended | |||||||||||||||||||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | % Change | Sept. 30, 2017 | Oct. 1, 2016 | % Change |
| July 1, 2023 |
| July 2, 2022 |
| % Change |
| July 1, 2023 |
| July 2, 2022 |
| % Change | |||||||||||||||||||
Outside steel shipments | 5,096 | 4,465 | 14 | % | 15,620 | 14,446 | 8 | % |
| 4,774 |
| 5,041 |
| -5% |
| 9,578 |
| 9,580 |
| - | ||||||||||||||||
Inside steel shipments | 1,069 | 748 | 43 | % | 3,039 | 2,344 | 30 | % |
| 1,205 |
| 1,407 |
| -14% |
| 2,436 |
| 2,682 |
| -9% | ||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
Total steel shipments | 6,165 | 5,213 | 18 | % | 18,659 | 16,790 | 11 | % |
| 5,979 |
| 6,448 |
| -7% |
| 12,014 |
| 12,262 |
| -2% | ||||||||||||||||
|
|
|
|
Net sales for the steel mills segment decreased 23% in the thirdsecond quarter of 2017 increased 23%2023 from the thirdsecond quarter of 20162022, due primarily to a 14% increasean 18% decrease in tons shipped to outside customers and an 8% increase inthe average sales price per ton, from $664$1,429 to $715. Our sheet, bar$1,168, and platea 5% decrease in tons sold to outside customers.
Net sales for the steel mills segment decreased 23% in the first six months of 2023 from the first six months of 2022, due to a 23% decrease in the average sales price per ton, from $1,432 to $1,101.
Outside sales tonnage for the steel products all experienced highersegment for the second quarter and first six months of 2023 and 2022 was as follows (in thousands):
|
| Three Months (13 Weeks) Ended |
| Six Months (26 Weeks) Ended | ||||||||
|
| July 1, 2023 |
| July 2, 2022 |
| % Change |
| July 1, 2023 |
| July 2, 2022 |
| % Change |
Joist sales |
| 142 |
| 158 |
| -10% |
| 277 |
| 337 |
| -18% |
Deck sales |
| 107 |
| 123 |
| -13% |
| 206 |
| 259 |
| -20% |
Cold finished sales |
| 112 |
| 123 |
| -9% |
| 229 |
| 256 |
| -11% |
Rebar fabrication sales |
| 332 |
| 339 |
| -2% |
| 611 |
| 630 |
| -3% |
Piling products sales |
| 113 |
| 119 |
| -5% |
| 214 |
| 230 |
| -7% |
Tubular products sales |
| 239 |
| 274 |
| -13% |
| 514 |
| 504 |
| 2% |
Other steel products sales |
| 148 |
| 175 |
| -15% |
| 283 |
| 330 |
| -14% |
Total steel products sales |
| 1,193 |
| 1,311 |
| -9% |
| 2,334 |
| 2,546 |
| -8% |
Net sales for the steel products segment decreased 10% in the second quarter of 2023 compared to the second quarter of 2022, due to a 2% decrease in the average sales price per ton, from $2,931 to $2,884, and a 9% decrease in shipping volumes. Average selling prices decreased across most businesses within the steel products segment in the second quarter of 2023 as compared to the second quarter of 2022, most notably at our buildings and tubular businesses.
Net sales for the steel products segment decreased 6% in the first six months of 2023 compared to the first six months of 2022, due to an 8% decrease in shipping volumes, partially offset by 2% increase in the average sales price
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per ton, from $2,814 to $2,878. The most notable increases in average selling prices in the third quarter and first ninesix months of 20172023 as compared to the respective prior year periods, with the most significantyear-to-date increasesfirst six months of 2022 were at our sheetinsulated metal panels and plate mills. Steel mills netjoist businesses.
Net sales increased 28%for the raw materials segment decreased 26% in the first nine monthssecond quarter of 2017 from2023 compared to the first ninesecond quarter of months of 2016 primarily2022, due to an 18% increasedecreases for both DJJ brokerage and scrap processing operations in average sales price per ton and an 8% increase in outside shipments. The increase in tons sold to outside customers for the third quarter and first nine months of 2017 compared to the respective prior year periods is partially due to the acquisitions ofdecreased volumes at our tubular products businesses that occurred during the fourth quarter of 2016 and first quarter of 2017. The addition of the tubular products businesses also contributed to the increase in average sales price per ton for the steel mills segment in the third quarter and first nine months of 2017 as compared to the same periods in the prior year as those products have higher average selling prices.
Imports continue to negatively impact the U.S. steel industry. Through the first nine months of 2017, finished steel imports accounted for an estimated 27% share of the U.S. market and have increased an estimated 15.1% compared to the same period last year. The industry continues to pursue trade cases to combat unfairly traded imports. Final determinations issued earlier this year againstcut-to-length steel plate imports from 12 countries are having a positive impact as steel imports of these products have decreased in the first nine months of this year compared to the same period last year. The U.S. Department of Commerce has made several rulings imposing duties on additional steel products since the beginning of the year that are favorable to the domestic steel industry. Although slower than we would like, we are encouraged by the steady progress that we are achieving through the prosecution of product and country specific trade cases. We believe this success is due to the overwhelming evidence that our foreign competitors receive support from illegal subsidies.
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Tonnage data for the steel products segment for the third quarter and first nine months of 2017 and 2016 was as follows (in thousands):
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended | |||||||||||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | % Change | Sept. 30, 2017 | Oct. 1, 2016 | % Change | |||||||||||||||||||
Joist sales | 127 | 129 | -2 | % | 332 | 322 | 3 | % | ||||||||||||||||
Deck sales | 119 | 123 | -3 | % | 329 | 332 | -1 | % | ||||||||||||||||
Cold finish sales | 119 | 99 | 20 | % | 361 | 328 | 10 | % | ||||||||||||||||
Fabricated concrete reinforcing steel sales | 319 | 311 | 3 | % | 857 | 857 | 0 | % |
The 8% increase in the steel products segment’s sales for the third quarter of 2017 from the third quarter of 2016 was due to a 5% increase in average sales price per ton from $1,299 to $1,361, and a 3% increase in volume. The 6% increase in the steel products segment’s sales for the first nine months of 2017 from the first nine months of 2016 was due to a 3% increase in average sales price per ton from $1,286 to $1,331, and a 2% increase in volume.
Sales for the raw materials segment increased 39% and 43% in the third quarter and first nine months of 2017, respectively, from the respective prior year periods. The increases are primarily due to significantly higher average selling prices in DJJ’s brokerage operations, and, to a lesser extent, increased volumes in both DJJ’s brokerage and scrap processing operations. In the thirdsecond quarter of 2017,2023, approximately 88%94% of outside sales for the raw materials segment were from DJJ’sthe brokerage operations of DJJ, and approximately 10%3% of outside sales were from DJJ’sthe scrap processing operations (90%of DJJ (91% and 7%, respectively, in the thirdsecond quarter of 2016)2022).
Net sales for the raw materials segment decreased 28% in the first six months of 2023 compared to the first six months of 2022, due to decreases for both DJJ brokerage and scrap processing operations in average sales price per ton and tons shipped to outside customers. In the first ninesix months of 2017,2023, approximately 87%93% of outside sales for the raw materials segment were from DJJ’sthe brokerage operations of DJJ, and approximately 10%3% of outside sales were from DJJ’sthe scrap processing operations (89%of DJJ (91% and 8%7%, respectively, in the first ninesix months of 2016)2022).
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Gross Margins –
Nucor recorded gross margins of $579.0 million (11%$2.50 billion (26%) forin the thirdsecond quarter of 2017,2023, which was a decrease compared with $682.2 million (16%to $4.10 billion (35%) in the thirdsecond quarter of 2016:
2022.
Scrap and scrap substitutes are the most significant element in the total cost of steel production. The average scrap and scrap substitute cost per gross ton used in the thirdsecond quarter of 20172023 was $317,$455, a 26% increase from $25215% decrease compared to $534 in the thirdsecond quarter of 2016.2022. The increasedecrease in the average scrap and scrap substitute cost per ton usedcosts was more than offset by decreased average selling prices and lower shipments to external customers, resulting in the third quarter of 2017 as compared to the third quarter of 2016 outpaced the increase in average sales price per ton for the same periods.lower total metal margins.
Scrap prices are driven by the global supply and demand for scrap and other iron-based raw materials used to make steel. Scrap prices increased during the first half of 2017 with prices leveling out during the third quarter. We do not expect significant volatility in scrap prices asAs we approach the end of the year.
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2023.
For the first nine months of 2017, Nucor recorded gross margins of $2.05 billion (14%), which was an increase compared with $1.58 billion (13%) for the first nine months of 2016:
Nucor recorded gross margins of $4.50 billion (25%) in the first ninesix months of 2017 benefitted from higher gross margins at DJJ’s brokerage2023, which was a decrease compared to $7.56 billion (34%) in the first six months of 2022.
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Marketing, Administrative and Other Expenses –
A major component of marketing, administrative and other expenses is profit sharing and other incentive compensation costs. These costs, which are based upon and fluctuate with Nucor’s financial performance, increased $4.4decreased by $121.5 million in the thirdsecond quarter of 2017 compared to the third quarter of 2016 primarily due to other incentive compensation costs related to management compensation plans. Profit sharing and other incentive compensation costs increased $62.9 million in the first nine months of 2017 compared to the first nine months of 2016 due to the increased profitability of the Company. Profit sharing and other incentive compensation costs decreased $25.3 million in the third quarter of 20172023 as compared to the second quarter of 20172022, and decreased by $246.6 million in the first six months of 2023 as compared to the first six months of 2022. These decreases were due to the annual restricted stock unit and stock option grants that occurredNucor's decreased profitability in the second quarter and first six months of 2017.
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Equity in Earnings of Unconsolidated Affiliates –
Equity in earnings of unconsolidated affiliates was $7.7$6.1 million and $14.2$7.1 million in the thirdsecond quarter of 20172023 and 2016,2022, respectively, and $29.8$4.8 million and $30.2$14.8 million in the first ninesix months of 20172023 and 2016,2022, respectively. The decreases in equity method investment earnings arewere primarily due to the decreased earnings at NuMit during both the third quarter and the first nine monthsresults of 2017 from the comparable prior year periods. Additionally, included in equity method investment earnings in the first nine months of 2016 is a $5.7 million benefit, $5.0 million of which isout-of-period, at Duferdofin Nucor primarily related to a change in the Italian income tax rate. Theout-of-period adjustment was not material to any previously reported periods.NuMit.
Interest Expense (Income) –
Net interest expense for the thirdsecond quarter and first ninesix months of 20172023 and 20162022 was as follows (in thousands):
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended |
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| |||||||||||||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 |
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| |||||||||||||||||
Interest expense | $ | 47,621 | $ | 46,519 | $ | 141,486 | $ | 137,370 |
| $ | 60,806 |
|
| $ | 63,514 |
|
| $ | 123,488 |
|
| $ | 107,590 |
| ||||||||
Interest income | (4,311 | ) | (3,510 | ) | (9,991 | ) | (8,955 | ) |
|
| (56,208 | ) |
|
| (5,751 | ) |
|
| (108,707 | ) |
|
| (6,692 | ) | ||||||||
|
|
|
| |||||||||||||||||||||||||||||
Interest expense, net | $ | 43,310 | $ | 43,009 | $ | 131,495 | $ | 128,415 |
| $ | 4,598 |
|
| $ | 57,763 |
|
| $ | 14,781 |
|
| $ | 100,898 |
| ||||||||
|
|
|
|
Interest expense fordecreased in the thirdsecond quarter and first nine months of 2017 increased slightly2023 compared to the respective prior year periodssecond quarter of 2022 due to minor increasesan increase in both average interest rates on our variable rate debt and average debt outstanding, as well as decreased capitalized interest. Interest income forexpense increased in the third quarter and first ninesix months of 2017 increased2023 compared to the respective prior year periodsfirst six months of 2022 primarily due to higher average interest rates on debt and an increase in average debt outstanding.
Interest income increased in the second quarter and first six months of 2023 compared to the second quarter and first six months of 2022 primarily due to an increase in average interest rates on investments offset by significantly decreasedand higher average investment levels.investments.
Earnings (Loss) Before Income Taxes and Noncontrolling Interests –Earnings (loss)
The table below presents earnings before income taxes and noncontrolling interests by segment for the thirdsecond quarter and first ninesix months of 20172023 and 20162022 (in thousands). The changes between periods were as follows (in thousands):driven by the quantitative and qualitative factors previously discussed.
|
|
|
|
|
|
| ||||||||||
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||
|
| July 1, 2023 |
|
| July 2, 2022 |
|
| July 1, 2023 |
|
| July 2, 2022 |
| ||||
Steel mills |
| $ | 1,403,547 |
|
| $ | 2,815,723 |
|
| $ | 2,241,935 |
|
| $ | 5,394,577 |
|
Steel products |
|
| 1,010,789 |
|
|
| 1,129,932 |
|
|
| 1,981,591 |
|
|
| 1,814,799 |
|
Raw materials |
|
| 138,411 |
|
|
| 263,598 |
|
|
| 196,551 |
|
|
| 359,451 |
|
Corporate/eliminations |
|
| (502,965 | ) |
|
| (718,851 | ) |
|
| (773,511 | ) |
|
| (1,180,310 | ) |
| $ | 2,049,782 |
|
| $ | 3,490,402 |
|
| $ | 3,646,566 |
|
| $ | 6,388,517 |
|
Three Months (13 Weeks) Ended | Nine Months (39 Weeks) Ended | |||||||||||||||
Sept. 30, 2017 | Oct. 1, 2016 | Sept. 30, 2017 | Oct. 1, 2016 | |||||||||||||
Steel mills | $ | 432,718 | $ | 591,799 | $ | 1,734,245 | $ | 1,402,898 | ||||||||
Steel products | 59,225 | 72,578 | 131,956 | 197,891 | ||||||||||||
Raw materials | 9,957 | 14,313 | 102,575 | (76,240 | ) | |||||||||||
Corporate/eliminations | (131,295 | ) | (194,518 | ) | (541,060 | ) | (480,930 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 370,605 | $ | 484,172 | $ | 1,427,716 | $ | 1,043,619 | |||||||||
|
|
|
|
|
|
|
|
Earnings before income taxes and noncontrolling interests for the steel mills segment in the third quarter of 2017 decreased compared to the prior year period due to compressed margins, particularly at our sheet and structural mills. Despite high utilization rates at our sheet mills, continued pressure from imports prevented prices from keeping pace with increasing raw material costs in the third quarter of 2017. These conditions, along with the decreased profitability of our plate mills, also caused earnings before income taxes and noncontrolling interests in the third quarter of 2017 to decrease from the second quarter of 2017. The increase in earnings in the steel mills segment in the first nine months of 2017 compared to the first nine months of 2016 was primarily due to improved metal margins experienced in the first half of the year. Though the profitability of the steel mills segment decreased in the third quarter of 2017 as compared to the third quarter of 2016 and second quarter of 2017, we expect stable conditions to continue through 2017 for most end markets that the steel mills segment serves.
In the steel products segment, earnings before income taxes and noncontrolling interests in the third quarter and first nine months of 2017 decreased compared to the respective prior year periods due to margin compression resulting from higher steel input costs and highly competitive markets, particularly for our rebar fabrication operations. The performance of our joist, grating and rebar fabrication operations declined in the third quarter and first nine months of 2017 from the comparable prior year periods. The performance of our deck operations in the third quarter of 2017 improved significantly
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compared to the third quarter of 2016, whileyear-to-date performance was flat compared with the prior year period. Our building systems operations improved in the third quarter of 2017, but declinedyear-to-date compared to the respective prior year periods. The performance of our cold finish operations improved in the third quarter and first nine months of 2017 compared to the respective prior year periods.
The profitability of our raw materials segment in the third quarter decreased as compared to the third quarter of 2016 and second quarter of 2017 due to the previously mentioned unplanned outages at our Louisiana DRI facility for most of the third quarter of 2017. Our raw materials segment performance for the first nine months of 2017 improved significantly as compared to the first nine months of 2016 due to the significantly increased profitability of DJJ’s brokerage and scrap processing operations and the profitable performance of our Trinidad DRI facility.
The decrease in losses in Corporate/eliminations in the third quarter of 2017 as compared to the third quarter of 2016 was driven primarily by less profit being eliminated related to intercompany inventory on hand at the end of the third quarter of 2017. The increase in losses in Corporate/eliminations in the first nine months of 2017 as compared to the first nine months of 2016 is primarily due to increased incentive compensation costs, primarily profit sharing expense.
Noncontrolling Interests –
Noncontrolling interests represent the income attributable to the holders of noncontrolling partners ofinterests in Nucor’s joint ventures, primarily Nucor-Yamato Steel Company (NYS), of whichNYS and CSI. Nucor owns a 51%. controlling interest in each of NYS and CSI. The decrease in earnings attributable to noncontrolling interests in the thirdsecond quarter and first six months of 20172023 as compared to the thirdsecond quarter and first six months of 20162022 was primarily attributabledue to the decreased earnings of NYS, which were due to decreased metal margin per ton and lower sales volumes in the third quarter of 2017CSI as compared to the third quarter of 2016. The decrease in earnings attributable to noncontrolling interests in the first nine months of 2017well as compared to the first nine months of 2016 is mainly the result of lower metal margins caused by higher scrap costs. Under the NYS limited partnership agreement, the minimum amount of cash to be distributed each year to the partners is the amount needed by each partner to pay applicable U.S. federal and state income taxes. In the first nine months of 2017, the amount of cash distributed to noncontrolling interest holders exceeded the earnings attributable to noncontrolling interests based on mutual agreement of the general partners; however, the cumulative amountNYS.
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Provision for Income Taxes –
The effective tax rate for the thirdsecond quarter of 20172023 was 28.2%22.6% compared to 31.6%21.9% for the thirdsecond quarter of 2016. We expect that the2022. The expected effective tax rate for the full year of 2017 will be2023 is approximately 31.3% compared with 30.7% for the full year of 2016. The decrease in the effective tax rate for the third quarter of 2017 as compared to the third quarter of 2016 was primarily due to a net tax benefit totaling $13.2 million related to a return to provision change in estimate and state tax credits included during the third quarter of 2017.22.9%.
We estimate that in the next 12 months our gross unrecognized tax benefits, which totaled $48.2$161.5 million at September 30, 2017,July 1, 2023, exclusive of interest, could decrease by as much as $9.5$5.8 million as a result of the expiration of the statute of limitations and the closures of examinations, substantially all of which would impact the effective tax rate.
The IRS is currently examining Nucor’s 2015, 2019 and 2020 federal income tax returns. Nucor has concluded U.S. federal income tax matters for tax years through 2013.2014, and for tax years 2016 and 2018. The tax years 2014 through 20162017 and 2021 remain open to examination by the Internal Revenue Service.IRS. The Canada Revenue Agency has substantially concluded its examination of the 20122015 through 2021 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates and is now examiningare currently under examination by the 2013 Canadian returns.Canada Revenue Agency. The tax years 20102016 through 20162022 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).
Net Earnings Attributable to Nucor Stockholders and Return on Equity –
Nucor reported consolidated net earnings attributable to Nucor stockholders of $254.9 million,$1.46 billion, or $0.79$5.81 per diluted share, in the thirdsecond quarter of 20172023 as compared with consolidatedto net earnings attributable to Nucor stockholders of $305.4 million,$2.56 billion, or $0.95$9.67 per diluted share, in the thirdsecond quarter of 2016.2022. Net earnings attributable to Nucor stockholders as a percentage of net sales was 5%were 15.3% and 7%21.7% in the thirdsecond quarter of 20172023 and 2016,2022, respectively.
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Nucor reported consolidated net earnings attributable to Nucor stockholders of $934.8 million,$2.60 billion, or $2.90$10.26 per diluted share, in the first ninesix months of 20172023 as compared with consolidatedto net earnings attributable to Nucor stockholders of $636.6 million,$4.66 billion, or $1.99$17.30 per diluted share, in the first ninesix months of 2016.2022. Net earnings attributable to Nucor stockholders as a percentage of net sales was 6%were 14.2% and 5%20.9% in the first ninesix months of 20172023 and 2016,2022, respectively. Annualized return on average stockholders’ equity was 15%27.1% and 11%60.4% in the first ninesix months of 20172023 and 2016,2022, respectively.
Outlook – Approaching the end of 2017, we are encouraged by a number of positive factors impacting our markets going into 2018. We see generally stable or improving market conditions for nonresidential construction, automotive, energy, heavy equipment and agriculture. Although illegally traded imports remain at unacceptable levels, we are encouraged by the cumulative benefits of the domestic steel industry’s successful trade cases.
We expect fourth quarter of 2017 earnings to be similar to slightly decreased from the third quarter of 2017, exclusive of the legal charges and tax benefits related to a return to provision change in estimate and state tax credits recognized in the third quarter of 2017.2023 to decrease compared to the second quarter of 2023. We expect much improved performance by the raw materials segment driven by more consistent DRI production. The downstream steel products segment is also likely to benefit from margin improvement. We expectearnings for the steel mills segment to see some decline mainlyin the third quarter of 2023 as compared to the second quarter of 2023 due to weaknessdecreased profitability, with the largest impact at our sheet mills. The earnings of the steel products segment are expected to moderate in plate steelthe third quarter of 2023 as compared to the second quarter of 2023. Earnings for the raw materials segment are expected to decrease in the third quarter of 2023 as compared to the second quarter of 2023 due to margin compression at our DRI facilities and typical seasonality.scrap processing operations.
Nucor’s largest exposure to market risk is viain our steel mills and steel products segments. Our largest single customer in the first nine monthssecond quarter of 20172023 represented approximately 5% of sales and has consistently paid within terms. In the raw materials segment, we are exposed to price fluctuations related to the purchase of scrap and scrap substitutes, pig iron and iron ore. Our exposure to market risk is mitigated byBusinesses within the fact that our steel mills use a significant portion of the products of this segment.
Liquidity and capital resources
Cash provided by operating activities was $762.5 million in the first nine months of 2017 compared with $1.18 billion in the first nine months of 2016. The primary reasonsegment account for the decrease in cash provided by operating activities is that changes in operating assets and operating liabilities (exclusive of acquisitions) used cash of $797.3 million in the first nine months of 2017 compared with $195.6 million of cash used in the first nine months of last year. The funding of our working capital in the first nine months of 2017 increased over the prior year period due mainly to increases in accounts receivable and inventories, partially offset by increases in accounts payable. Accounts receivable increased in the third quarter of 2017 from the fourth quarter of 2016 due to a 14% increase in tons shipped to outside customers and a 15% increase in average sales price per ton. Inventories and accounts payable increased due to the 29% increase in the cost of scrap and scrap substitutes in inventory, as well as the 21% increase in tons of inventory on hand fromyear-end 2016 to the end of the third quarter of 2017 to support higher operating rates. Another factor leading to the decrease in cash provided by operating activities was the $125.2 million decrease in deferred income taxes. Partially offsetting the decrease in cash generated from changes in operating assets and operating liabilities and changes in deferred taxes was a $260.2 million increase in net earnings over the first nine months of 2016.
The current ratio was 2.1 at the end of the third quarter of 2017 and 2.7 atyear-end 2016. The current ratio was negatively impacted by a 57% increase in accounts payable as compared toyear-end 2016 due to the reasons cited above. The current ratio was also negatively impacted by a decrease in cash and cash equivalents and short-term investments and an increase in long-term debt due within one year. The $570.0 million decrease in cash and cash equivalents and short-term investments fromyear-end 2016 was primarily due to the funding of working capital, acquisitions, dividends, capital expenditures and common stock repurchases, partially offset by cash generated from operating activities. Accounts receivable and inventories increased 30% and 42%, respectively, sinceyear-end 2016 due to the reasons cited above. In the third quarters of both 2017 and 2016, total accounts receivable turned approximately every five weeks and inventories turned approximately every nine weeks. The increase in long-term debt due within one year resulted from the reclassification of $500.0 million of debt due in June 2018 fromnon-current to current liabilities.
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Cash used in investing activities during the first nine months of 2017 was $736.5 million compared to $945.5 million from the prior year period. The primary driver for the decrease in cash used in investing activities was that cash used to purchase investments decreased from $650.0 million in the first nine months of 2016 to $50.0 million in the first nine months of 2017. Cash used for capital expenditures also experienced a small decrease from the first nine months of the prior year. Those decreases in cash used in investing activities were partially offset by a $495.0 million increase in cash used to fund acquisitions, mainly the purchases of Republic and Southland in January 2017 and St. Louis Cold Drawn in September 2017.
Cash used in financing activities in the first nine months of 2017 was $513.5 million compared with $482.6 million in the prior year period. The majority of the change related to the fact that cash used to fund the repurchase of shares of our common stock increased by $85.1 million over the prior year period. Partially offsetting the increase in cash used to repurchase shares of our common stock was a net increase in short-term debt associated with trade credit arrangements used to finance the business of Nucor Trading S.A. over the prior year period.raw materials segment’s sales.
Nucor’s conservative financial practices have served us well in the pastLiquidity and are serving us well today. Our cash and cash equivalents and short-term investments position remained strong at $1.63 billion as of September 30, 2017. Nucor’s financial strength allows for a consistent approach to capital allocation throughout the business cycle. Nucor’s highest capital allocation priority is to invest for profitable long-term growth through our multi-pronged strategy of optimizing existing operations, acquisitions and greenfield expansions. Our second priority is to provide our stockholders with cash dividends that are consistent with our success in delivering long-term earnings growth. Our third priority is to opportunistically repurchase our stock when our cash position is strong and attractively priced growth opportunities are limited. In September 2015, Nucor’s Board of Directors approved a stock repurchase program under which the Company is authorized to repurchase up to $900 million of its common stock. As of September 30, 2017, the Company had approximately $738.0 million remaining available under the program.Capital Resources
Nucor has an undrawn $1.5 billion revolving credit facility that does not mature until April 2021. We believe our financial strength is a key strategic advantage, among domestic steel producers, particularly during recessionary business cycles. We carrycurrently have the highest credit ratings of any steel producer headquartered in North America, with anA- long-term rating from Standard and& Poor’s, an A- rating from Fitch Ratings and a Baa1 long-term rating from Moody’s. Our credit ratings are dependent, however, upon a number of factors, both qualitative and quantitative, and are subject to change at any time. The disclosure of our credit ratings is made in order to enhance investors’ understanding of our sources of liquidity and the impact of our credit ratings on our cost of funds. Based upon
Our liquidity position as of July 1, 2023 remained strong, consisting of total cash and cash equivalents, short-term investments and restricted cash and cash equivalents of $5.39 billion as of such date compared to $4.94 billion as of December 31, 2022. Of these totals, the preceding factors, we expectamount of restricted cash and cash equivalents was $12.7 million at July 1, 2023and $80.4 million at December 31, 2022. Approximately $583.3 million of the cash and cash equivalents position at July, 1, 2023, was held by our majority-owned and controlled subsidiaries as compared to continue$1.04 billion at December 31, 2022.
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Cash provided by operating activities was $3.13 billion in the first six months of 2023 as compared to have adequate access$4.73 billion in the first six months of 2022. The $1.60 billion decrease was primarily driven by net earnings before noncontrolling interests of $2.82 billion for the first six months of 2023, a decrease of $2.14 billion from net earnings before noncontrolling interests for the prior year period of $4.95 billion. Partially offsetting the decline in net earnings before noncontrolling interests were the changes in operating assets and operating liabilities (exclusive of acquisitions) which used cash of $310.0 million in the first six months of 2023 as compared to using cash of $730.6 million in the first six months of 2022.
The funding of our working capital in the first six months of 2023 decreased by $420.6 million compared to the first six months of 2022 mainly due to the change in accounts receivable using $378.3 million less cash and the change in federal income taxes providing $362.9 million more cash as compared to the same period in 2022. These changes were offset by the $321.2 million decrease in the change in salaries, wages and related accruals in the first six months of 2023 as compared to the first six months of 2022. The change in salaries, wages, and related accruals used cash of $574.0 million in the first six months of 2023 as compared to $252.8 million in the first six months of 2022, due primarily to the payout in the first six months of 2023 of incentive compensation for 2022, which was higher than the incentive compensation for 2021 that was paid out in the first six months of 2022 due to higher Company earnings in 2022.
The current ratio was 3.8 at the end of the second quarter of 2023 and 3.4 at year-end 2022. The increase in the current ratio at the end of the second quarter of 2023 compared to year-end 2022 was due to the $325.6 million, or 8%, decrease in current liabilities. The decrease in current liabilities was primarily due to the $610.2 million decrease in salaries, wages and related accruals in the first six months of 2023 as compared to the first six months of 2022 due to the aforementioned incentive compensation accrued on December 31, 2022 and paid out during the first six months of 2023.
Cash used in investing activities during the first six months of 2023 was $1.38 billion as compared to $4.54 billion in the prior year period, a decrease of $3.16 billion. The primary reason for the decrease in cash used in investing activities was the decrease in cash used for acquisitions of $3.47 billion. Acquisitions were significantly higher in the first six months of 2022 due to the acquisition of CSI on February 1, 2022 and C.H.I. Overhead Doors, LLC on June 24, 2022. Cash used for capital markets atexpenditures of $1.06 billion in the first six months of 2023 increased by $88.3 million over the same period of 2022 primarily due to the plate mill and tubular product facility being built in Kentucky, the sheet mill in West Virginia and the micro mill being built in North Carolina. Capital expenditures for 2023 are estimated to be approximately $3.0 billion as compared to $1.95 billion in 2022. The projects that we anticipate will have the largest capital expenditures in 2023 are the sheet mill under construction in West Virginia, the micro mill being built in North Carolina, the sheet mill expansion in Indiana and the plate mill in Kentucky.
Cash used in financing activities during the first six months of 2023 was $1.59 billion as compared to $614.3 million in the first six months of 2022. The primary uses of cash were stock repurchases of $876.7 million in the first six months of 2023 as compared to $1.71 billion in the first six months of 2022, a reasonable costdecrease of funds for liquidity purposes when needed.$831.2 million and distributions to noncontrolling interests of $388.8 million in the first six months of 2023 as compared to $268.5 million in the first six months of 2022, an increase of $120.2 million. The primary change in the source of cash offsetting these uses of cash was proceeds from long-term debt, net of discount to the public, of $2.09 billion in the first six months of 2022 as compared to none in the first six months of 2023. In the first six months of 2022, Nucor issued $500.0 million aggregate principal amount of its 3.950% Notes due in 2025, $500.0 million aggregate principal amount of its 4.300% Notes due in 2027, $550.0 million aggregate principal amount of the 3.125% Notes due in 2032 and $550.0 million aggregate principal amount of the 3.850% Notes due in 2052. On April 25, 2022, we redeemed all $500.0 million aggregate principal amount outstanding of our 4.000% Notes due 2023.
Our
Nucor’s $1.75 billion revolving credit facility matures on November 5, 2026. The revolving credit facility includes only one financial covenant, which is a limit of 60% on the ratio of funded debt to total capitalization.capital. In addition, the revolving credit facility contains customarynon-financial covenants, including a limit on Nucor’s ability to pledge the Company’s assets and a limit on consolidations, mergers and sales of assets. As of September 30, 2017, ourJuly 1, 2023, the funded debt to total capital ratio was 33%,24.2% and we were in compliance with allnon-financial covenants under ourthe revolving credit facility. No borrowings were outstanding under the revolving credit facility as of September 30, 2017.
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Capital expenditures for 2017 are expected to be approximately $500.0 million compared to $617.7 million in 2016. The decrease in projected 2017 capital expenditures is primarily due to the fact that several major expansion projects were completed or near completion by the end of 2016. Those projects include NYS’s quench and self-tempering project to become the sole North American producer of high-strength,low-alloy beams; the heat treat facility addition at our Memphis, Tennessee SBQ mill to expand our participation in energy, automotive, heavy equipment and service center markets; an upgraded finishing end at our Auburn, New York bar mill; and the installation of DRI handling equipment at our Gallatin, Kentucky sheet mill. Additionally, in 2016, Nucor purchased 49% of Encana Oil & Gas (USA) Inc.’s leasehold interest covering approximately 54,000 acres in the South Piceance Basin for $165.0 million.
In September 2017,June 2023, Nucor’s Board of Directors declared a quarterly cash dividend on Nucor’s common stock of $0.3775$0.51 per share payable on November 9, 2017 August 11, 2023to stockholders of record on September 29, 2017.June 30, 2023. This dividend is Nucor’s 178th201st consecutive quarterly cash dividend.
Funds provided from operations, cash and cash equivalents, short-term investments, restricted cash and cash equivalents and new borrowings under our existing credit facilities are expected to be adequate to meet future capital
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expenditure and working capital requirements for existing operations for at least the next 24 months. We also believe we have adequate access to capital markets for liquidity purposes.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the ordinary course of business, Nucor is exposed to a variety of market risks. We continually monitor these risks and develop appropriate strategies to manage them.
Interest Rate Risk–
Nucor manages interest rate risk by using a combination of variable-rate and fixed-rate debt. Nucor also occasionally makes use of interest rate swaps to manage net exposure to interest rate changes. Management does not believe that Nucor’s exposure to interest rate market risk has significantly changed since December 31, 2016.2022. There were no interest rate swaps outstanding at September 30, 2017.July 1, 2023.
Commodity Price Risk –
In the ordinary course of business, Nucor is exposed to market risk for price fluctuations of raw materials and energy, principally scrap steel, other ferrous and nonferrous metals, alloys and natural gas. We attempt to negotiate the best prices for our raw material and energy requirements and to obtain prices for our steel products that match market price movements in response to supply and demand. In periods of strong or stable demand for our products, we are more likely to be able to effectively reduce the normal time lag in passing through higher raw material costs so that we can maintain our gross margins. When demand for our products is weaker, this becomes more challenging. Our DRI facilities in Trinidad and Louisiana provide us with flexibility in managing our raw materials requirements and our input costs. DRI is particularly important for operational flexibility when demand for prime scrap increases due to increased domestic steel production.
Natural gas produced by Nucor’s drillingproduction operations is being sold to third parties to partially offset our exposure to changes in the price of natural gas consumed by our Louisiana DRI facility and our steel mills in the United States. For the nine months ended September 30, 2017, the volume of natural gas sold from our drilling operations was approximately 21% of the volume of natural gas purchased for consumption in our domestic steelmaking and DRI facilities.
Nucor also periodically uses derivative financial instruments to hedge a portion of our exposure to price risk related to natural gas purchases used in the production process and to hedge a portion of our scrap, aluminum and copper purchases and sales. Gains and losses from derivatives designated as hedges are deferred in accumulated other comprehensive income (loss),loss, net of income taxes onin the condensed consolidated balance sheets and recognized intoin net earnings in the same period as the underlying physical transaction. At September 30, 2017,July 1, 2023, accumulated other comprehensive income (loss),loss, net of income taxes included $0.3$3.5 million in unrealizednet-of-tax gains for the fair value of these derivative instruments. Changes in the fair values of derivatives not designated as hedges are recognized
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in net earnings each period.
The following table presents the negative effect onpre-tax earnings of a hypothetical change in the fair value of the derivative instruments outstanding at September 30, 2017,July 1, 2023, due to an assumed 10% and 25% change in the market price of each of the indicated commodities (in thousands):
Commodity Derivative | 10% Change | 25% Change |
| 10% Change |
|
| 25% Change |
| ||||||||
Natural gas | $ | 7,390 | $ | 18,470 |
| $ | 13,960 |
|
| $ | 34,910 |
| ||||
Aluminum | 3,938 | 8,634 |
| $ | 4,421 |
|
| $ | 12,672 |
| ||||||
Copper | 2,740 | 6,829 |
| $ | 1,004 |
|
| $ | 2,504 |
|
Any resulting changes in fair value would be recorded as adjustments to accumulated other comprehensive income (loss),loss, net of income taxes or recognized in net earnings, as appropriate. These hypothetical losses would be partially offset by the benefit of lower prices paid or higher prices received for the physical commodities.
Foreign Currency Risk -
Nucor is exposed to foreign currency risk primarily through its operations in Canada, Europe and Mexico. We periodically use derivative contracts to mitigate the risk of currency fluctuations. Open foreign currency derivative contracts at September 30, 2017July 1, 2023 were insignificant.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures–
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the evaluation date.
Changes in Internal Control Over Financial Reporting –
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2017,July 1, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1.Legal1. Legal Proceedings
Nucor is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position or cash flows. Nucor maintains liability insurance with self-insurance limits for certain risksrisks.
There were no proceedings that were pending or contemplated under federal, state or local environmental laws that the Company reasonably believes may result in monetary sanctions of at least $1.0 million (the threshold chosen by Nucor as permitted by Item 103 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), and which Nucor believes is reasonably designed to result in disclosure of any such proceeding that is subjectmaterial to certain self-insurance limits.its business or financial condition).
There have been no material changes in Nucor’s risk factors from those included in “Item 1A. Risk Factors” in Nucor’s Annual Report on Form10-K for the year ended December 31, 2016.
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Item 2.Unregistered2. Unregistered Sales of Equity Securities and Use of Proceeds
Our share repurchase program activity for each of the three months and the quarter ended September 30, 2017July 1, 2023 was as follows (in thousands, except per share amounts):
Total Number of Shares Purchased | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||||||
July 2, 2017 - July 29, 2017 | 491 | $ | 59.28 | 491 | $ | 799,226 | ||||||||||
July 30, 2017 - August 26, 2017 | 300 | $ | 57.19 | 300 | 782,069 | |||||||||||
August 27, 2017 - September 30, 2017 | 800 | $ | 55.05 | 800 | 738,029 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
For the Quarter Ended September 30, 2017 | 1,591 | $ | 56.76 | 1,591 | $ | 738,029 | ||||||||||
|
|
|
|
|
|
|
|
|
| Total |
|
| Average |
|
| Total Number of |
|
| Approximate |
| ||||
April 2, 2023 - April 29, 2023 |
|
| 2,323 |
|
| $ | 147.99 |
|
|
| 2,323 |
|
| $ | 317,952 |
|
April 30, 2023 - May 27, 2023 |
|
| 744 |
|
| $ | 144.01 |
|
|
| 744 |
|
| $ | 4,000,000 |
|
May 28, 2023 - July 1, 2023 |
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | 4,000,000 |
|
For the Quarter Ended July 1, 2023 |
|
| 3,067 |
|
|
|
|
|
| 3,067 |
|
|
|
|
Item 5 Other Information
Insider Trading Arrangements
32During the quarter ended July 1, 2023, none of our directors or officers (as defined in rule 16a-1 (f) under the Exchange Act) adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" (as such terms are defined in Item 408 of Regulation S-K).
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Item 6. Exhibits
Exhibit No. | ||||
3 | ||||
3.1 | ||||
10* | ||||
31* | ||||
31.1* | ||||
32** | ||||
32.1** | ||||
101* | Financial | |||
104* | Cover Page from the Quarterly Report on Form 10-Q of Nucor Corporation for the quarter ended July 1, 2023, filed August 9, 2023, formatted in Inline XBRL (included in Exhibit 101 above). | |||
* Filed herewith.
33** Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K.
SIGNATURES(#) Indicates a management contract or compensatory plan or arrangement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NUCOR CORPORATION | ||||||||
| ||||||||
By: | /s/ Stephen D. | |||||||
Stephen D. Laxton | ||||||||
Chief Financial Officer, Treasurer and | ||||||||
| Executive Vice President | |||||||
Dated: August 9, 2023
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