UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended OctoberJuly 3, 20202021
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 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) 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 (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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-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 Rule 12b-2 of the Exchange Act.
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 Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
301,928,935293,694,534 shares of the registrant’s common stock were outstanding at OctoberJuly 3, 2020.2021.
Nucor Corporation
Quarterly Report on Form 10-Q
For the Three Months and NineSix Months Ended OctoberJuly 3, 20202021
TABLE OF CONTENTSTable of Contents
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| Condensed Consolidated Balance Sheets – |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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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 |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
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| Sept. 28, 2019 |
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| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
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| July 3, 2021 |
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| July 4, 2020 |
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| July 3, 2021 |
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| July 4, 2020 |
| ||||||||
Net sales |
| $ | 4,927,960 |
|
| $ | 5,464,502 |
|
| $ | 14,879,603 |
|
| $ | 17,457,112 |
|
| $ | 8,789,164 |
|
| $ | 4,327,306 |
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| $ | 15,806,304 |
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| $ | 9,951,643 |
|
Costs, expenses and other: |
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Cost of products sold |
|
| 4,425,765 |
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| 4,891,991 |
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| 13,370,181 |
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| 15,213,215 |
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| 6,315,661 |
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| 3,949,347 |
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| 11,710,364 |
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| 8,944,416 |
|
Marketing, administrative and other expenses |
|
| 165,513 |
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| 159,301 |
|
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| 460,922 |
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| 549,020 |
|
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| 387,070 |
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| 142,017 |
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| 678,194 |
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| 295,409 |
|
Equity in losses (earnings) of unconsolidated affiliates |
|
| (479 | ) |
|
| 1,585 |
|
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| 14,422 |
|
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| (2,459 | ) | ||||||||||||||||
Equity in (earnings) losses of unconsolidated affiliates |
|
| (19,403 | ) |
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| 14,078 |
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| (32,642 | ) |
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| 14,901 |
| ||||||||||||||||
Losses on assets |
|
| 6,604 |
|
|
| - |
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| 299,450 |
|
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| - |
|
|
| 44,308 |
|
|
| 5,000 |
|
|
| 50,970 |
|
|
| 292,846 |
|
Interest expense, net |
|
| 40,139 |
|
|
| 31,286 |
|
|
| 116,856 |
|
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| 92,759 |
|
|
| 35,780 |
|
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| 35,807 |
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| 75,424 |
|
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| 76,717 |
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| 4,637,542 |
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| 5,084,163 |
|
|
| 14,261,831 |
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| 15,852,535 |
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| 6,763,416 |
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| 4,146,249 |
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| 12,482,310 |
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| 9,624,289 |
|
Earnings before income taxes and noncontrolling interests |
|
| 290,418 |
|
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| 380,339 |
|
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| 617,772 |
|
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| 1,604,577 |
|
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| 2,025,748 |
|
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| 181,057 |
|
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| 3,323,994 |
|
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| 327,354 |
|
Provision for income taxes |
|
| 67,788 |
|
|
| 86,752 |
|
|
| 207,610 |
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| 367,920 |
|
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| 454,289 |
|
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| 47,904 |
|
|
| 765,021 |
|
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| 139,822 |
|
Net earnings |
|
| 222,630 |
|
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| 293,587 |
|
|
| 410,162 |
|
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| 1,236,657 |
|
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| 1,571,459 |
|
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| 133,153 |
|
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| 2,558,973 |
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| 187,532 |
|
Earnings attributable to noncontrolling interests |
|
| 29,215 |
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| 18,556 |
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| 87,535 |
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| 73,337 |
|
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| 64,591 |
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| 24,272 |
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| 109,673 |
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| 58,320 |
|
Net earnings attributable to Nucor stockholders |
| $ | 193,415 |
|
| $ | 275,031 |
|
| $ | 322,627 |
|
| $ | 1,163,320 |
|
| $ | 1,506,868 |
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| $ | 108,881 |
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| $ | 2,449,300 |
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| $ | 129,212 |
|
Net earnings per share: |
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Basic |
| $ | 0.63 |
|
| $ | 0.90 |
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| $ | 1.06 |
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| $ | 3.79 |
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| $ | 5.05 |
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| $ | 0.36 |
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| $ | 8.14 |
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| $ | 0.42 |
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Diluted |
| $ | 0.63 |
|
| $ | 0.90 |
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| $ | 1.06 |
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| $ | 3.78 |
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| $ | 5.04 |
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| $ | 0.36 |
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| $ | 8.13 |
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| $ | 0.42 |
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Average shares outstanding: |
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Basic |
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| 303,394 |
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| 304,637 |
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| 303,072 |
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| 305,553 |
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| 296,817 |
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| 302,921 |
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| 299,359 |
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| 302,915 |
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Diluted |
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| 303,441 |
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| 304,980 |
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| 303,099 |
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| 306,029 |
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| 297,529 |
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| 302,933 |
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| 299,738 |
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| 302,932 |
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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 |
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
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|
| Oct. 3, 2020 |
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| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Net earnings |
| $ | 222,630 |
|
| $ | 293,587 |
|
| $ | 410,162 |
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| $ | 1,236,657 |
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| $ | 1,571,459 |
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| $ | 133,153 |
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| $ | 2,558,973 |
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| $ | 187,532 |
|
Other comprehensive income: |
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Net unrealized income (loss) on hedging derivatives, net of income taxes of $2,000 and $(1,000) for the third quarter of 2020 and 2019, respectively, and $1,400 and $(2,500) for the first nine months of 2020 and 2019, respectively |
|
| 6,387 |
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|
| (3,315 | ) |
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| 4,888 |
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|
| (7,801 | ) | ||||||||||||||||
Reclassification adjustment for settlement of hedging derivatives included in net income, net of income taxes of $700 and $500 for the third quarter of 2020 and 2019, respectively, and $2,300 and $500 for the first nine months of 2020 and 2019, respectively |
|
| 2,113 |
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| 1,615 |
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| 6,712 |
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| 1,501 |
| ||||||||||||||||
Foreign currency translation gain (loss), net of income taxes of $0 for the third quarter and first nine months of 2020 and 2019 |
|
| 16,867 |
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| (14,306 | ) |
|
| (24,103 | ) |
|
| (5,219 | ) | ||||||||||||||||
Net unrealized income (loss) on hedging derivatives, net of income taxes of $2,600 and $200 for the second quarter of 2021 and 2020, respectively, and $3,000 and $(600) for the first six months of 2021 and 2020, respectively |
|
| 8,204 |
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| 757 |
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| 9,203 |
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| (1,499 | ) | ||||||||||||||||
Reclassification adjustment for settlement of hedging derivatives included in net income, net of income taxes of $0 and $900 for the second quarter of 2021 and 2020, respectively, and $100 and $1,600 for the first six months of 2021 and 2020, respectively |
|
| 196 |
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| 2,543 |
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| 697 |
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| 4,599 |
| ||||||||||||||||
Foreign currency translation gain (loss), net of income taxes of $0 for the second quarter and first six months of 2021 and 2020 |
|
| 21,431 |
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| 23,491 |
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| 35,232 |
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|
| (40,970 | ) | ||||||||||||||||
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| 25,367 |
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|
| (16,006 | ) |
|
| (12,503 | ) |
|
| (11,519 | ) |
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| 29,831 |
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| 26,791 |
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| 45,132 |
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| (37,870 | ) |
Comprehensive income |
|
| 247,997 |
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| 277,581 |
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| 397,659 |
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|
| 1,225,138 |
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| 1,601,290 |
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|
| 159,944 |
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|
| 2,604,105 |
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|
| 149,662 |
|
Comprehensive income attributable to noncontrolling interests |
|
| (29,215 | ) |
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| (18,556 | ) |
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| (87,535 | ) |
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| (73,337 | ) |
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| 64,591 |
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| 24,272 |
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| 109,673 |
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| 58,320 |
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Comprehensive income attributable to Nucor stockholders |
| $ | 218,782 |
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| $ | 259,025 |
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| $ | 310,124 |
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| $ | 1,151,801 |
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| $ | 1,536,699 |
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| $ | 135,672 |
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| $ | 2,494,432 |
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| $ | 91,342 |
|
See notes to condensed consolidated financial statements.
2
Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
|
| Oct. 3, 2020 |
|
| Dec. 31, 2019 |
|
| July 3, 2021 |
|
| December 31, 2020 |
| ||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 2,866,578 |
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| $ | 1,534,605 |
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| $ | 2,722,656 |
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| $ | 2,639,671 |
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Short-term investments |
|
| 412,401 |
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| 300,040 |
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| 398,409 |
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| 408,004 |
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Accounts receivable, net |
|
| 2,119,421 |
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| 2,160,102 |
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| 3,399,076 |
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| 2,298,850 |
|
Inventories, net |
|
| 3,260,685 |
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| 3,842,095 |
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| 5,240,750 |
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| 3,569,089 |
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Other current assets |
|
| 306,762 |
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| 389,528 |
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|
| 295,048 |
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| 573,048 |
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Total current assets |
|
| 8,965,847 |
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|
| 8,226,370 |
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| 12,055,939 |
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| 9,488,662 |
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Property, plant and equipment, net |
|
| 6,829,733 |
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|
| 6,178,555 |
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| 7,235,536 |
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| 6,899,110 |
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Restricted cash and cash equivalents |
|
| 131,623 |
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|
| - |
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| 84,350 |
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| 115,258 |
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Goodwill |
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| 2,195,788 |
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| 2,201,063 |
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| 2,241,558 |
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| 2,229,672 |
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Other intangible assets, net |
|
| 678,558 |
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| 742,186 |
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| 627,201 |
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| 668,021 |
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Other assets |
|
| 717,728 |
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| 996,492 |
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| 750,998 |
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|
| 724,671 |
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Total assets |
| $ | 19,519,277 |
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| $ | 18,344,666 |
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| $ | 22,995,582 |
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| $ | 20,125,394 |
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LIABILITIES |
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Current liabilities: |
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Short-term debt |
| $ | 63,778 |
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| $ | 62,444 |
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| $ | 100,686 |
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| $ | 57,906 |
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Current portion of long-term debt and finance lease obligations |
|
| 10,475 |
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| 29,264 |
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| 12,027 |
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| 10,885 |
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Accounts payable |
|
| 1,210,987 |
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| 1,201,698 |
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| 2,204,137 |
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|
| 1,432,159 |
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Salaries, wages and related accruals |
|
| 432,767 |
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| 510,844 |
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| 850,396 |
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|
| 462,727 |
|
Accrued expenses and other current liabilities |
|
| 655,288 |
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|
| 659,524 |
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|
| 712,704 |
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|
| 664,183 |
|
Total current liabilities |
|
| 2,373,295 |
|
|
| 2,463,774 |
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|
| 3,879,950 |
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|
| 2,627,860 |
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Long-term debt and finance lease obligations due after one year |
|
| 5,452,193 |
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| 4,291,301 |
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|
| 5,275,496 |
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|
| 5,271,789 |
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Deferred credits and other liabilities |
|
| 976,722 |
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|
| 798,415 |
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|
| 1,130,485 |
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|
| 993,884 |
|
Total liabilities |
|
| 8,802,210 |
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|
| 7,553,490 |
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|
| 10,285,931 |
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|
| 8,893,533 |
|
EQUITY |
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Nucor stockholders' equity: |
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Common stock |
|
| 152,061 |
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|
| 152,061 |
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|
| 152,061 |
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|
| 152,061 |
|
Additional paid-in capital |
|
| 2,117,582 |
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|
| 2,107,646 |
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|
| 2,117,155 |
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|
| 2,121,288 |
|
Retained earnings |
|
| 11,068,908 |
|
|
| 11,115,056 |
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|
| 13,550,406 |
|
|
| 11,343,852 |
|
Accumulated other comprehensive loss, net of income taxes |
|
| (315,469 | ) |
|
| (302,966 | ) |
|
| (73,729 | ) |
|
| (118,861 | ) |
Treasury stock |
|
| (2,720,668 | ) |
|
| (2,713,931 | ) |
|
| (3,491,915 | ) |
|
| (2,709,675 | ) |
Total Nucor stockholders' equity |
|
| 10,302,414 |
|
|
| 10,357,866 |
|
|
| 12,253,978 |
|
|
| 10,788,665 |
|
Noncontrolling interests |
|
| 414,653 |
|
|
| 433,310 |
|
|
| 455,673 |
|
|
| 443,196 |
|
Total equity |
|
| 10,717,067 |
|
|
| 10,791,176 |
|
|
| 12,709,651 |
|
|
| 11,231,861 |
|
Total liabilities and equity |
| $ | 19,519,277 |
|
| $ | 18,344,666 |
|
| $ | 22,995,582 |
|
| $ | 20,125,394 |
|
See notes to condensed consolidated financial statements.
3
Nucor Corporation Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
|
| Nine Months (39 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||
Operating activities: |
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|
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|
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|
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|
|
|
|
|
|
|
Net earnings |
| $ | 410,162 |
|
| $ | 1,236,657 |
|
| $ | 2,558,973 |
|
| $ | 187,532 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
| 525,688 |
|
|
| 477,957 |
|
|
| 362,492 |
|
|
| 349,691 |
|
Amortization |
|
| 62,877 |
|
|
| 64,655 |
|
|
| 41,858 |
|
|
| 42,165 |
|
Stock-based compensation |
|
| 56,122 |
|
|
| 74,311 |
|
|
| 66,729 |
|
|
| 39,101 |
|
Deferred income taxes |
|
| 140,606 |
|
|
| 76,737 |
|
|
| 102,367 |
|
|
| 90,515 |
|
Distributions from affiliates |
|
| 3,021 |
|
|
| 27,405 |
|
|
| 180 |
|
|
| 2,000 |
|
Equity in losses (earnings) of unconsolidated affiliates |
|
| 14,422 |
|
|
| (2,459 | ) | ||||||||
Equity in (earnings) losses of unconsolidated affiliates |
|
| (32,642 | ) |
|
| 14,901 |
| ||||||||
Losses on assets |
|
| 299,450 |
|
|
| - |
|
|
| 50,970 |
|
|
| 292,846 |
|
Changes in assets and liabilities (exclusive of acquisitions and dispositions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 37,547 |
|
|
| 197,783 |
|
|
| (1,093,021 | ) |
|
| 264,424 |
|
Inventories |
|
| 590,434 |
|
|
| 476,761 |
|
|
| (1,673,962 | ) |
|
| 464,004 |
|
Accounts payable |
|
| 15,366 |
|
|
| (180,397 | ) |
|
| 726,649 |
|
|
| (272,910 | ) |
Federal income taxes |
|
| 18,848 |
|
|
| (177,405 | ) |
|
| 290,287 |
|
|
| 26,145 |
|
Salaries, wages and related accruals |
|
| (69,235 | ) |
|
| (157,317 | ) |
|
| 385,265 |
|
|
| (142,388 | ) |
Other operating activities |
|
| 100,283 |
|
|
| 5,526 |
|
|
| 97,041 |
|
|
| (8,058 | ) |
Cash provided by operating activities |
|
| 2,205,591 |
|
|
| 2,120,214 |
|
|
| 1,883,186 |
|
|
| 1,349,968 |
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (1,179,081 | ) |
|
| (984,646 | ) |
|
| (702,378 | ) |
|
| (777,317 | ) |
Investment in and advances to affiliates |
|
| (16,542 | ) |
|
| (27,613 | ) |
|
| (169 | ) |
|
| (9,756 | ) |
Divestiture of affiliates |
|
| - |
|
|
| 67,591 |
| ||||||||
Disposition of plant and equipment |
|
| 19,492 |
|
|
| 32,922 |
|
|
| 10,665 |
|
|
| 17,652 |
|
Acquisitions (net of cash acquired) |
|
| (20,368 | ) |
|
| (9,495 | ) |
|
| 300 |
|
|
| 794 |
|
Purchase of investments |
|
| (401,986 | ) |
|
| (249,616 | ) |
|
| (357,917 | ) |
|
| (222,500 | ) |
Proceeds from the sale of investments |
|
| 301,249 |
|
|
| - |
|
|
| 367,512 |
|
|
| 275,067 |
|
Other investing activities |
|
| (33,536 | ) |
|
| 2,176 |
|
|
| 587 |
|
|
| 1,132 |
|
Cash used in investing activities |
|
| (1,330,772 | ) |
|
| (1,168,681 | ) |
|
| (681,400 | ) |
|
| (714,928 | ) |
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in short-term debt |
|
| 1,334 |
|
|
| (10,145 | ) |
|
| 42,780 |
|
|
| 2,208 |
|
Proceeds from long-term debt, net of discount |
|
| 1,237,635 |
|
|
| - |
|
|
| - |
|
|
| 1,074,995 |
|
Repayment of long-term debt |
|
| (97,150 | ) |
|
| - |
|
|
| - |
|
|
| (77,150 | ) |
Bond issuance related costs |
|
| (6,250 | ) |
|
| - |
|
|
| - |
|
|
| (6,250 | ) |
Issuance of common stock |
|
| - |
|
|
| 5,892 |
| ||||||||
Proceeds from exercise of stock options |
|
| 128,800 |
|
|
| - |
| ||||||||
Payment of tax withholdings on certain stock-based compensation |
|
| (17,691 | ) |
|
| (15,723 | ) |
|
| (64,416 | ) |
|
| (17,263 | ) |
Distributions to noncontrolling interests |
|
| (106,193 | ) |
|
| (71,241 | ) |
|
| (97,196 | ) |
|
| (62,965 | ) |
Cash dividends |
|
| (368,636 | ) |
|
| (369,270 | ) |
|
| (246,539 | ) |
|
| (245,619 | ) |
Acquisition of treasury stock |
|
| (39,499 | ) |
|
| (197,511 | ) |
|
| (916,145 | ) |
|
| (39,499 | ) |
Other financing activities |
|
| (6,983 | ) |
|
| (6,538 | ) |
|
| (5,072 | ) |
|
| (4,645 | ) |
Cash provided by (used in) financing activities |
|
| 596,567 |
|
|
| (664,536 | ) | ||||||||
Cash (used in) provided by financing activities |
|
| (1,157,788 | ) |
|
| 623,812 |
| ||||||||
Effect of exchange rate changes on cash |
|
| (7,790 | ) |
|
| 482 |
|
|
| 8,079 |
|
|
| (4,268 | ) |
Increase in cash and cash equivalents |
|
| 1,463,596 |
|
|
| 287,479 |
| ||||||||
Cash and cash equivalents - beginning of year |
|
| 1,534,605 |
|
|
| 1,398,886 |
| ||||||||
Cash and cash equivalents and restricted cash and cash equivalents - end of nine months |
| $ | 2,998,201 |
|
| $ | 1,686,365 |
| ||||||||
Increase in cash and cash equivalents and restricted cash and cash equivalents |
|
| 52,077 |
|
|
| 1,254,584 |
| ||||||||
Cash and cash equivalents and restricted cash and cash equivalents - beginning of year |
|
| 2,754,929 |
|
|
| 1,534,605 |
| ||||||||
Cash and cash equivalents and restricted cash and cash equivalents - end of six months |
| $ | 2,807,006 |
|
| $ | 2,789,189 |
| ||||||||
Non-cash investing activity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in accrued plant and equipment purchases |
| $ | - |
|
| $ | 62,700 |
|
| $ | 44,754 |
|
| $ | (25,897 | ) |
See notes to condensed consolidated financial statements.
4
Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Interim Presentation
The information furnished in this Item 1 reflects all adjustments which are, in the opinion of management, necessary to 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, 20192020 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, 2019.2020.
2. Inventories
Inventories consisted of approximately 40%48% raw materials and supplies and 60%52% finished and semi-finished products at OctoberJuly 3, 20202021 (42% and 58%, respectively, at December 31, 2019)2020). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which products are sold to customers at various stages throughout the process. Since most steel products can be classified as either finished or semi-finished products, these two categories of inventory are combined.
3. Property, Plant and Equipment
Property, plant and equipment is recorded net of accumulated depreciation of $9.87$10.20 billion at OctoberJuly 3, 20202021 ($9.429.86 billion at December 31, 2019)2020).
Nucor performed anreviews its natural gas well assets for impairment assessment ofif and when circumstances indicate that a decline in value below their carrying amounts may have occurred. Nucor last assessed its proved producing natural gas well assets in the fourth quarter of 2019. One of2020 due to the main assumptions that most significantly affects the undiscounted cash flows determination used in the impairment assessment is management’s estimate of future pricing ofcontinued low-price natural gas and natural gas liquids. The pricing used in the impairmentenvironment. After completing its assessment, was developed by management based on projected natural gas market supply and demand dynamics, in conjunction with a reviewNucor determined that as of projections by market analysts. Management also makes key estimates on the expected reserve levels and on the expected lease operating costs. The impairment assessment was performed on eachsuch time there were no impairments of Nucor’sany of its three groups (“fields”) of wells, with each field defined by common geographic location.
As a result of the impairment assessment, Nucor recorded a non-cash impairment charge of $35.0 million relating to one field of wells in the fourth quarter of 2019. The post-impairment carrying value of this field was $11.2 million proved well assets. Cat October 3, 2020 ($12.3 million at December 31, 2019). The remaining two fields were not impaired as a result of the assessment and had a combined carrying value of $62.4 million at October 3, 2020 ($66.6 million at December 31, 2019). Changeshanges in the natural gas industry or a prolonged low-price environment beyond what hadhas already been assumed in the assessments could cause management to revise the natural gas and natural gas liquids price assumptions, the estimated reserves or the estimated lease operating costs. Unfavorable Therefore, it is reasonably possible that unfavorable revisions to these assumptions or estimates could possibly result in further impairment of some or all of the fieldsgroups of proved well assets.The combined carrying value of the three groups of wells was $68.4 million at July 3, 2021 ($71.7 million at December 31, 2020).
Nucor owns a 49% leasehold interest in unproved oil and natural gas properties covering approximately 54,000 acres in the South Piceance Basin located in Colorado. Nucor is subject to forfeiture of a portion of its leasehold interest in these properties if we do not drill new wells within various contractually specified time periods. A decision to not develop a portion of these properties within the specified time periods would likely result in a partial asset impairment in the future. The carrying value of the entire leasehold interest at October 3, 2020 was $165.0 million. Nucor has full discretion on its participation in all future drilling capital investments related to the leasehold interest.
In the second quarter of 2021, Nucor made the decision that it would not develop a portion of its unproved oil and natural gas properties (“Portion A”) within the contractually specified time period related to Portion A. As a result of this decision, the Company will forfeit its leasehold rights for Portion A. The Company recorded a charge of $42.0 million to write off the value of Portion A that is included in losses on assets on the condensed consolidated statements of earnings for the three months and six months ended July 3, 2021. The decision not to develop Portion A was heavily influenced by the approaching deadline to commence development combined with Portion A’s expected near-term profitability not achieving management’s desired returns relative to the cost of development. A significant portion of the Company’s remaining leasehold interest in unproved oil and natural gas properties are already supported by active drilling on the properties or have various contractually specified time periods to drill new wells that expire later than the time period for Portion A. Accordingly, management does not believe the value assigned to those portions needs to be evaluated at this time. The carrying value of the remaining portions of unproved oil and natural gas properties was $96.0 million at July 3, 2021.
5
4. Goodwill and Other Intangible Assets
The change in the net carrying amount of goodwill for the ninesix months ended OctoberJuly 3, 20202021 by segment was as follows (in thousands):
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
| ||||||||
Balance at December 31, 2019 |
| $ | 591,986 |
|
| $ | 879,500 |
|
| $ | 729,577 |
|
| $ | 2,201,063 |
| ||||||||||||||||
Balance at December 31, 2020 |
| $ | 612,470 |
|
| $ | 887,625 |
|
| $ | 729,577 |
|
| $ | 2,229,672 |
| ||||||||||||||||
Acquisitions |
|
| 705 |
|
|
| - |
|
|
| - |
|
|
| 705 |
| ||||||||||||||||
Other |
|
| - |
|
|
| (821 | ) |
|
| - |
|
|
| (821 | ) |
|
| - |
|
|
| (129 | ) |
|
| - |
|
|
| (129 | ) |
Translation |
|
| - |
|
|
| (4,454 | ) |
|
| - |
|
|
| (4,454 | ) |
|
| - |
|
|
| 11,310 |
|
|
| - |
|
|
| 11,310 |
|
Balance at October 3, 2020 |
| $ | 591,986 |
|
| $ | 874,225 |
|
| $ | 729,577 |
|
| $ | 2,195,788 |
| ||||||||||||||||
Balance at July 3, 2021 |
| $ | 613,175 |
|
| $ | 898,806 |
|
| $ | 729,577 |
|
| $ | 2,241,558 |
|
Nucor completed its most recent annual goodwill impairment testing during the fourth quarter of 20192020 and concluded that as of such time there was 0 impairment of goodwill for any of its reporting units.
The annual assessment performed in 2019 used forward-looking projections and included expected improvements in the future cash flows of2020 for one of the Company’s reporting units, Rebar Fabrication.Fabrication, used forward-looking projections in future cash flows. The fair value of this reporting unit exceeded its carrying value by approximately 56%99% in the most recent assessment. The reporting unit’s profitabilityunit was profitable in the first nine months of 2020 significantly increased from the first nine months of 2019. Weand we expect the 2020 operating results of the Rebar Fabrication reporting unit will continueit to improve compared to 2019.be profitable in 2021. If our assessment of the relevant facts and circumstances changes, or the actual performance of this reporting unit falls short of expected results, non-cash impairment charges may be required. Total goodwill associated with the Rebar Fabrication reporting unit was $352.7$374.1 million as of OctoberJuly 3, 20202021 ($356.6364.3 million as of December 31, 2019)2020). 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 $59.6$55.2 million as of OctoberJuly 3, 20202021 ($67.258.8 million as of December 31, 2019)2020). 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.
Due to lower than expected operating resultsThe annual assessment performed in 2020 for one of the Company’s reporting units, Grating, used forward-looking projections and anticipated changes to the Grating reporting unit’s business strategy and structure, the Company determined a triggering event occurred in the third quarter of 2019 and performed an impairment assessment.included continued positive future cash flows. The fair value of the Gratingthis reporting unit exceeded its carrying value by approximately 17%88% in thatthe most recent assessment. If our assessment of the relevant facts and circumstances changes, or the actual performance of this reporting unit falls short of expected results, non-cash impairment charges may be required. Total goodwill associated with the Grating reporting unit was $36.6$37.4 million as of OctoberJuly 3, 20202021 ($36.837.0 million as of December 31, 2019)2020).
Intangible assets with estimated useful lives of five to 22 years are amortized on a straight-line or accelerated basis and were comprised of the following as of OctoberJuly 3, 20202021 and December 31, 20192020 (in thousands):
|
| October 3, 2020 |
|
| December 31, 2019 |
|
| July 3, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||
|
| Gross Amount |
|
| Accumulated Amortization |
|
| Gross Amount |
|
| Accumulated Amortization |
|
| Gross Amount |
|
| Accumulated Amortization |
|
| Gross Amount |
|
| Accumulated Amortization |
| ||||||||
Customer relationships |
| $ | 1,412,323 |
|
| $ | 821,029 |
|
| $ | 1,412,954 |
|
| $ | 767,532 |
|
| $ | 1,422,758 |
|
| $ | 874,016 |
|
| $ | 1,421,962 |
|
| $ | 838,443 |
|
Trademarks and trade names |
|
| 162,062 |
|
|
| 98,110 |
|
|
| 162,183 |
|
|
| 92,258 |
|
|
| 162,608 |
|
|
| 103,933 |
|
|
| 162,365 |
|
|
| 100,000 |
|
Other |
|
| 63,822 |
|
|
| 40,510 |
|
|
| 63,807 |
|
|
| 36,968 |
|
|
| 63,821 |
|
|
| 44,037 |
|
|
| 63,822 |
|
|
| 41,685 |
|
|
| $ | 1,638,207 |
|
| $ | 959,649 |
|
| $ | 1,638,944 |
|
| $ | 896,758 |
|
| $ | 1,649,187 |
|
| $ | 1,021,986 |
|
| $ | 1,648,149 |
|
| $ | 980,128 |
|
Intangible asset amortization expense in the thirdsecond quarter of 2021 and 2020 and 2019 was $20.7$20.8 million and $22.0$20.7 million, respectively, and was $62.9$41.9 million and $64.7$42.2 million in the first ninesix months of 20202021 and 2019,2020, respectively. Annual amortization expense is estimated to be $83.5 million in 2020; $82.3$82.7 million in 2021; $80.7$81.1 million in 2022; $80.0$80.4 million in 2023; and $79.2$79.6 million in 2024.
5. Equity Investments
The carrying value of our equity investments in domestic2024; and foreign companies was $521.2 million at October 3, 2020 ($793.2 million at December 31, 2019) and is recorded in other assets in the condensed consolidated balance sheets.
NuMit
Nucor owns a 50% economic and voting interest in NuMit LLC (“NuMit”). NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 26 sheet processing facilities located throughout the United States, Canada and
6
Mexico. Nucor accounts for its investment in NuMit (on a one-month lag basis) under the equity method, as control and risk of loss are shared equally between the members of NuMit. Nucor’s investment in NuMit was $322.5 million at October 3, 2020 ($319.8 million at December 31, 2019). Nucor received distributions of $2.0 million and $27.4 million from NuMit during the first nine months of 2020 and 2019, respectively.
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 its investment (on a one-month lag basis) under the equity method, as control and risk of loss are shared equally between the members of Duferdofin Nucor.
Nucor’s investment in Duferdofin Nucor was $0.1 million at October 3, 2020 ($263.0 million at December 31, 2019). Nucor’s 50% share of the total net assets of Duferdofin Nucor was $128.6 million at October 3, 2020, resulting in a negative basis difference of $128.5 million. This was due to the $261.6 million impairment charge taken against the Company’s investment in Duferdofin Nucor in the first nine months of 2020 as discussed below, offset by the step-up to fair value of certain assets and liabilities attributable to Duferdofin Nucor, as well as the identification of goodwill ($86.5 million at December 31, 2019) and finite-lived intangible assets. This basis difference prior to the impairment charge, excluding the portion attributable to goodwill, was being amortized based on the remaining estimated useful lives of the various underlying net assets, as appropriate, through the first quarter of 2020. Beginning with the second quarter of 2020, the negative basis difference began amortizing based on the remaining estimated useful lives of the various underlying net assets, as appropriate. Amortization associated with the negative basis in the third quarter of 2020 was income of $1.9 million, compared to an expense of $2.2$78.6 million in the third quarter of 2019, associated with the fair value step-up. Net amortization was $1.6 million of income in the first nine months of 2020, and $6.7 million of expense in the first nine months 2019. 2025.
As of October 3, 2020, Nucor had outstanding notes receivable of €35.0 million ($41.0 million) from Duferdofin Nucor (€35.0 million, or $39.3 million, as of December 31, 2019). The notes receivable bear interest at a rate that resets annually on September 30 to the 12-month Euro Interbank Offered Rate plus 0.75% per year. The maturity date of the principal amounts is January 31, 2022. As of October 3, 2020 and December 31, 2019, the notes receivable were classified in other assets in the condensed consolidated balance sheets. These notes were fully reserved in connection with the $261.6 million impairment charge taken against the Company’s investment in Duferdofin Nucor in the first nine months of 2020.
Nucor has issued a guarantee for its ownership percentage (50%) of Duferdofin Nucor’s borrowings under Facility A of a Structured Trade Finance Facilities Agreement (“Facility A”). The fair value of the guarantee is immaterial. In April 2018, Duferdofin Nucor amended and extended Facility A to mature on April 16, 2021. The maximum amount Duferdofin Nucor could borrow under Facility A was €160.0 million ($187.5 million) at October 3, 2020. As of October 3, 2020, there was €132.0 million ($154.7 million) outstanding under that facility (€147.0 million, or $164.9 million, as of December 31, 2019). If Duferdofin Nucor fails to pay when due 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.
On October 2, 2020, Nucor entered into an agreement (the “Duferdofin Agreement”) to transfer its 50% economic and voting interest in Duferdofin Nucor to the owner of the remaining 50% interest. The closing of the transaction is subject to Duferdofin Nucor renegotiating the borrowings currently under Facility A, Nucor’s relief under the guarantee and other customary closing conditions, including regulatory consents. The closing of the transaction is expected to occur during the fourth quarter of 2020. Nucor is continuing to evaluate the impact of the transaction contemplated by the Duferdofin Agreement on the financial statements, which will include foreign currency losses currently included in accumulated other comprehensive loss as outlined in Footnote 14 and other impacts.
Nucor-JFE
Nucor owns a 50% economic and voting interest in Nucor-JFE Steel Mexico, S. de R.L. de C.V. (“Nucor-JFE”), a 50-50 joint venture with JFE Steel Corporation of Japan, to build and operate a galvanized sheet steel plant in central Mexico. After delays caused by the COVID-19 pandemic, Nucor JFE is expected to begin commissioning in November of this year. Nucor accounts for its investment in Nucor-JFE (on a one-month lag basis) under the equity method, as control and risk of loss are shared equally between the members of Nucor-JFE. Nucor’s investment in Nucor-JFE was $150.3 million at October 3, 2020 ($163.2 million at December 31, 2019).
On January 16, 2019, Nucor entered into an agreement to guarantee a percentage, equal to its ownership percentage (50%), of Nucor-JFE’s borrowings under the General Financing Agreement and Promissory Note (the “JFE Facility”). The fair value of the guarantee is immaterial. Nucor’s guarantee expires on April 30, 2021. The maximum amount Nucor-JFE could borrow under the JFE Facility was $65.0 million as of October 3, 2020. The JFE Facility is uncommitted. As of October 3, 2020, there was $45.0 million outstanding under the JFE Facility (0ne as of December 31, 2019). If Nucor-JFE fails to pay when due any amounts for which it is obligated under the JFE Facility, Nucor could be required to pay 50% of such
7
amounts pursuant to and in accordance with the terms of its guarantee. Nucor has not recorded any liability associated with this guarantee.
Nucor-JFE has other credit facilities that Nucor has agreed to guarantee. The principal amount subject to guarantee by Nucor for these other credit facilities was $25.0 million as of October 3, 2020 ($25.0 million as of December 31, 2019). The fair value of the guarantees is immaterial. If Nucor-JFE fails to pay when due any amounts for which it is obligated under the other credit facilities, Nucor could be required to pay such amounts pursuant to and in accordance with the terms of its guarantees. Nucor has not recorded any liability associated with these guarantees.
All Equity Investments
Nucor reviews its equity investments for impairment if and when circumstances indicate that a decline in fair value below their carrying amounts may have occurred. Nucor determined that a triggering event occurred in the first quarter of 2020 with respect to its equity method investment in Duferdofin Nucor due to adverse developments in the joint venture’s commercial outlook, which were and continue to be exacerbated by the COVID-19 pandemic, all of which have negatively impacted the joint venture’s strategic direction. After completing its impairment assessment, Nucor determined that the carrying amount exceeded its estimated fair value and the impairment condition was considered to be other than temporary. Therefore, Nucor recorded a $250.0 million impairment charge in the first quarter of 2020, a $5.0 million impairment charge in the second quarter of 2020, and a $6.6 million impairment charge in the third quarter of 2020 against its investment in Duferdofin Nucor. Any additional capital contributions, if necessary, that Nucor makes to Duferdofin Nucor will likely be subject to impairment. Additionally, in the first quarter of 2020 the Company fully reserved its €35.0 million ($41.0 million) outstanding note receivable from Duferdofin Nucor due to an assessment of the likelihood of collection in light of these adverse developments and its effective subordination to Facility A. These charges are included in losses on assets in the condensed consolidated statements of earnings. The assumptions that most significantly affect the fair value determination include projected cash flows and the discount rate. The Company-specific inputs for measuring fair value are considered “Level 3” or unobservable inputs that are not corroborated by market data under applicable fair value authoritative guidance, as quoted market prices are not available.
It is reasonably possible that material deviation of future performance from the estimates used in our most recent valuation could result in further impairment of our investment in Duferdofin Nucor and affect any potential liability associated with the Company’s guarantee of the indebtedness of Duferdofin Nucor as discussed above.
6.5. Current Liabilities
Book overdrafts, included in accounts payable in the condensed consolidated balance sheets, were $115.2$181.1 million at OctoberJuly 3, 20202021 ($116.4210.5 million at December 31, 2019)2020). Dividends payable, included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, were $123.0$120.1 million at OctoberJuly 3, 20202021 ($122.9123.9 million at December 31, 2019)2020).Accrued vacation and holiday pay, included in salaries, wages and related accruals in the condensed consolidated balance sheets, were $121.8 million at October 3, 2020 ($106.2 million at December 31, 2019).
7.6
6. Fair Value Measurements
The following table summarizes information regarding Nucor’s financial assets and financial liabilities that were measured at fair value as of OctoberJuly 3, 20202021 and December 31, 20192020 (in thousands). Nucor does not have any non-financial assets or non-financial liabilities that are measured at fair value on a recurring basis.
8
|
|
|
|
|
| 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 July 3, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
| $ | 2,204,795 |
|
| $ | 2,204,795 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 398,409 |
|
|
| 398,409 |
|
|
| - |
|
|
| - |
|
Restricted cash and cash equivalents |
|
| 84,350 |
|
|
| 84,350 |
|
|
| - |
|
|
| - |
|
Derivative contracts |
|
| 6,800 |
|
|
| - |
|
|
| 6,800 |
|
|
| - |
|
Total assets |
| $ | 2,694,354 |
|
| $ | 2,687,554 |
|
| $ | 6,800 |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
| $ | (4,730 | ) |
| $ | - |
|
| $ | (4,730 | ) |
| $ | - |
|
As of December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
| $ | 2,186,820 |
|
| $ | 2,186,820 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 408,004 |
|
|
| 408,004 |
|
|
| - |
|
|
| - |
|
Restricted cash and cash equivalents |
|
| 115,258 |
|
|
| 115,258 |
|
|
| - |
|
|
| - |
|
Total assets |
| $ | 2,710,082 |
|
| $ | 2,710,082 |
|
| $ | - |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
| $ | (14,361 | ) |
| $ | - |
|
| $ | (14,361 | ) |
| $ | - |
|
|
|
|
|
|
| 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 October 3, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
| $ | 2,539,777 |
|
| $ | 2,539,777 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 412,401 |
|
|
| 412,401 |
|
|
| - |
|
|
| - |
|
Restricted cash and cash equivalents |
|
| 131,623 |
|
|
| 131,623 |
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 3,083,801 |
|
| $ | 3,083,801 |
|
| $ | - |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
| $ | (6,577 | ) |
| $ | - |
|
| $ | (6,577 | ) |
| $ | - |
|
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
| $ | 1,229,000 |
|
| $ | 1,229,000 |
|
| $ | - |
|
| $ | - |
|
Short-term investments |
|
| 300,040 |
|
|
| 300,040 |
|
|
| - |
|
|
| - |
|
Total assets |
| $ | 1,529,040 |
|
| $ | 1,529,040 |
|
| $ | - |
|
| $ | - |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
| $ | (19,599 | ) |
| $ | - |
|
| $ | (19,599 | ) |
| $ | - |
|
Fair value measurements for Nucor’s cash equivalents, 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 at OctoberJuly 3, 20202021 consisted of certificates of deposit, commercial paper and corporate notes. Fair value measurements for Nucor’s derivatives 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 $6.28$5.90 billion at OctoberJuly 3, 20202021 ($4.816.05 billion at December 31, 2019)2020). The debt fair value estimates are classified under Level 2 because such estimates are based on readily available market prices of our debt at OctoberJuly 3, 20202021 and December 31, 2019,2020, or similar debt with the same maturities, ratings and interest rates.
Disclosures are required for certain assets and liabilities that are measured at fair value, but are recognized and disclosed on a nonrecurring basis in periods subsequent to initial recognition. For Nucor, our equity investment in Duferdofin Nucor was measured at fair value as a result of the impairment charges recorded in the first nine months of 2020 (see Note 5).
8.7. Contingencies
Nucor is subject to environmental laws and regulations established by federal, state and local authorities and, accordingly, makes provisions for the estimated costs of compliance. Of the undiscounted total of $16.6$14.2 million of accrued environmental costs at OctoberJuly 3, 20202021 ($16.416.0 million at December 31, 2019)2020), $6.3$2.9 million was classified in accrued expenses and other current liabilities ($4.15.6 million at December 31, 2019)2020) and $10.3$11.3 million was classified in deferred credits and other liabilities ($12.310.4 million at December 31, 2019)2020). Inherent uncertainties exist in these estimates primarily due to unknown conditions, evolving remediation technology and changing governmental regulations, legal standards and enforcement priorities.
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.
9.7
8. Stock-Based Compensation
Overview
The Company maintains the Nucor Corporation 2014 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) under which the Company may award stock-based compensation to key employees, officers and non-employee directors. The Company’s stockholders approved an amendment and restatement of the Omnibus Plan on May 14, 2020. The
9
Omnibus Plan, as amended and restated, permits the award of stock options, restricted stock units, restricted shares and other stock-based awards for up to 19.0 million shares of the Company’s common stock. As of OctoberJuly 3, 2020, 7.82021, 7.0 million shares remained available for award under the Omnibus Plan.
The Company also maintains a number of inactive plans under which stock-based awards remain outstanding but no further awards may be made. As of OctoberJuly 3, 2020, 1.02021, 0.5 million shares were reserved for issuance upon the future settlement of outstanding awards under such inactive plans.
Stock Options
Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at 100% of the market value on the date of the grant. The stock options granted are generally exercisable at the end of three years and have a term of 10 years.
A summary of activity under Nucor’s stock option plans for the first ninesix months of 20202021 is as follows (shares 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 |
|
| 3,916 |
|
| $ | 50.03 |
|
|
|
|
|
|
|
Granted |
|
| 138 |
|
| $ | 110.74 |
|
|
|
|
|
|
|
Exercised |
|
| (2,554 | ) |
| $ | 50.43 |
|
|
|
| $ | 49,707 |
|
Canceled |
|
| - |
|
| $ | - |
|
|
|
|
|
|
|
Outstanding at July 3, 2021 |
|
| 1,500 |
|
| $ | 54.92 |
|
| 6.6 years |
| $ | 64,347 |
|
Stock options exercisable at July 3, 2021 |
|
| 837 |
|
| $ | 53.86 |
|
| 4.8 years |
| $ | 35,916 |
|
For the 2021 stock option grant, the grant date fair value of $32.30 per share was calculated using the Black-Scholes options pricing model with the following assumptions:
|
|
|
|
|
| Weighted- |
|
| Weighted- |
|
|
|
| |
|
|
|
|
|
| Average |
|
| Average |
| Aggregate |
| ||
|
|
|
|
|
| Exercise |
|
| Remaining |
| Intrinsic |
| ||
|
| Shares |
|
| Price |
|
| Contractual Life |
| Value |
| |||
Number of shares under stock options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of year |
|
| 3,892 |
|
| $ | 50.78 |
|
|
|
|
|
|
|
Granted |
|
| 529 |
|
| $ | 42.46 |
|
|
|
|
|
|
|
Exercised |
|
| - |
|
| $ | - |
|
|
|
| $ | - |
|
Canceled |
|
| (239 | ) |
| $ | 51.58 |
|
|
|
|
|
|
|
Outstanding at October 3, 2020 |
|
| 4,182 |
|
| $ | 49.68 |
|
| 6.0 years |
| $ | 3,846 |
|
Stock options exercisable at October 3, 2020 |
|
| 3,435 |
|
| $ | 50.36 |
|
| 5.3 years |
| $ | 2,189 |
|
Exercise price |
| $ | 110.74 |
|
Expected dividend yield |
|
| 1.46 | % |
Expected stock price volatility |
|
| 32.86 | % |
Risk-free interest rate |
|
| 1.28 | % |
Expected life (years) |
|
| 6.5 |
|
Stock options granted to employees who are eligible for retirement on the date of the 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 $0.3$2.6 million and $1.8 million in the thirdsecond quarter of both2021 and 2020, respectively, and 2019 and $2.4$2.9 million and $4.4$2.1 million in the first ninesix months of 20202021 and 2019,2020, respectively. As of OctoberJuly 3, 2020,2021, unrecognized compensation expense related to stock options was $2.8$4.0 million, which is expected to be recognized over a weighted-average period of 2.4 years.
Restricted Stock Units
Nucor annually grants restricted stock units (“RSUs”) to key employees, officers and non-employee directors. The RSUs granted to key employees and officers vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date provided that a portion of the RSUs awarded to an officer prior to 2018 vest only upon the officer’s retirement.date. 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
8
satisfying age and years of service requirements. RSUs granted to a non-employee director are fully vested on the grant date and are payable to the non-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 the 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 price of Nucor’s common stock on the date of the grant.
10
A summary of Nucor’s RSU activity for the first ninesix months of 20202021 is as follows (shares in thousands):
|
| Shares |
|
| Grant Date Fair Value |
|
| Shares |
|
| Grant Date Fair Value |
| ||||
Restricted stock units: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at beginning of year |
|
| 1,776 |
|
| $ | 52.60 |
|
|
| 1,830 |
|
| $ | 47.33 |
|
Granted |
|
| 1,246 |
|
| $ | 42.46 |
|
|
| 397 |
|
| $ | 110.74 |
|
Vested |
|
| (1,140 | ) |
| $ | 50.14 |
|
|
| (902 | ) |
| $ | 57.40 |
|
Canceled |
|
| (22 | ) |
| $ | 50.17 |
|
|
| (52 | ) |
| $ | 47.62 |
|
Unvested at October 3, 2020 |
|
| 1,860 |
|
| $ | 47.34 |
| ||||||||
Unvested at July 3, 2021 |
|
| 1,273 |
|
| $ | 59.97 |
|
Compensation expense for RSUs was $11.1$22.7 million and $11.0$26.8 million in the thirdsecond quarter of 20202021 and 2019,2020, respectively, and $47.9$32.0 million and $59.1$36.8 million in the first ninesix months of 20202021 and 2019,2020, respectively. As of OctoberJuly 3, 2020,2021, unrecognized compensation expense related to unvested RSUs was $64.2$63.6 million, which is expected to be recognized over a weighted-average period of 1.5 years.
Restricted Stock Awards
Prior to their expiration effective December 31, 2017, the Nucor Corporation Senior Officers Long-Term Incentive Plan and the Nucor Corporation Senior Officers Annual Incentive Plan authorized the award of shares of common stock to officers subject to certain conditions and restrictions. Effective January 1, 2018, the Company adopted supplements to the Omnibus Plan with terms that permit the award of shares of common stock to officers subject to the conditions and restrictions described below, which are substantially similar to those of the expired Senior Officers Long-Term Incentive Plan and Senior Officers Annual Incentive Plan. The expired Senior Officers Long-Term Incentive Plan, together with the applicable supplement, is referred to below as the “LTIP,” and the expired Senior Officers Annual Incentive Plan, together with the applicable supplement, is referred to below as the “AIP.”
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 to one-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.
9
A summary of Nucor’s restricted stock activity under the AIP and the LTIP for the first ninesix months of 20202021 is as follows (shares in thousands):
|
|
|
|
|
| Grant Date |
|
|
|
|
|
| Grant Date |
| ||
|
| Shares |
|
| Fair Value |
|
| Shares |
|
| Fair Value |
| ||||
Restricted stock units and restricted stock awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at beginning of year |
|
| 147 |
|
| $ | 60.81 |
|
|
| 127 |
|
| $ | 49.94 |
|
Granted |
|
| 348 |
|
| $ | 36.15 |
|
|
| 262 |
|
| $ | 65.61 |
|
Vested |
|
| (359 | ) |
| $ | 40.98 |
|
|
| (240 | ) |
| $ | 63.10 |
|
Canceled |
|
| - |
|
| $ | - |
|
|
| (9 | ) |
| $ | 48.75 |
|
Unvested at October 3, 2020 |
|
| 136 |
|
| $ | 49.98 |
| ||||||||
Unvested at July 3, 2021 |
|
| 140 |
|
| $ | 56.77 |
|
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 $3.3$21.6 million and $1.8$2.8 million in the thirdsecond quarter of 20202021 and 2019,2020, respectively, and $5.8$31.8 million and $10.9$2.5 million in the first ninesix months of 20202021 and 2019,2020, respectively. As of OctoberJuly 3, 2020,2021, unrecognized compensation expense related to unvested restricted stock awards was $1.6$2.1 million, which is expected to be recognized over a weighted-average period of 1.61.9 years.
11
10.9. 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 $27.5$192.4 million and $40.0$20.4 million in the thirdsecond quarter of 20202021 and 2019,2020, respectively, and $59.5$321.3 million and $163.7$32.0 million in the first ninesix months of 20202021 and 2019,2020, respectively. The related liability for these benefits is included in salaries, wages and related accruals in the condensed consolidated balance sheets.
11.10. Interest Expense (Income):
The components of net interest expense for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 are as follows (in thousands):
|
| Three Months (13 Weeks) Ended |
|
| Nine Months (39 Weeks) Ended |
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Interest expense |
| $ | 42,281 |
|
| $ | 40,721 |
|
| $ | 128,726 |
|
| $ | 119,736 |
|
| $ | 37,661 |
|
| $ | 38,849 |
|
| $ | 78,631 |
|
| $ | 86,445 |
|
Interest income |
|
| (2,142 | ) |
|
| (9,435 | ) |
|
| (11,870 | ) |
|
| (26,977 | ) |
|
| (1,881 | ) |
|
| (3,042 | ) |
|
| (3,207 | ) |
|
| (9,728 | ) |
Interest expense, net |
| $ | 40,139 |
|
| $ | 31,286 |
|
| $ | 116,856 |
|
| $ | 92,759 |
|
| $ | 35,780 |
|
| $ | 35,807 |
|
| $ | 75,424 |
|
| $ | 76,717 |
|
12.11. Income Taxes
The effective tax rate for the thirdsecond quarter of 2021 was 22.4% compared to 26.5% for the second quarter of 2020. The effective tax rate for the second quarter of 2020 was 23.3% as comparedelevated, relative to 22.8% for the thirdsecond quarter of 2019.2021, primarily due to a $5.3 million unfavorable non-cash, out-of-period adjustment to deferred tax balances. The out-of-period adjustment was not material to any previously reported period.
Nucor has concluded U.S. federal income tax matters for tax years through 2016, other than 2015.2014 and for tax year 2016. The tax years 2015 and 2017 through 2019 remain open to examination by the Internal Revenue Service. The 2015 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 20132014 through 20192020 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).From time to time in the ordinary course of business, Nucor is involved in tax disputes with federal, state and local taxing jurisdictions, which are, individually and in the aggregate, immaterial to Nucor.
Non-current deferred tax liabilities included in deferred credits and other liabilities in the condensed consolidated balance sheets were $575.2$701.9 million at OctoberJuly 3, 20202021 ($431.0596.4 million at December 31, 2019)2020).
1
10
12. Stockholders’ Equity
The following tables reflect the changes in stockholders’ equity attributable to both Nucor and the noncontrolling interests of Nucor’s joint ventures, primarily Nucor-Yamato Steel Company (Limited Partnership) (“NYS”) of which Nucor owns 51%, for the three months and ninesix months ended OctoberJuly 3, 20202021 and September 28, 2019July 4, 2020 (in thousands):
|
|
|
|
|
| Three Months (13 Weeks) Ended October 3, 2020 |
|
|
|
|
|
|
|
|
|
| Three Months (13 Weeks) Ended July 3, 2021 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
|
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||||||||||||
BALANCES, July 4, 2020 |
| $ | 10,623,485 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,106,907 |
|
| $ | 10,998,533 |
|
| $ | (340,836 | ) |
|
| 78,259 |
|
| $ | (2,721,845 | ) |
| $ | 10,194,820 |
|
| $ | 428,665 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, April 3, 2021 |
| $ | 11,861,723 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,160,909 |
|
| $ | 12,163,626 |
|
| $ | (103,560 | ) |
|
| 80,912 |
|
| $ | (2,925,796 | ) |
| $ | 11,447,240 |
|
| $ | 414,483 |
| ||||||||||||||||||||||||||||||||||||||||
Net earnings |
|
| 222,630 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 193,415 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 193,415 |
|
|
| 29,215 |
|
|
| 1,571,459 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,506,868 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,506,868 |
|
|
| 64,591 |
|
Other comprehensive income (loss) |
|
| 25,367 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 25,367 |
|
|
| - |
|
|
| - |
|
|
| 25,367 |
|
|
| - |
|
|
| 29,831 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 29,831 |
|
|
| - |
|
|
| - |
|
|
| 29,831 |
|
|
| - |
|
Stock options exercised |
|
| 21,276 |
|
|
| - |
|
|
| - |
|
|
| 5,337 |
|
|
| - |
|
|
| - |
|
|
| (419 | ) |
|
| 15,939 |
|
|
| 21,276 |
|
|
| - |
| ||||||||||||||||||||||||||||||||||||||||
Stock option expense |
|
| 263 |
|
|
| - |
|
|
| - |
|
|
| 263 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 263 |
|
|
| - |
|
|
| 2,575 |
|
|
| - |
|
|
| - |
|
|
| 2,575 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,575 |
|
|
| - |
|
Issuance of stock under award plans, net of forfeitures |
|
| 11,189 |
|
|
| - |
|
|
| - |
|
|
| 10,012 |
|
|
| - |
|
|
| - |
|
|
| (34 | ) |
|
| 1,177 |
|
|
| 11,189 |
|
|
| - |
|
|
| (18,338 | ) |
|
| - |
|
|
| - |
|
|
| (50,566 | ) |
|
| - |
|
|
| - |
|
|
| (799 | ) |
|
| 32,228 |
|
|
| (18,338 | ) |
|
| - |
|
Amortization of unearned compensation |
|
| 400 |
|
|
| - |
|
|
| - |
|
|
| 400 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 400 |
|
|
| - |
|
|
| (1,100 | ) |
|
| - |
|
|
| - |
|
|
| (1,100 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,100 | ) |
|
| - |
|
Treasury stock acquired |
|
| (614,286 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,765 |
|
|
| (614,286 | ) |
|
| (614,286 | ) |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared |
|
| (123,039 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (123,039 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (123,039 | ) |
|
| - |
|
|
| (120,088 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (120,088 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (120,088 | ) |
|
| - |
|
Distributions to noncontrolling interests |
|
| (43,228 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (43,228 | ) |
|
| (23,401 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (23,401 | ) |
Other |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| 1 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, October 3, 2020 |
| $ | 10,717,067 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,117,582 |
|
| $ | 11,068,908 |
|
| $ | (315,469 | ) |
|
| 78,225 |
|
| $ | (2,720,668 | ) |
| $ | 10,302,414 |
|
| $ | 414,653 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, July 3, 2021 |
| $ | 12,709,651 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,117,155 |
|
| $ | 13,550,406 |
|
| $ | (73,729 | ) |
|
| 86,459 |
|
| $ | (3,491,915 | ) |
| $ | 12,253,978 |
|
| $ | 455,673 |
|
12
|
|
|
|
|
| Six Months (26 Weeks) Ended July 3, 2021 |
|
|
|
|
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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, 2020 |
| $ | 11,231,861 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,121,288 |
|
| $ | 11,343,852 |
|
| $ | (118,861 | ) |
|
| 77,909 |
|
| $ | (2,709,675 | ) |
| $ | 10,788,665 |
|
| $ | 443,196 |
|
Net earnings |
|
| 2,558,973 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,449,300 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,449,300 |
|
|
| 109,673 |
|
Other comprehensive income (loss) |
|
| 45,132 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 45,132 |
|
|
| - |
|
|
| - |
|
|
| 45,132 |
|
|
| - |
|
Stock options exercised |
|
| 128,800 |
|
|
| - |
|
|
| - |
|
|
| 35,825 |
|
|
| - |
|
|
| - |
|
|
| (2,554 | ) |
|
| 92,975 |
|
|
| 128,800 |
|
|
| - |
|
Stock option expense |
|
| 2,908 |
|
|
| - |
|
|
| - |
|
|
| 2,908 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,908 |
|
|
| - |
|
Issuance of stock under award plans, net of forfeitures |
|
| (2,736 | ) |
|
| - |
|
|
| - |
|
|
| (43,666 | ) |
|
| - |
|
|
| - |
|
|
| (1,041 | ) |
|
| 40,930 |
|
|
| (2,736 | ) |
|
| - |
|
Amortization of unearned compensation |
|
| 800 |
|
|
| - |
|
|
| - |
|
|
| 800 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 800 |
|
|
| - |
|
Treasury stock acquired |
|
| (916,145 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,145 |
|
|
| (916,145 | ) |
|
| (916,145 | ) |
|
| - |
|
Cash dividends declared |
|
| (242,746 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (242,746 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (242,746 | ) |
|
| - |
|
Distributions to noncontrolling interests |
|
| (97,196 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (97,196 | ) |
BALANCES, July 3, 2021 |
| $ | 12,709,651 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,117,155 |
|
| $ | 13,550,406 |
|
| $ | (73,729 | ) |
|
| 86,459 |
|
| $ | (3,491,915 | ) |
| $ | 12,253,978 |
|
| $ | 455,673 |
|
11
|
|
|
|
|
| Nine Months (39 Weeks) Ended October 3, 2020 |
|
|
|
|
|
|
|
|
|
| Three Months (13 Weeks) Ended July 4, 2020 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
|
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||||||||||||
BALANCES, December 31, 2019 |
| $ | 10,791,176 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,107,646 |
|
| $ | 11,115,056 |
|
| $ | (302,966 | ) |
|
| 78,342 |
|
| $ | (2,713,931 | ) |
| $ | 10,357,866 |
|
| $ | 433,310 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, April 4, 2020 |
| $ | 10,596,069 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,119,370 |
|
| $ | 11,012,690 |
|
| $ | (367,627 | ) |
|
| 79,019 |
|
| $ | (2,748,290 | ) |
| $ | 10,168,204 |
|
| $ | 427,865 |
| ||||||||||||||||||||||||||||||||||||||||
Net earnings |
|
| 410,162 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 322,627 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 322,627 |
|
|
| 87,535 |
|
|
| 133,153 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 108,881 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 108,881 |
|
|
| 24,272 |
|
Other comprehensive income (loss) |
|
| (12,503 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (12,503 | ) |
|
| - |
|
|
| - |
|
|
| (12,503 | ) |
|
| - |
|
|
| 26,791 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 26,791 |
|
|
| - |
|
|
| - |
|
|
| 26,791 |
|
|
| - |
|
Stock option expense |
|
| 2,402 |
|
|
| - |
|
|
| - |
|
|
| 2,402 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,402 |
|
|
| - |
|
|
| 1,864 |
|
|
| - |
|
|
| - |
|
|
| 1,864 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,864 |
|
|
| - |
|
Issuance of stock under award plans, net of forfeitures |
|
| 38,996 |
|
|
| - |
|
|
| - |
|
|
| 6,234 |
|
|
| - |
|
|
| - |
|
|
| (942 | ) |
|
| 32,762 |
|
|
| 38,996 |
|
|
| - |
|
|
| 11,618 |
|
|
| - |
|
|
| - |
|
|
| (14,827 | ) |
|
| - |
|
|
| - |
|
|
| (760 | ) |
|
| 26,445 |
|
|
| 11,618 |
|
|
| - |
|
Amortization of unearned compensation |
|
| 1,300 |
|
|
| - |
|
|
| - |
|
|
| 1,300 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,300 |
|
|
| - |
|
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500 |
|
|
| - |
|
Treasury stock acquired |
|
| (39,499 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 825 |
|
|
| (39,499 | ) |
|
| (39,499 | ) |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared |
|
| (368,774 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (368,774 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (368,774 | ) |
|
| - |
|
|
| (123,038 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (123,038 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (123,038 | ) |
|
| - |
|
Distributions to noncontrolling interests |
|
| (106,193 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (106,193 | ) |
|
| (23,472 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (23,472 | ) |
Other |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| 1 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, October 3, 2020 |
| $ | 10,717,067 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,117,582 |
|
| $ | 11,068,908 |
|
| $ | (315,469 | ) |
|
| 78,225 |
|
| $ | (2,720,668 | ) |
| $ | 10,302,414 |
|
| $ | 414,653 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, July 4, 2020 |
| $ | 10,623,485 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,106,907 |
|
| $ | 10,998,533 |
|
| $ | (340,836 | ) |
|
| 78,259 |
|
| $ | (2,721,845 | ) |
| $ | 10,194,820 |
|
| $ | 428,665 |
|
|
|
|
|
|
| Three Months (13 Weeks) Ended September 28, 2019 |
|
|
|
|
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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, June 29, 2019 |
| $ | 10,698,008 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,098,809 |
|
| $ | 10,977,950 |
|
| $ | (297,760 | ) |
|
| 76,997 |
|
| $ | (2,630,343 | ) |
| $ | 10,300,717 |
|
| $ | 397,291 |
|
Net earnings |
|
| 293,587 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 275,031 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 275,031 |
|
|
| 18,556 |
|
Other comprehensive income (loss) |
|
| (16,006 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (16,006 | ) |
|
| - |
|
|
| - |
|
|
| (16,006 | ) |
|
| - |
|
Stock option expense |
|
| 275 |
|
|
| - |
|
|
| - |
|
|
| 275 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 275 |
|
|
| - |
|
Issuance of stock under award plans, net of forfeitures |
|
| 11,339 |
|
|
| - |
|
|
| - |
|
|
| 9,365 |
|
|
| - |
|
|
| - |
|
|
| (58 | ) |
|
| 1,974 |
|
|
| 11,339 |
|
|
| - |
|
Amortization of unearned compensation |
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500 |
|
|
| - |
|
Cash dividends declared |
|
| (122,809 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (122,809 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (122,809 | ) |
|
| - |
|
Distributions to noncontrolling interests |
|
| (3,861 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,861 | ) |
Other |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1 |
|
|
| - |
|
|
| - |
|
BALANCES, September 28, 2019 |
| $ | 10,861,033 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,108,948 |
|
| $ | 11,130,172 |
|
| $ | (313,766 | ) |
|
| 76,939 |
|
| $ | (2,628,368 | ) |
| $ | 10,449,047 |
|
| $ | 411,986 |
|
|
|
|
|
|
| Nine Months (39 Weeks) Ended September 28, 2019 |
|
|
|
|
|
|
|
|
|
| Six Months (26 Weeks) Ended July 4, 2020 |
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
| Treasury Stock |
|
| Nucor |
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
|
|
|
|
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| (at cost) |
|
| Stockholders' |
|
| Noncontrolling |
| ||||||||||||||||||||||||||||||
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
|
| Total |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Shares |
|
| Amount |
|
| Equity |
|
| Interests |
| ||||||||||||||||||||
BALANCES, December 31, 2018 |
| $ | 10,201,968 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,073,715 |
|
| $ | 10,337,445 |
|
| $ | (304,133 | ) |
|
| 74,562 |
|
| $ | (2,467,010 | ) |
| $ | 9,792,078 |
|
| $ | 409,890 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, December 31, 2019 |
| $ | 10,791,176 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,107,646 |
|
| $ | 11,115,056 |
|
| $ | (302,966 | ) |
|
| 78,342 |
|
| $ | (2,713,931 | ) |
| $ | 10,357,866 |
|
| $ | 433,310 |
| ||||||||||||||||||||||||||||||||||||||||
Net earnings |
|
| 1,236,657 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,163,320 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,163,320 |
|
|
| 73,337 |
|
|
| 187,532 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 129,212 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 129,212 |
|
|
| 58,320 |
|
Other comprehensive income (loss) |
|
| (11,519 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (11,519 | ) |
|
| - |
|
|
| - |
|
|
| (11,519 | ) |
|
| - |
|
|
| (37,870 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (37,870 | ) |
|
| - |
|
|
| - |
|
|
| (37,870 | ) |
|
| - |
|
Stock options exercised |
|
| 5,892 |
|
|
| - |
|
|
| - |
|
|
| 808 |
|
|
| - |
|
|
| - |
|
|
| (153 | ) |
|
| 5,084 |
|
|
| 5,892 |
|
|
| - |
| ||||||||||||||||||||||||||||||||||||||||
Stock option expense |
|
| 4,387 |
|
|
| - |
|
|
| - |
|
|
| 4,387 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,387 |
|
|
| - |
|
|
| 2,139 |
|
|
| - |
|
|
| - |
|
|
| 2,139 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,139 |
|
|
| - |
|
Issuance of stock under award plans, net of forfeitures |
|
| 59,608 |
|
|
| - |
|
|
| - |
|
|
| 28,540 |
|
|
| - |
|
|
| - |
|
|
| (920 | ) |
|
| 31,068 |
|
|
| 59,608 |
|
|
| - |
|
|
| 27,807 |
|
|
| - |
|
|
| - |
|
|
| (3,778 | ) |
|
| - |
|
|
| - |
|
|
| (908 | ) |
|
| 31,585 |
|
|
| 27,807 |
|
|
| - |
|
Amortization of unearned compensation |
|
| 1,500 |
|
|
| - |
|
|
| - |
|
|
| 1,500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,500 |
|
|
| - |
|
|
| 900 |
|
|
| - |
|
|
| - |
|
|
| 900 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 900 |
|
|
| - |
|
Treasury stock acquired |
|
| (197,511 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,450 |
|
|
| (197,511 | ) |
|
| (197,511 | ) |
|
| - |
|
|
| (39,499 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 825 |
|
|
| (39,499 | ) |
|
| (39,499 | ) |
|
| - |
|
Cash dividends declared |
|
| (368,707 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (368,707 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (368,707 | ) |
|
| - |
|
|
| (245,735 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (245,735 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (245,735 | ) |
|
| - |
|
Distributions to noncontrolling interests |
|
| (71,241 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (71,241 | ) |
|
| (62,965 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (62,965 | ) |
Other |
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| (2 | ) |
|
| (1,886 | ) |
|
| 1,886 |
|
|
| - |
|
|
| 1 |
|
|
| (1 | ) |
|
| - |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, September 28, 2019 |
| $ | 10,861,033 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,108,948 |
|
| $ | 11,130,172 |
|
| $ | (313,766 | ) |
|
| 76,939 |
|
| $ | (2,628,368 | ) |
| $ | 10,449,047 |
|
| $ | 411,986 |
| ||||||||||||||||||||||||||||||||||||||||
BALANCES, July 4, 2020 |
| $ | 10,623,485 |
|
|
| 380,154 |
|
| $ | 152,061 |
|
| $ | 2,106,907 |
|
| $ | 10,998,533 |
|
| $ | (340,836 | ) |
|
| 78,259 |
|
| $ | (2,721,845 | ) |
| $ | 10,194,820 |
|
| $ | 428,665 |
|
Dividends declared per share were $0.4025$0.405 per share in the thirdsecond quarter of 20202021 ($0.400.4025 per share in the thirdsecond quarter of 2019)2020) and $1.2075$0.81 per share in the first ninesix months of 20202021 ($1.200.805 per share in the first ninesix months of 2019)2020).
On September 6, 2018,May 13, 2021, the Company announced that the Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $2.00$3.00 billion of the Company’s common stock and terminated any previously authorized share repurchase programs. Share repurchases will be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of 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 OctoberJuly 3, 2020,2021, the Company had approximately $1.16$2.80 billion remaining available for share repurchases under theits newly authorized program.
13
12
14.
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 ninesix months ended OctoberJuly 3, 20202021 and September 28, 2019July 4, 2020 (in thousands):
|
| Three-Month (13-Week) Period Ended |
|
| Three-Month (13-Week) Period Ended |
| ||||||||||||||||||||||||||
|
| October 3, 2020 |
|
| July 3, 2021 |
| ||||||||||||||||||||||||||
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| ||||||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||||||
Accumulated other comprehensive income (loss) at July 4, 2020 |
| $ | (10,900 | ) |
| $ | (337,743 | ) |
| $ | 7,807 |
|
| $ | (340,836 | ) | ||||||||||||||||
Accumulated other comprehensive income (loss) at April 3, 2021 |
| $ | (3,200 | ) |
| $ | (107,026 | ) |
| $ | 6,666 |
|
| $ | (103,560 | ) | ||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| 6,387 |
|
|
| 16,867 |
|
|
| - |
|
|
| 23,254 |
|
|
| 8,204 |
|
|
| 21,431 |
|
|
| - |
|
|
| 29,635 |
|
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1) |
|
| 2,113 |
|
|
| - |
|
|
| - |
|
|
| 2,113 |
|
|
| 196 |
|
|
| - |
|
|
| - |
|
|
| 196 |
|
Net current-period other comprehensive income (loss) |
|
| 8,500 |
|
|
| 16,867 |
|
|
| - |
|
|
| 25,367 |
|
|
| 8,400 |
|
|
| 21,431 |
|
|
| - |
|
|
| 29,831 |
|
Accumulated other comprehensive income (loss) at October 3, 2020 |
| $ | (2,400 | ) |
| $ | (320,876 | ) |
| $ | 7,807 |
|
| $ | (315,469 | ) | ||||||||||||||||
Accumulated other comprehensive income (loss) at July 3, 2021 |
| $ | 5,200 |
|
| $ | (85,595 | ) |
| $ | 6,666 |
|
| $ | (73,729 | ) |
|
| Nine-Month (39-Week) Period Ended |
| |||||||||||||
|
| October 3, 2020 |
| |||||||||||||
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| |||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive income (loss) at December 31, 2019 |
| $ | (14,000 | ) |
| $ | (296,773 | ) |
| $ | 7,807 |
|
| $ | (302,966 | ) |
Other comprehensive income (loss) before reclassifications |
|
| 4,888 |
|
|
| (24,103 | ) |
|
| - |
|
|
| (19,215 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1) |
|
| 6,712 |
|
|
| - |
|
|
| - |
|
|
| 6,712 |
|
Net current-period other comprehensive income (loss) |
|
| 11,600 |
|
|
| (24,103 | ) |
|
| - |
|
|
| (12,503 | ) |
Accumulated other comprehensive income (loss) at October 3, 2020 |
| $ | (2,400 | ) |
| $ | (320,876 | ) |
| $ | 7,807 |
|
| $ | (315,469 | ) |
|
| Six-Month (26-Week) Period Ended |
| |||||||||||||
|
| July 3, 2021 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| |||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive income (loss) at December 31, 2020 |
| $ | (4,700 | ) |
| $ | (120,827 | ) |
| $ | 6,666 |
|
| $ | (118,861 | ) |
Other comprehensive income (loss) before reclassifications |
|
| 9,203 |
|
|
| 35,232 |
|
|
| - |
|
|
| 44,435 |
|
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1) |
|
| 697 |
|
|
| - |
|
|
| - |
|
|
| 697 |
|
Net current-period other comprehensive income (loss) |
|
| 9,900 |
|
|
| 35,232 |
|
|
| - |
|
|
| 45,132 |
|
Accumulated other comprehensive income (loss) at July 3, 2021 |
| $ | 5,200 |
|
| $ | (85,595 | ) |
| $ | 6,666 |
|
| $ | (73,729 | ) |
(1) Includes $2,113$196 and $6,712$697 of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net losses on commodity contracts in the thirdsecond quarter and first ninesix months of 2020,2021, respectively. The tax impactsimpact of those reclassifications were $700was $0 and $2,300$100 in the thirdsecond quarter and first ninesix months of 2020,2021, respectively.
|
| Three-Month (13-Week) Period Ended |
| |||||||||||||
|
| July 4, 2020 |
| |||||||||||||
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| |||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive income (loss) at April 4, 2020 |
| $ | (14,200 | ) |
| $ | (361,234 | ) |
| $ | 7,807 |
|
| $ | (367,627 | ) |
Other comprehensive income (loss) before reclassifications |
|
| 757 |
|
|
| 23,491 |
|
|
| - |
|
|
| 24,248 |
|
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (2) |
|
| 2,543 |
|
|
| - |
|
|
| - |
|
|
| 2,543 |
|
Net current-period other comprehensive income (loss) |
|
| 3,300 |
|
|
| 23,491 |
|
|
| - |
|
|
| 26,791 |
|
Accumulated other comprehensive income (loss) at July 4, 2020 |
| $ | (10,900 | ) |
| $ | (337,743 | ) |
| $ | 7,807 |
|
| $ | (340,836 | ) |
Included in the $320.9 million foreign currency losses at October 3, 2020 are $191.5 million of losses related to our equity method investment in Duferdofin Nucor and $129.4 million of losses related primarily to our Canadian operations.
1413
|
| Three-Month (13-Week) Period Ended |
| |||||||||||||
|
| September 28, 2019 |
| |||||||||||||
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| |||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive income (loss) at June 29, 2019 |
| $ | (11,100 | ) |
| $ | (295,559 | ) |
| $ | 8,899 |
|
| $ | (297,760 | ) |
Other comprehensive income (loss) before reclassifications |
|
| (3,315 | ) |
|
| (14,306 | ) |
|
| - |
|
|
| (17,621 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1) |
|
| 1,615 |
|
|
| - |
|
|
| - |
|
|
| 1,615 |
|
Net current-period other comprehensive income (loss) |
|
| (1,700 | ) |
|
| (14,306 | ) |
|
| - |
|
|
| (16,006 | ) |
Accumulated other comprehensive income (loss) at September 28, 2019 |
| $ | (12,800 | ) |
| $ | (309,865 | ) |
| $ | 8,899 |
|
| $ | (313,766 | ) |
|
| Nine-Month (39-Week) Period Ended |
| |||||||||||||
|
| September 28, 2019 |
| |||||||||||||
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| |||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive income (loss) at December 31, 2018 |
| $ | (6,500 | ) |
| $ | (304,646 | ) |
| $ | 7,013 |
|
| $ | (304,133 | ) |
Other comprehensive income (loss) before reclassifications |
|
| (7,801 | ) |
|
| (5,219 | ) |
|
| - |
|
|
| (13,020 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1) |
|
| 1,501 |
|
|
| - |
|
|
| - |
|
|
| 1,501 |
|
Net current-period other comprehensive income (loss) |
|
| (6,300 | ) |
|
| (5,219 | ) |
|
| - |
|
|
| (11,519 | ) |
Other |
|
| - |
|
|
| - |
|
|
| 1,886 |
|
|
| 1,886 |
|
Accumulated other comprehensive income (loss) at September 28, 2019 |
| $ | (12,800 | ) |
| $ | (309,865 | ) |
| $ | 8,899 |
|
| $ | (313,766 | ) |
|
| Six-Month (26-Week) Period Ended |
| |||||||||||||
|
| July 4, 2020 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gains and Losses on |
|
| Foreign Currency |
|
| Adjustment to Early |
|
|
|
|
| |||
|
| Hedging Derivatives |
|
| Gain (Loss) |
|
| Retiree Medical Plan |
|
| Total |
| ||||
Accumulated other comprehensive income (loss) at December 31, 2019 |
| $ | (14,000 | ) |
| $ | (296,773 | ) |
| $ | 7,807 |
|
| $ | (302,966 | ) |
Other comprehensive income (loss) before reclassifications |
|
| (1,499 | ) |
|
| (40,970 | ) |
|
| - |
|
|
| (42,469 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (2) |
|
| 4,599 |
|
|
| - |
|
|
| - |
|
|
| 4,599 |
|
Net current-period other comprehensive income (loss) |
|
| 3,100 |
|
|
| (40,970 | ) |
|
| - |
|
|
| (37,870 | ) |
Accumulated other comprehensive income (loss) at July 4, 2020 |
| $ | (10,900 | ) |
| $ | (337,743 | ) |
| $ | 7,807 |
|
| $ | (340,836 | ) |
(1)(2) Includes $1,615$2,543 and $1,501$4,599 of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net losses on commodity contracts in the thirdsecond quarter and first ninesix months of 2019,2020, respectively. The tax impactsimpact of those reclassifications were $500was $900 and $1,600 in both the thirdsecond quarter and first ninesix months of 2019.2020, respectively.
15.14. 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 businesses; rebar distribution businesses; and Nucor’s equity method investments in Duferdofin Nucor, NuMit LLC (“NuMit”) and Nucor-JFE.Nucor-JFE Steel Mexico, S. de R.L. de C.V. (“Nucor-JFE”). 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, steel grating, tubular products businesses, piling products business, and wire and wire mesh. The raw materials segment includes The David J. Joseph Company and its affiliates (collectively, “DJJ”(“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.
Net interest expense 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. 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 investmentinvestments in and advances to affiliates.
1514
Nucor’s results by segment for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 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 |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Net sales to external customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills |
| $ | 2,842,625 |
|
| $ | 3,244,473 |
|
| $ | 8,875,856 |
|
| $ | 10,897,322 |
|
| $ | 5,909,909 |
|
| $ | 2,513,961 |
|
| $ | 10,518,686 |
|
| $ | 6,033,231 |
|
Steel products |
|
| 1,738,004 |
|
|
| 1,820,359 |
|
|
| 4,988,026 |
|
|
| 5,225,064 |
|
|
| 2,241,107 |
|
|
| 1,523,168 |
|
|
| 4,051,162 |
|
|
| 3,250,022 |
|
Raw materials |
|
| 347,331 |
|
|
| 399,670 |
|
|
| 1,015,721 |
|
|
| 1,334,726 |
|
|
| 638,148 |
|
|
| 290,177 |
|
|
| 1,236,456 |
|
|
| 668,390 |
|
|
| $ | 4,927,960 |
|
| $ | 5,464,502 |
|
| $ | 14,879,603 |
|
| $ | 17,457,112 |
|
| $ | 8,789,164 |
|
| $ | 4,327,306 |
|
| $ | 15,806,304 |
|
| $ | 9,951,643 |
|
Intercompany sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills |
| $ | 731,942 |
|
| $ | 825,237 |
|
| $ | 2,264,278 |
|
| $ | 2,542,008 |
|
| $ | 1,496,298 |
|
| $ | 663,244 |
|
| $ | 2,721,411 |
|
| $ | 1,532,336 |
|
Steel products |
|
| 51,029 |
|
|
| 57,517 |
|
|
| 197,603 |
|
|
| 174,718 |
|
|
| 80,394 |
|
|
| 63,205 |
|
|
| 151,613 |
|
|
| 146,574 |
|
Raw materials |
|
| 1,863,796 |
|
|
| 2,063,167 |
|
|
| 5,772,583 |
|
|
| 6,917,523 |
|
|
| 4,009,808 |
|
|
| 1,484,982 |
|
|
| 7,656,003 |
|
|
| 3,908,787 |
|
Corporate/eliminations |
|
| (2,646,767) |
|
|
| (2,945,921 | ) |
|
| (8,234,464) |
|
|
| (9,634,249 | ) |
|
| (5,586,500 | ) |
|
| (2,211,431 | ) |
|
| (10,529,027 | ) |
|
| (5,587,697 | ) |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
Earnings (loss) before income taxes and noncontrolling interests: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills |
| $ | 205,152 |
|
| $ | 309,939 |
|
| $ | 512,082 |
|
| $ | 1,578,257 |
|
| $ | 2,174,807 |
|
| $ | 150,424 |
|
| $ | 3,489,781 |
|
| $ | 306,930 |
|
Steel products |
|
| 186,976 |
|
|
| 170,214 |
|
|
| 502,409 |
|
|
| 363,731 |
|
|
| 259,330 |
|
|
| 152,874 |
|
|
| 471,142 |
|
|
| 315,433 |
|
Raw materials |
|
| 6,232 |
|
|
| (10,599 | ) |
|
| (3,068) |
|
|
| 64,333 |
|
|
| 120,143 |
|
|
| (1,389 | ) |
|
| 343,378 |
|
|
| (9,300 | ) |
Corporate/eliminations |
|
| (107,942) |
|
|
| (89,215 | ) |
|
| (393,651) |
|
|
| (401,744 | ) |
|
| (528,532 | ) |
|
| (120,852 | ) |
|
| (980,307 | ) |
|
| (285,709 | ) |
|
| $ | 290,418 |
|
| $ | 380,339 |
|
| $ | 617,772 |
|
| $ | 1,604,577 |
|
| $ | 2,025,748 |
|
| $ | 181,057 |
|
| $ | 3,323,994 |
|
| $ | 327,354 |
|
|
| Oct. 3, 2020 |
|
| Dec. 31, 2019 |
|
| July 3, 2021 |
|
| Dec. 31, 2020 |
| ||||
Segment assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills |
| $ | 9,251,790 |
|
| $ | 9,283,216 |
|
| $ | 11,734,231 |
|
| $ | 9,708,260 |
|
Steel products |
|
| 4,399,501 |
|
|
| 4,610,628 |
|
|
| 5,342,505 |
|
|
| 4,461,042 |
|
Raw materials |
|
| 3,172,464 |
|
|
| 3,316,479 |
|
|
| 3,876,540 |
|
|
| 3,324,489 |
|
Corporate/eliminations |
|
| 2,695,522 |
|
|
| 1,134,343 |
|
|
| 2,042,306 |
|
|
| 2,631,603 |
|
|
| $ | 19,519,277 |
|
| $ | 18,344,666 |
|
| $ | 22,995,582 |
|
| $ | 20,125,394 |
|
16.15. Revenue
The following tables disaggregate our revenue by major source for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 (in thousands):
|
| Three Months (13 Weeks) Ended October 3, 2020 |
|
| Nine Months (39 Weeks) Ended October 3, 2020 |
|
| Three Months (13 Weeks) Ended July 3, 2021 |
|
| Six Months (26 Weeks) Ended July 3, 2021 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
| ||||||||||||||||
Sheet |
| $ | 1,256,537 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,256,537 |
|
| $ | 3,899,970 |
|
| $ | - |
|
| $ | - |
|
| $ | 3,899,970 |
|
| $ | 3,104,304 |
|
| $ | - |
|
| $ | - |
|
| $ | 3,104,304 |
|
| $ | 5,455,759 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,455,759 |
|
Bar |
|
| 957,216 |
|
|
| - |
|
|
| - |
|
|
| 957,216 |
|
|
| 2,830,936 |
|
|
| - |
|
|
| - |
|
|
| 2,830,936 |
|
|
| 1,515,115 |
|
|
| - |
|
|
| - |
|
|
| 1,515,115 |
|
|
| 2,776,157 |
|
|
| - |
|
|
| - |
|
|
| 2,776,157 |
|
Structural |
|
| 362,192 |
|
|
| - |
|
|
| - |
|
|
| 362,192 |
|
|
| 1,159,949 |
|
|
| - |
|
|
| - |
|
|
| 1,159,949 |
|
|
| 619,541 |
|
|
| - |
|
|
| - |
|
|
| 619,541 |
|
|
| 1,096,736 |
|
|
| - |
|
|
| - |
|
|
| 1,096,736 |
|
Plate |
|
| 266,680 |
|
|
| - |
|
|
| - |
|
|
| 266,680 |
|
|
| 985,001 |
|
|
| - |
|
|
| - |
|
|
| 985,001 |
|
|
| 670,949 |
|
|
| - |
|
|
| - |
|
|
| 670,949 |
|
|
| 1,190,034 |
|
|
| - |
|
|
| - |
|
|
| 1,190,034 |
|
Tubular Products |
|
| - |
|
|
| 274,915 |
|
|
| - |
|
|
| 274,915 |
|
|
| - |
|
|
| 830,283 |
|
|
| - |
|
|
| 830,283 |
|
|
| - |
|
|
| 512,503 |
|
|
| - |
|
|
| 512,503 |
|
|
| - |
|
|
| 887,156 |
|
|
| - |
|
|
| 887,156 |
|
Rebar Fabrication |
|
| - |
|
|
| 463,286 |
|
|
| - |
|
|
| 463,286 |
|
|
| - |
|
|
| 1,300,518 |
|
|
| - |
|
|
| 1,300,518 |
|
|
| - |
|
|
| 480,727 |
|
|
| - |
|
|
| 480,727 |
|
|
| - |
|
|
| 867,284 |
|
|
| - |
|
|
| 867,284 |
|
Other Steel Products |
|
| - |
|
|
| 999,803 |
|
|
| - |
|
|
| 999,803 |
|
|
| - |
|
|
| 2,857,225 |
|
|
| - |
|
|
| 2,857,225 |
|
|
| - |
|
|
| 1,247,877 |
|
|
| - |
|
|
| 1,247,877 |
|
|
| - |
|
|
| 2,296,722 |
|
|
| - |
|
|
| 2,296,722 |
|
Raw Materials |
|
| - |
|
|
| - |
|
|
| 347,331 |
|
|
| 347,331 |
|
|
| - |
|
|
| - |
|
|
| 1,015,721 |
|
|
| 1,015,721 |
|
|
| - |
|
|
| - |
|
|
| 638,148 |
|
|
| 638,148 |
|
|
| - |
|
|
| - |
|
|
| 1,236,456 |
|
|
| 1,236,456 |
|
|
| $ | 2,842,625 |
|
| $ | 1,738,004 |
|
| $ | 347,331 |
|
| $ | 4,927,960 |
|
| $ | 8,875,856 |
|
| $ | 4,988,026 |
|
| $ | 1,015,721 |
|
| $ | 14,879,603 |
|
| $ | 5,909,909 |
|
| $ | 2,241,107 |
|
| $ | 638,148 |
|
| $ | 8,789,164 |
|
| $ | 10,518,686 |
|
| $ | 4,051,162 |
|
| $ | 1,236,456 |
|
| $ | 15,806,304 |
|
1615
|
| Three Months (13 Weeks) Ended September 28, 2019 |
|
| Nine Months (39 Weeks) Ended September 28, 2019 |
|
| Three Months (13 Weeks) Ended July 4, 2020 |
|
| Six Months (26 Weeks) Ended July 4, 2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
|
| Steel Mills |
|
| Steel Products |
|
| Raw Materials |
|
| Total |
| ||||||||||||||||
Sheet |
| $ | 1,513,884 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,513,884 |
|
| $ | 5,071,027 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,071,027 |
|
| $ | 1,065,004 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,065,004 |
|
| $ | 2,643,433 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,643,433 |
|
Bar |
|
| 979,082 |
|
|
| - |
|
|
| - |
|
|
| 979,082 |
|
|
| 3,173,289 |
|
|
| - |
|
|
| - |
|
|
| 3,173,289 |
|
|
| 811,054 |
|
|
| - |
|
|
| - |
|
|
| 811,054 |
|
|
| 1,873,720 |
|
|
| - |
|
|
| - |
|
|
| 1,873,720 |
|
Structural |
|
| 378,670 |
|
|
| - |
|
|
| - |
|
|
| 378,670 |
|
|
| 1,214,355 |
|
|
| - |
|
|
| - |
|
|
| 1,214,355 |
|
|
| 347,258 |
|
|
| - |
|
|
| - |
|
|
| 347,258 |
|
|
| 797,757 |
|
|
| - |
|
|
| - |
|
|
| 797,757 |
|
Plate |
|
| 372,837 |
|
|
| - |
|
|
| - |
|
|
| 372,837 |
|
|
| 1,438,651 |
|
|
| - |
|
|
| - |
|
|
| 1,438,651 |
|
|
| 290,645 |
|
|
| - |
|
|
| - |
|
|
| 290,645 |
|
|
| 718,321 |
|
|
| - |
|
|
| - |
|
|
| 718,321 |
|
Tubular Products |
|
| - |
|
|
| 296,519 |
|
|
| - |
|
|
| 296,519 |
|
|
| - |
|
|
| 919,711 |
|
|
| - |
|
|
| 919,711 |
|
|
| - |
|
|
| 250,311 |
|
|
| - |
|
|
| 250,311 |
|
|
| - |
|
|
| 555,368 |
|
|
| - |
|
|
| 555,368 |
|
Rebar Fabrication |
|
| - |
|
|
| 469,180 |
|
|
| - |
|
|
| 469,180 |
|
|
| - |
|
|
| 1,249,912 |
|
|
| - |
|
|
| 1,249,912 |
|
|
| - |
|
|
| 413,916 |
|
|
| - |
|
|
| 413,916 |
|
|
| - |
|
|
| 837,232 |
|
|
| - |
|
|
| 837,232 |
|
Other Steel Products |
|
| - |
|
|
| 1,054,660 |
|
|
| - |
|
|
| 1,054,660 |
|
|
| - |
|
|
| 3,055,441 |
|
|
| - |
|
|
| 3,055,441 |
|
|
| - |
|
|
| 858,941 |
|
|
| - |
|
|
| 858,941 |
|
|
| - |
|
|
| 1,857,422 |
|
|
| - |
|
|
| 1,857,422 |
|
Raw Materials |
|
| - |
|
|
| - |
|
|
| 399,670 |
|
|
| 399,670 |
|
|
| - |
|
|
| - |
|
|
| 1,334,726 |
|
|
| 1,334,726 |
|
|
| - |
|
|
| - |
|
|
| 290,177 |
|
|
| 290,177 |
|
|
| - |
|
|
| - |
|
|
| 668,390 |
|
|
| 668,390 |
|
|
| $ | 3,244,473 |
|
| $ | 1,820,359 |
|
| $ | 399,670 |
|
| $ | 5,464,502 |
|
| $ | 10,897,322 |
|
| $ | 5,225,064 |
|
| $ | 1,334,726 |
|
| $ | 17,457,112 |
|
| $ | 2,513,961 |
|
| $ | 1,523,168 |
|
| $ | 290,177 |
|
| $ | 4,327,306 |
|
| $ | 6,033,231 |
|
| $ | 3,250,022 |
|
| $ | 668,390 |
|
| $ | 9,951,643 |
|
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 $114.3$159.2 million as of OctoberJuly 3, 20202021 ($108.6120.2 million as of December 31, 2019)2020), and are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.
17.16. Earnings Per Share
The computations of basic and diluted net earnings per share for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 are as follows (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 |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Basic net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings |
| $ | 193,415 |
|
| $ | 275,031 |
|
| $ | 322,627 |
|
| $ | 1,163,320 |
|
| $ | 1,506,868 |
|
| $ | 108,881 |
|
| $ | 2,449,300 |
|
| $ | 129,212 |
|
Earnings allocated to participating securities |
|
| (1,201 | ) |
|
| (1,655 | ) |
|
| (2,182 | ) |
|
| (6,295 | ) |
|
| (6,676 | ) |
|
| (792 | ) |
|
| (12,426 | ) |
|
| (1,423 | ) |
Net earnings available to common stockholders |
| $ | 192,214 |
|
| $ | 273,376 |
|
| $ | 320,445 |
|
| $ | 1,157,025 |
|
| $ | 1,500,192 |
|
| $ | 108,089 |
|
| $ | 2,436,874 |
|
| $ | 127,789 |
|
Basic average shares outstanding |
|
| 303,394 |
|
|
| 304,637 |
|
|
| 303,072 |
|
|
| 305,553 |
|
|
| 296,817 |
|
|
| 302,921 |
|
|
| 299,359 |
|
|
| 302,915 |
|
Basic net earnings per share |
| $ | 0.63 |
|
| $ | 0.90 |
|
| $ | 1.06 |
|
| $ | 3.79 |
|
| $ | 5.05 |
|
| $ | 0.36 |
|
| $ | 8.14 |
|
| $ | 0.42 |
|
Diluted net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings |
| $ | 193,415 |
|
| $ | 275,031 |
|
| $ | 322,627 |
|
| $ | 1,163,320 |
|
| $ | 1,506,868 |
|
| $ | 108,881 |
|
| $ | 2,449,300 |
|
| $ | 129,212 |
|
Earnings allocated to participating securities |
|
| (1,202 | ) |
|
| (1,656 | ) |
|
| (2,182 | ) |
|
| (6,295 | ) |
|
| (6,649 | ) |
|
| (792 | ) |
|
| (12,385 | ) |
|
| (1,423 | ) |
Net earnings available to common stockholders |
| $ | 192,213 |
|
| $ | 273,375 |
|
| $ | 320,445 |
|
| $ | 1,157,025 |
|
| $ | 1,500,219 |
|
| $ | 108,089 |
|
| $ | 2,436,915 |
|
| $ | 127,789 |
|
Diluted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic average shares outstanding |
|
| 303,394 |
|
|
| 304,637 |
|
|
| 303,072 |
|
|
| 305,553 |
|
|
| 296,817 |
|
|
| 302,921 |
|
|
| 299,359 |
|
|
| 302,915 |
|
Dilutive effect of stock options and other |
|
| 47 |
|
|
| 343 |
|
|
| 27 |
|
|
| 476 |
|
|
| 712 |
|
|
| 12 |
|
|
| 379 |
|
|
| 17 |
|
|
|
| 303,441 |
|
|
| 304,980 |
|
|
| 303,099 |
|
|
| 306,029 |
|
|
| 297,529 |
|
|
| 302,933 |
|
|
| 299,738 |
|
|
| 302,932 |
|
Diluted net earnings per share |
| $ | 0.63 |
|
| $ | 0.90 |
|
| $ | 1.06 |
|
| $ | 3.78 |
|
| $ | 5.04 |
|
| $ | 0.36 |
|
| $ | 8.13 |
|
| $ | 0.42 |
|
The following stock options were excluded from the computation of diluted net earnings per share for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 because their effect would have been anti-dilutive (shares in thousands):
|
| Three Months (13 Weeks) Ended |
|
| Nine Months (39 Weeks) Ended |
|
| Three Months (13 Weeks) Ended |
|
| Six Months (26 Weeks) Ended |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Anti-dilutive stock options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares |
|
| 3,463 |
|
|
| 963 |
|
|
| 3,638 |
|
|
| 963 |
|
|
| 52 |
|
|
| 3,749 |
|
|
| 152 |
|
|
| 3,724 |
|
Weighted-average exercise price |
| $ | 51.38 |
|
| $ | 60.92 |
|
| $ | 51.15 |
|
| $ | 60.92 |
|
| $ | 110.74 |
|
| $ | 50.69 |
|
| $ | 73.47 |
|
| $ | 51.04 |
|
1716
18. Restricted Cash and Cash Equivalents
As of October 3, 2020, restricted cash and cash equivalents totaled $131.6 million, and primarily consisted of net proceeds from the issuance of $162.6 million in 40-year variable-rate Green Bonds in July 2020. The restricted cash and cash equivalents are held in a trust account and are to be used to partially fund the capital costs, in particular the expenditures associated with pollution prevention and control including waste recycling, associated with the construction of Nucor’s plate mill located in Brandenburg, Kentucky. Funds are disbursed from the trust account as qualified expenditures for the construction of the Brandenburg facility are made ($31.0 million in the third quarter of 2020). Interest earned on funds held in the trust account is subject to the same usage requirements as the bond proceeds principle. Since the restricted cash and interest and dividends must be used for the construction of the Brandenburg facility and relate to a long-term liability, the entire balance has been classified as a non-current asset.
19. Debt17. Subsequent Events
In May 2020,On August 9, 2021, Nucor issued $500.0 millionacquired Cornerstone Building Brands, Inc.’s insulated metal panels (“IMP”) business for a cash purchase price of 2.000% Notes due 2025 and $500.0 million of 2.700% Notes due 2030. Net proceeds of the issuances were $989.4 million. Costs of $8.4 million associated with the issuances have been capitalizedapproximately $1 billion, subject to customary adjustments. The Company believes this acquisition is strategically important and will be amortized overbroaden value-added solutions Nucor is able to provide to targeted end markets as the lifeuse of IMP products reduce energy usage and overall operations-related greenhouse gas emissions. The IMP business Nucor is acquiring has 7 manufacturing facilities located throughout North America. These locations will complement the notes.footprint of Nucor Buildings as well as the Company’s existing IMP business, Truecore.
In On July 2020,20, 2021, Nucor announced it had entered into an agreement to purchase Hannibal Industries, Inc. for a cash purchase price of approximately $370 million. Hannibal Industries is a leading national provider of steel racking solutions to warehouses and serves the e-commerce, industrial, food storage and retail segments. Hannibal Industries has manufacturing facilities in Los Angeles and Houston, as well as 3 distribution centers. The Company believes this acquisition is strategically important as it further deepens our ability to serve warehouse and distribution customers. We expect this transaction to close in August of 2021.
On August 4, 2021, Nucor became an obligor with respect to $162.6$197.0 million in 40-year40-year variable-rate Green Bonds to partially fund the capital costs, in particular the expenditures associated with pollution prevention and control including(including waste recycling associated withand waste reduction), of the construction of Nucor’s plate mill located in Brandenburg, Kentucky. The net proceeds from the debt issuance are being held in a trust account pending disbursement for the construction of the facility.
20. Subsequent Event
Subsequent tofacility and will be accounted for as restricted cash. Funds will be disbursed from the endtrust account as qualified expenditures for the construction of the third quarter of 2020, we received certification of state income tax credits that will result in an approximately $40 million net benefit to our provision for income taxes in the fourth quarter of 2020.Brandenburg facility are made.
1817
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements made in this Quarterly Report on Form 10-Q, 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 subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and 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 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 result in a delay or cancellation 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 United States, as well as prevailing domestic prices for oil and gas;States; (7) impairment in the recorded value of inventory, equity investments, fixed assets, goodwill or other long-lived assets; (8) uncertainties surrounding the global economy, including excess world capacity for steel production; (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; (13) our safety performance; (14) the impact of the COVID-19 pandemic;pandemic and any variants of the virus; and (15) the risks discussed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and in “Item 1A. Risk Factors” of this report2020 and elsewhere herein.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 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 and “Item 1A. Risk Factors” 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 Form 10-K for the year ended December 31, 2019.2020.
Overview
Nucor and its affiliates manufacture steel and steel products. Nucor also produces DRI for use in its steel mills. Through DJJ, the Company also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron 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 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 businesses; rebar distribution businesses; and Nucor’s equity method investments in Duferdofin Nucor, NuMit and Nucor-JFE. 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, steel grating, tubular products businesses, piling products business, and wire and wire mesh. The raw materials segment includes DJJ, primarily a scrap broker and processor; Nu-Iron Unlimited and NSLA,Nucor Steel Louisiana, two facilities that produce DRI used by the steel mills; and our natural gas production operations.related assets.
On August 9, 2021, Nucor acquired Cornerstone Building Brands, Inc.’s IMP business for a cash purchase price of approximately $1 billion, subject to customary adjustments. The Company believes this acquisition is strategically compelling and will broaden the value-added solutions that Nucor Buildings Group provides to targeted end markets such as warehousing, distribution and data centers. We expect these end-use markets to continue to grow in the coming years
18
and that the use of IMP products within them will also increase. IMPs facilitate cost-effective climate control in the built environment and reduce energy usage and overall operations-related greenhouse gas emissions for owners and lessees. The IMP business Nucor is acquiring is comprised of two industry leading brands, CENTRIA and Metl-Span, and has seven manufacturing facilities located throughout North America, complementing the Company’s existing IMP business, Truecore.
In addition, Nucor announced during July 2021 that it had entered into an agreement to purchase Hannibal Industries, Inc. for a cash purchase price of approximately $370 million. Hannibal Industries is a leading national provider of steel racking solutions to warehouses. We expect that Hannibal Industries’ business, serving customers in the e-commerce, industrial, food storage and retail segments, will also continue to grow in the coming years. Hannibal Industries has manufacturing facilities in Los Angeles and Houston, as well as three distribution centers. We expect this transaction to close in August of 2021.
Together, the Cornerstone Building Brands and Hannibal Industries acquisitions reflect Nucor’s strategy to target the fastest growing segments of steel intensive construction markets.
The average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 80%96%, 71%76% and 65%77%, respectively, in the first ninesix months of 20202021 compared with approximately 85%79%, 71%69% and 70%62%, respectively, in the first ninesix months of 2019.
19
COVID-19 Update
The COVID-19 pandemic continues to impact Nucor’s operations and we believe it is currently the most significant ongoing event impacting almost all aspects of our business. Our most important value is the health and safety of our teammates, their families and the communities where we operate. We have formed several internal task forces to closely monitor developments related to the pandemic and provide guidance to Nucor facilities. Our facilities around the country are each taking steps to respond to COVID-19 based on the nature of their operations and the actions being taken by their state and local governments. We have restricted travel, upgraded the cleaning practices at our facilities and offices, implemented remote work arrangements for teammates wherever possible, and instituted social distancing measures throughout the Company. Across Nucor, we remain committed to protecting our teammates while minimizing disruptions to our customers and supply chain.2020.
Results of Operations
For the second quarter in a row, Nucor reported the most profitable quarter in the Company’s history. The Company reported record consolidated net earnings of $193.4 million,$1.51 billion, or $0.63$5.04 per diluted share, forin the thirdsecond quarter of 2020 and $322.62021. This surpassed the previous quarterly record for consolidated net earnings of $942.4 million, or $1.06$3.10 per diluted share, for the first nine months of 2020. These are significant decreases when compared to the respective prior year periods in which we reported net earnings of $275.0 million, or $0.90 per diluted share, for the third quarter of 2019 and $1.16 billion, or $3.78 per diluted share, for the first nine months of 2019. The major factor driving the decreased 2020 performance has been the ongoing COVID-19 pandemic that began to impact the domestic economy and our business latewas set in the first quarter of 2020.2021.
Third quarter of 2020 net earnings of $193.4 million, or $0.63 per diluted share, is an increase comparedAll three operating segments continued to generate robust profitability in the second quarter of 20202021. The steel mills segment and the steel products segment set new records for profitability in the second quarter of 2021, surpassing the previous record that was set in the first quarter of 2021. Overall strong demand across most of the end markets we serve is supporting higher average selling prices. In the steel mills segment, the greatest improvement in profitability in the second quarter of 2021 as compared to the first quarter of 2021 came from our sheet and plate mills. Our steel products segment continues to benefit from strong demand in nonresidential construction markets. Backlogs for our steel mills and steel products segments remain strong, which we believe indicates that these strong market conditions will continue into the third quarter of 2021. We expect the Company to set a new record for quarterly earnings in the third quarter of 2021.
Nucor reported consolidated net earnings of $108.9 million, or $0.36 per diluted share. Utilization rates reboundedshare, in the thirdsecond quarter of 2020, which were the lowest quarterly earnings that the Company reported in 2020. The onset of the COVID-19 pandemic late in the first quarter of 2020 had a major negative impact on the markets that we serve in the second quarter of 2020, causing customer production disruptions and generally lower shipment activity. However, nonresidential construction markets remained resilient, and conditions in the other markets we serve recovered over the remainder of 2020. The strong demand generated by the recovery combined with lean inventory levels across supply chains contributed to the dramatic increase in average selling prices in the second quarter of 2021 as compared to the second quarter of 2020. The average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 83%, 75% and 69%, respectively, in the third quarter of 2020 compared with approximately 68%, 66% and 51%, respectively, in the second quarter of 2020. Nonresidential construction markets have been resilient during the pandemic and remained strong in the third quarter of 2020. The strength of nonresidential construction markets in the third quarter of 2020 benefited our bar and structural mills in the steel mills segment and spurred our steel products segment to another strong quarter. Market conditions for our sheet and plate mills in the steel mills segment remained challenged in the third quarter of 2020, but we currently expect improved performance in the fourth quarter of 2020 due to positive pricing momentum in sheet and plate markets.
The following discussion will provide greater quantitative and qualitative analysis of Nucor’s performance in the thirdsecond quarter and first ninesix months of 20202021 as compared to the respective prior year periods.second quarter and first six months of 2020.
Net Sales
Net sales to external customers by segment for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 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 | ||||||||||||||||
|
| Oct. 3, 2020 |
| Sept. 28, 2019 |
| % Change |
| Oct. 3, 2020 |
| Sept. 28, 2019 |
| % Change |
| July 3, 2021 |
| July 4, 2020 |
| % Change |
| July 3, 2021 |
| July 4, 2020 |
| % Change |
Steel mills |
| $2,842,625 |
| $3,244,473 |
| -12% |
| $8,875,856 |
| $10,897,322 |
| -19% |
| $5,909,909 |
| $2,513,961 |
| 135% |
| $10,518,686 |
| $6,033,231 |
| 74% |
Steel products |
| 1,738,004 |
| 1,820,359 |
| -5% |
| 4,988,026 |
| 5,225,064 |
| -5% |
| 2,241,107 |
| 1,523,168 |
| 47% |
| 4,051,162 |
| 3,250,022 |
| 25% |
Raw materials |
| 347,331 |
| 399,670 |
| -13% |
| 1,015,721 |
| 1,334,726 |
| -24% |
| 638,148 |
| 290,177 |
| 120% |
| 1,236,456 |
| 668,390 |
| 85% |
Total net sales |
| $4,927,960 |
| $5,464,502 |
| -10% |
| $14,879,603 |
| $17,457,112 |
| -15% |
| $8,789,164 |
| $4,327,306 |
| 103% |
| $15,806,304 |
| $9,951,643 |
| 59% |
Net sales for the thirdsecond quarter of 2020 decreased 10%2021 increased 103% from the thirdsecond quarter of 2019.2020. Average sales price per ton decreased 7%increased 49% from $834$790 in the thirdsecond quarter of 20192020 to $774$1,175 in the thirdsecond quarter of 2020.2021. Total tons shipped to outside customers in the thirdsecond quarter of 20202021 were 6,367,0007,482,000 tons, a 3% decrease37% increase from the thirdsecond quarter of 2019.2020.
19
Net sales for the first ninesix months of 2020 decreased 15%2021 increased 59% from the first ninesix months of 2019.2020. Average sales price per ton decreased 10%increased 37% from $871$786 in the first ninesix months of 20192020 to $782$1,078 in the first ninesix months of 2020.2021. Total tons shipped to outside customers in the first ninesix months of 20202021 were 19,033,000 tons,14,658,000, a 5% decrease16% increase from the first ninesix months of 2019.2020.
20
In the steel mills segment, sales tons for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 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 | ||||||||||||||||
|
| Oct. 3, 2020 |
| Sept. 28, 2019 |
| % Change |
| Oct. 3, 2020 |
| Sept. 28, 2019 |
| % Change |
| July 3, 2021 |
| July 4, 2020 |
| % Change |
| July 3, 2021 |
| July 4, 2020 |
| % Change |
Outside steel shipments |
| 4,442 |
| 4,559 |
| -3% |
| 13,382 |
| 14,013 |
| -5% |
| 5,356 |
| 3,758 |
| 43% |
| 10,546 |
| 8,940 |
| 18% |
Inside steel shipments |
| 1,184 |
| 1,229 |
| -4% |
| 3,511 |
| 3,564 |
| -1% |
| 1,378 |
| 1,011 |
| 36% |
| 2,732 |
| 2,327 |
| 17% |
Total steel shipments |
| 5,626 |
| 5,788 |
| -3% |
| 16,893 |
| 17,577 |
| -4% |
| 6,734 |
| 4,769 |
| 41% |
| 13,278 |
| 11,267 |
| 18% |
Net sales for the steel mills segment decreased 12%increased 135% in the thirdsecond quarter of 20202021 from the thirdsecond quarter of 2019,2020, due primarily to a 10% decrease65% increase in the average sales price per ton from $711$672 to $639 and$1,107 as well as a 3% decrease43% increase in tons sold to outside customers. Average selling prices decreasedincreased across all product groups within the steel mills segment in the thirdsecond quarter of 20202021 as compared to the thirdsecond quarter of 2019.2020.
Net sales for the steel mills segment decreased 19%increased 74% in the first ninesix months of 2021 from the first six months of 2020, from the first nine months of 2019, due to a 14% decrease48% increase in the average sales price per ton from $677 to $1,001 and a 5% decreasean 18% increase in tons sold to outside customers.
Outside sales tonnage for the steel products segment for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 was as follows (in thousands):
|
| Three Months (13 Weeks) Ended |
| Nine Months (39 Weeks) Ended | ||||||||
|
| Oct. 3, 2020 |
| Sept. 28, 2019 |
| % Change |
| Oct. 3, 2020 |
| Sept. 28, 2019 |
| % Change |
Joist |
| 153 |
| 133 |
| 15% |
| 406 |
| 359 |
| 13% |
Deck |
| 129 |
| 132 |
| -2% |
| 365 |
| 354 |
| 3% |
Cold finish |
| 99 |
| 116 |
| -15% |
| 300 |
| 390 |
| -23% |
Rebar fabrication |
| 328 |
| 342 |
| -4% |
| 948 |
| 929 |
| 2% |
Piling products |
| 186 |
| 160 |
| 16% |
| 522 |
| 462 |
| 13% |
Tubular products |
| 280 |
| 272 |
| 3% |
| 816 |
| 780 |
| 5% |
Other steel products |
| 92 |
| 107 |
| -14% |
| 278 |
| 303 |
| -8% |
Total steel products |
| 1,267 |
| 1,262 |
| - |
| 3,635 |
| 3,577 |
| 2% |
|
| Three Months (13 Weeks) Ended |
| Six Months (26 Weeks) Ended | ||||||||
|
| July 3, 2021 |
| July 4, 2020 |
| % Change |
| July 3, 2021 |
| July 4, 2020 |
| % Change |
Joist sales |
| 167 |
| 122 |
| 37% |
| 339 |
| 253 |
| 34% |
Deck sales |
| 130 |
| 111 |
| 17% |
| 265 |
| 236 |
| 12% |
Cold finished sales |
| 128 |
| 75 |
| 71% |
| 260 |
| 201 |
| 29% |
Rebar fabrication sales |
| 338 |
| 309 |
| 9% |
| 620 |
| 620 |
| - |
Piling products sales |
| 171 |
| 156 |
| 10% |
| 307 |
| 336 |
| -9% |
Tubular products sales |
| 269 |
| 249 |
| 8% |
| 519 |
| 536 |
| -3% |
Other steel products sales |
| 109 |
| 87 |
| 25% |
| 209 |
| 186 |
| 12% |
Total steel products sales |
| 1,312 |
| 1,109 |
| 18% |
| 2,519 |
| 2,368 |
| 6% |
Net sales for the steel products segment decreased 5%increased 47% in the thirdsecond quarter of 2021 compared to the second quarter of 2020, compared to the third quarter of 2019, due to a 5% decrease24% increase in the average sales price per ton from $1,442$1,372 to $1,371.$1,708 and an 18% increase in tons sold to outside customers. Average selling prices decreasedincreased across all businesses within the steel products segment in the thirdsecond quarter of 20202021 as compared to the thirdsecond quarter of 2019.2020, most notably at our tubular products businesses.
Net sales for the steel products segment decreased 5%increased 25% in the first ninesix months of 20202021 compared to the first ninesix months of 2019,2020, due primarily to a 6% decrease17% increase in the average sales price per ton from $1,461$1,372 to $1,372 which was partially offset by$1,608 and a 2%6% increase in tons sold to outside customers. Average selling prices decreasedincreased across mostall businesses within the steel products segment in the first ninesix months of 20202021 as compared to the first ninesix months of 2019, with the exception being2020, most notably at our rebar fabrication business.tubular products businesses.
Net sales for the raw materials segment decreased 13%increased 120% and 24%85% in the thirdsecond quarter and first ninesix months of 2020,2021, respectively, from the same prior year periods. The decreasesincreases were primarily due to decreasedincreased average selling prices and volumes at DJJ’s brokerage operations and decreased volumes at both DJJ’s scrap processing and brokerage operations. In the thirdsecond quarter of 2020,2021, approximately 90% of outside sales for the raw materials segment were from the brokerage operations of DJJ, and approximately 9% of outside sales were from the scrap processing operations of DJJ (89% and 8%, respectively, in the second quarter of 2020). In the first six months of 2021, approximately 89% of outside sales for the raw materials segment were from the brokerage operations of DJJ, and approximately 9% of outside sales were from the scrap processing operations of DJJ (89%(88% and 10%, respectively, in the third quarter of 2019). In the first nine months of 2020, approximately 89% of outside sales for the raw materials segment were from the brokerage operations of DJJ, and approximately 9% of outside sales were from the scrap processing operations of DJJ (90% and 9%8%, respectively, in the first ninesix months of 2019)2020).
20
Gross Margins
Nucor recorded gross margins of $502.2 million (10%$2.47 billion (28%) in the thirdsecond quarter of 2020 and $572.52021, which was a significant increase compared with $378.0 million (10%(9%) in the thirdsecond quarter of 2019.
21
2020.
| • | The primary driver for the |
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 second quarter of 2021 was $457, a 61% increase compared to $284 in the second quarter of 2020. The increase in the average scrap and scrap substitute cost per gross ton used was more than offset by the previously mentioned increases in average selling prices and volumes.
Scrap prices are driven by the global supply and demand for scrap and other iron-based raw materials used to make steel. AsScrap prices have increased dramatically since the beginning of 2021 and we expect continued strong demand for scrap and volatility in scrap prices as we begin the fourth quarter of 2020, we currently expect a stable outlook for scrap prices.
third quarter.
| • | Pre-operating and start-up costs of new facilities |
| • | Gross margins in the steel products segment increased in the |
| • | Gross margins in the raw materials segment significantly increased in the |
Nucor recorded gross margins of $1.51$4.10 billion (26%) in the first six months of 2021, which was a significant increase compared with $1.01 billion (10%) in the first ninesix months of 2020, which was a decrease compared with $2.24 billion (13%) in the first nine months of 2019.2020.
| • | The primary driver for the |
| • | Pre-operating and start-up costs of new facilities |
| • | Gross margins in the steel products segment increased in the first |
| • | Gross margins in the raw materials segment |
21
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, decreasedincreased by $9.8$215.5 million in the thirdsecond quarter of 2021 as compared to thesecond quarter of 2020, as compared to the third quarter of 2019, and decreasedincreased by $121.0$351.5 million in the first ninesix months of 20202021 as compared to the first ninesix months of 2019.2020. These decreasesincreases were due to Nucor’s decreasedincreased profitability in the thirdsecond quarter and first ninesix months of 20202021 as compared to the respective prior year periods, which resulted in significantly decreasedincreased accruals related to profit sharing.
IncludedEquity in marketing, administrative and other expenses in the first nine months(Earnings) Losses of 2020 was $18.2 million of restructuring charges related to the realignment of Nucor’s metal buildings business in the steel products segment. Of that amount, $16.4 million was recorded in the third quarter of 2020. Included in marketing, administrative and other expenses in the first nine months of 2019 was a benefit of $33.7 million related to the gain on the sale of an equity method investment in the raw materials segment.
22
Table of ContentsUnconsolidated Affiliates
Equity in Losses (Earnings) of Unconsolidated Affiliates
Equity in(earnings) losses (earnings) of unconsolidated affiliates was $(0.5)$(19.4) million and $1.6$14.1 million in the thirdsecond quarter of 2021 and 2020, respectively, and 2019,$(32.6) million and $14.9 million in the first six months of 2021 and 2020, respectively. The increase in equity method investment earnings waswere primarily due to the improved results of NuMit.
Equity in losses (earnings) of unconsolidated affiliates was $14.4 million and $(2.5) million in the first nine months of 2020 and 2019, respectively. The decrease in equity method investmentincreased earnings was primarily due to decreased results ofat NuMit and decreased losses at Nucor-JFE.
Losses on Assets
Included in the first ninesix months of 2021 earnings was a non-cash loss on assets of $42.0 million related to our leasehold interest in unproved oil and natural gas properties in the raw materials segment. Also included in the first six months of 2021 earnings were losses on assets of $9.0 million in the steel products segment.
Included in the first six months of 2020 earnings were losses on assets of $299.5$292.8 million related to our equity method investment in Duferdofin Nucor.Nucor S.r.l. (“Duferdofin Nucor”) that we have since exited. Nucor determined that a triggering event occurred in the first quarter of 2020 due to adverse developments in the joint venture’s commercial outlook, which have beenwere exacerbated by the COVID‐19 pandemic, all of which have negatively impacted the joint venture’s strategic direction.
As a part of the losses on assets, Nucor recorded a non‐cash impairment charge of $261.6 million on its equity method investment in Duferdofin Nucor that is included in the steel mills segment earnings. Additionally, the Company recorded a $37.9 million charge to fully reserve its outstanding note receivable from Duferdofin Nucor. This impact is recorded in the Corporate/eliminations line.
Interest Expense (Income)
Net interest expense for the thirdsecond quarter and first ninesix months of 20202021 and 20192020 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 |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Interest expense |
| $ | 42,281 |
|
| $ | 40,721 |
|
| $ | 128,726 |
|
| $ | 119,736 |
|
| $ | 37,661 |
|
| $ | 38,849 |
|
| $ | 78,631 |
|
| $ | 86,445 |
|
Interest income |
|
| (2,142 | ) |
|
| (9,435 | ) |
|
| (11,870 | ) |
|
| (26,977 | ) |
|
| (1,881 | ) |
|
| (3,042 | ) |
|
| (3,207 | ) |
|
| (9,728 | ) |
Interest expense, net |
| $ | 40,139 |
|
| $ | 31,286 |
|
| $ | 116,856 |
|
| $ | 92,759 |
|
| $ | 35,780 |
|
| $ | 35,807 |
|
| $ | 75,424 |
|
| $ | 76,717 |
|
Interest expense increaseddecreased in the thirdsecond quarter and first six months of 20202021 compared to the thirdsecond quarter and first six months of 20192020 due primarily to increasedthe lower average interest rates on debt outstanding. Interest expense increasedand an increase in capitalized interest in the first ninesix months of 2020 compared to the first nine months of 2019 due to decreased capitalized interest and increased average debt outstanding.2021.
Interest income decreased in the thirdsecond quarter and first ninesix months of 2020 as2021 compared to the thirdsecond quarter and first ninesix months of 20192020 due to a decrease in average interest rates on investments.
Earnings (Loss) Before Income Taxes and Noncontrolling Interests
The following table presents earningsEarnings (loss) before income taxes and noncontrolling interests by segment for the thirdsecond quarter and first ninesix months of 2021 and 2020 and 2019were as follows (in thousands). The changes between periods were driven by the quantitative and qualitative factors previously discussed.
|
| Three Months |
|
| Nine Months |
|
| Three Months |
|
| Six Months |
| ||||||||||||||||||||
|
| (13 Weeks) Ended |
|
| (39 Weeks) Ended |
|
| (13 Weeks) Ended |
|
| (26 Weeks) Ended |
| ||||||||||||||||||||
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| Oct. 3, 2020 |
|
| Sept. 28, 2019 |
|
| July 3, 2021 |
|
| July 4, 2020 |
|
| July 3, 2021 |
|
| July 4, 2020 |
| ||||||||
Steel mills |
| $ | 205,152 |
|
| $ | 309,939 |
|
| $ | 512,082 |
|
| $ | 1,578,257 |
|
| $ | 2,174,807 |
|
| $ | 150,424 |
|
| $ | 3,489,781 |
|
| $ | 306,930 |
|
Steel products |
|
| 186,976 |
|
|
| 170,214 |
|
|
| 502,409 |
|
|
| 363,731 |
|
|
| 259,330 |
|
|
| 152,874 |
|
|
| 471,142 |
|
|
| 315,433 |
|
Raw materials |
|
| 6,232 |
|
|
| (10,599 | ) |
|
| (3,068 | ) |
|
| 64,333 |
|
|
| 120,143 |
|
|
| (1,389 | ) |
|
| 343,378 |
|
|
| (9,300 | ) |
Corporate/eliminations |
|
| (107,942 | ) |
|
| (89,215 | ) |
|
| (393,651 | ) |
|
| (401,744 | ) |
|
| (528,532 | ) |
|
| (120,852 | ) |
|
| (980,307 | ) |
|
| (285,709 | ) |
|
| $ | 290,418 |
|
| $ | 380,339 |
|
| $ | 617,772 |
|
| $ | 1,604,577 |
|
| $ | 2,025,748 |
|
| $ | 181,057 |
|
| $ | 3,323,994 |
|
| $ | 327,354 |
|
2322
Noncontrolling Interests
Noncontrolling interests represent the income attributable to the noncontrolling partners of Nucor’s joint ventures, primarily Nucor-Yamato Steel Company (Limited Partnership) (“NYS”)NYS of which Nucor owns 51%. The increase in earnings attributable to noncontrolling interests in the thirdsecond quarter and first ninesix months of 20202021 as compared to the thirdsecond quarter and first ninesix months of 2019 2020 was mainlyprimarily due to the result of the higherincreased earnings of NYS, which was due toa result of the increased sales volume in the first nine months of 2020 as compared to the first nine months of 2019.metal margins. 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 ninesix months of 2020, 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 amount of cash distributed to partners was less than the cumulative net earnings of the partnership.partners.
Provision for Income Taxes
Theeffective tax rate for the thirdsecond quarter of 2021 was 22.4% compared to 26.5% for the second quarter of 2020. The effective tax rate for the second quarter of 2020 was 23.3% as comparedelevated, relative to 22.8% for the thirdsecond quarter of 2019.2021, primarily due to a $5.3 million unfavorable non-cash, out-of-period adjustment to deferred tax balances. The out-of-period adjustment was not material to any previously reported period. The expected effective tax rate for the full year of 20202021 is approximately 31.5% as compared to 23.1% for the full year of 2019. The increase in the expected effective tax rate for the full year of 2020 as compared to the rate for the full year of 2019 is primarily due to the $261.6 million financial statement impairment of our equity method investment in Duferdofin Nucor in the first nine months of 2020. The impairment has no corresponding impact to the provision for income taxes..
We estimate that in the next 12 months our gross unrecognized tax benefits, which totaled $51.1$59.5 million at OctoberJuly 3, 2020,2021, exclusive of interest, could decrease by as much as $6.2$5.4 million as a result of the expiration of the statute of limitations and closures of examinations, substantially all of which would impact the effective tax rate.
Nucor has concluded U.S. federal income tax matters for tax years through 2016, except2014 and for 2015.tax year 2016. The tax years 2015 and 2017 through 2019 remain open to examination by the Internal Revenue Service. The 2015 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 20132014 through 20192020 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions). From time to time in the ordinary course of business, Nucor is involved in tax disputes with federal, state and local taxing jurisdictions, which are, individually and in the aggregate, immaterial to Nucor.
Net Earnings Attributable to Nucor Stockholders and Return on Equity
Nucor reported consolidated net earnings of $193.4 million,$1.51 billion, or $0.63$5.04 per diluted share, in the thirdsecond quarter of 20202021 as compared to consolidated net earnings of $275.0$108.9 million, or $0.90$0.36 per diluted share, in the thirdsecond quarter of 2019.2020. Net earnings attributable to Nucor stockholders as a percentage of net sales were 4%17.1% and 5%2.5% in the thirdsecond quarter of 2021 and 2020, and 2019, respectively.
Nucor reported consolidated net earnings of $322.6 million,$2.45 billion, or $1.06$8.13 per diluted share, in the first ninesix months of 20202021 as compared to consolidated net earnings of $1.16 billion,$129.2 million, or $3.78$0.42 per diluted share, in the first ninesix months of 2019.2020. Net earnings attributable to Nucor stockholders as a percentage of net sales were 2%15.5% and 7%1.3% in the first ninesix months of 2021 and 2020, and 2019, respectively. Annualized return on average stockholders’ equity was 4%42.5% and 15%2.5% in the first ninesix months of 2021 and 2020, and 2019, respectively.
Outlook
The ongoing COVID-19 pandemic continues to cause uncertainty, making it difficult to accurately forecast future market conditions and demand trends. While many of the markets Nucor serves have typically experienced a seasonal slowdown in the fourth quarter, the Company expects higher
Outlook
We expect earnings in the fourth quarter of 2020 as compared to the third quarter of 2020 due primarily2021 to improved pricing at our sheet and plate mills.be the highest quarterly earnings in Nucor also expectshistory, surpassing the raw materials segment's earnings torecord set in the second quarter of 2021. The primary drivers for the expected increase in the fourth quarter of 2020 as compared toearnings in the third quarter of 2020 due2021 are improved pricing and margins in the steel mills segment. We expect increased profitability across the steel mills segment, with the largest increase at our sheet mills. The steel products segment and the raw materials segment are also expected to have increased earnings in the third quarter of 2021 compared to the improved margins at the Company's DRI facilities.second quarter of 2021.
Nucor’s largest exposure to market risk is via our steel mills and steel products segments. Our largest single customer in the thirdsecond quarter of 20202021 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 by the fact that our steel mills use a significant portion of the products of the raw materials segment.
24
Liquidity and Capital Resources
As a result of the COVID-19 pandemic and the significant uncertainty it will continue to have on Nucor and our stakeholders, we have instituted enterprise-wide efforts to enhance our liquidity and support our teammates, which include, among other things:
|
|
|
|
|
|
To further enhance our liquidity, Nucor took advantage of attractive market conditions during the second quarter of 2020 to issue low coupon debt in the form of long-term notes. In May, Nucor issued $500.0 million of 2.000% Notes due 2025 and $500.0 million of 2.700% Notes due 2030. Additionally, in July, Nucor became an obligor with respect to $162.6 million in 40-year variable-rate Green Bonds to partially fund the capital costs associated with the construction of our plate mill located in Brandenburg, Kentucky. Our credit ratings of an A- long-term rating from Standard & Poor’s and a Baa1 long-term rating from Moody’s were unchanged by these debt issuances.
Nucor operates a capital-intensive business in highly cyclical markets. We therefore attempt to utilize conservative financial practices that maximize our financial strength during economic downturns like the one we are currently experiencing that was caused byexperienced as a result of the COVID-19 pandemic. Our liquidity position, consisting of cash and cash equivalents, short-term investments and
23
restricted cash and cash equivalents, remained strong at $3.41$3.21 billion as of OctoberJuly 3, 2020.2021. Additionally, Nucor has no significant debt maturities until September 2022.
We believe that our conservative financial practices have served us well in the past and are serving us well today. Nucor’s strong liquidity position maximizes our flexibilityfinancial strength allows for prudent deployment of our capital. We have three prioritiesa consistent, balanced approach to allocating our capital.capital allocation throughout the business cycle. Nucor’s highest capital allocation priority is to reinvest in our business to ensure our continued profitable growth over the long term. We have historically done this by investing to optimize our existing operations, initiate greenfield expansions and make acquisitions. 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 supplement our base dividend with additional returns ofreturn capital to our stockholders when both our earningsthrough cash dividends and financial condition are strong.share repurchases. We still currently intend to return a minimum of 40% of our net earnings to our stockholders, while maintaining a debt-to-capital ratio that supports a strong investment grade credit rating. We will use stock repurchases or supplemental dividends to reach this 40% return level when our base dividend is not sufficient to meet this goal. The primary factor we will use to decide between share repurchases and supplemental dividends will be our assessment of the intrinsic value of a Nucor share. In September 2018,May 2021, Nucor’s Board of Directors approved a new share repurchase program under which authorized the Company is authorized to repurchase up to $2.00$3.00 billion of its common stock.stock and contemporaneously terminated any previously authorized share repurchase programs. As of OctoberJuly 3, 2020,2021, the Company had approximately $1.16$2.80 billion remaining available for share repurchases under the new program.
Cash provided by operating activities was $2.21$1.88 billion in the first ninesix months of 20202021 as compared to $2.12$1.35 billion in the prior year period. Net earnings in the first ninesix months of 2019. Net earnings declined2021 improved by $826.5 million$2.37 billion over the prior year period, which includedperiod. Included in the first six months of 2021 earnings was a $299.5 million non-cash loss on assets of $42.0 million related to our leasehold interest in unproved oil and natural gas properties in the raw materials segment. Included in the first six months of 2020 was a non-cash loss on assets of $292.8 million related to our previously held equity method investment in Duferdofin Nucor. The decreaseChanges in net earnings in the first nine months of 2020 as compared to the first nine months of 2019 was partially offset by a $528.3 million increase in cash provided by operating assets and operating liabilities in the same period. Changes in operating assets and liabilities (exclusive of acquisitions) providedresulted in a cash reduction of $693.2$1.27 billion in the first six months of 2021 compared with a cash increase of $331.2 million in the first ninesix months of 2020 as compared to $165.0 million in the prior year period.2020. The funding of our working capital in the first ninesix months of 2020 decreased2021 increased as compared to the first ninesix months of 20192020 mainly due to decreaseslarger increases in inventoryinventories and other current assets, specifically the federal income taxaccounts receivable, and an increase in other non-current liabilities, but also due to more moderate fluctuationspartially offset by changes in accounts receivablepayables and accounts payable from year-end 2019 toaccruals. Inventories increased almost one million tons, or 15%, at the end of the thirdsecond quarter of 2021 compared to year-end 2020, and the cost of scrap and scrap substitutes in our inventory increased 48% from year-end 2020. Inventories at the end of the second quarter of 2020 asdecreased by over one million tons, or 15%, compared to the same prior year period. Inventory reduction, especially scrap, was a particular focusyear-end 2019 due to uncertainty fromworking capital reduction initiatives focused on maintaining inventory levels at our anticipated near-term production requirements in response to the COVID-19 pandemic
25
Tablepandemic. Accounts receivable increased in the first six months of Contents
beginning2021 from year-end 2020 due to a 14% increase in tons shipped to outside customers and a 45% increase in composite sales price in the second quarter of 2020, and our investment in inventory2021 compared to the fourth quarter of 2020. Accounts receivable at the end of the thirdsecond quarter of 2020 continued to decline from prior quarter-end levels. As a result, inventories decreased by over 1.2 million tons, or 17%, in the third quarter of 2020 from the fourth quarter of 2019. The decrease in federal income tax receivable was mainly a function of the timing of federal tax payments. The increase in other non-current liabilities was mainly driven by an increase in deferred Social Security tax accruals permitted under the CARES Act. Also contributing to the increase in cash provided by operating assets and operating liabilities when comparing the first nine months of 2020 to the same prior year period was the more moderate cash outflow related to salaries, wages, and related accruals. The decrease in cash used to fund salaries, wages and related accruals in the first nine months of 2020 as compared to the first nine months of 2019 was due to the timing of incentive compensation payments and lower current year profit sharing accruals due to the decreased profitability of the Company. Cash provided by accounts receivable was more moderate in the first nine months of 2020 than in the first nine months of 2019. Accounts receivable decreased in the first nine months of 2019 from year-end 2018 due to an 11% decrease in composite sales price per ton, while composite sales price dropped only 2% from year-end 2019 to the end of the third quarter of 2020. Similarly, accounts payable provided cash of $15.4 million in the first nine months of 2020 as opposed to using cash of $180.4 million in the same prior year period. Accounts payable decreased from year-end 2018 to the end of the third quarter of 2019 due to an 18% declinea 16% decrease in average scrap and scrap substitutes cost per gross ton in inventory and an 8% decline in total inventory tons on hand, whereas accounts payable was flat from year-end 2019shipped to the end of the third quarter of 2020.outside customers.
The current ratio was 3.83.1 at the end of the thirdsecond quarter of 20202021 and 3.33.6 at year-end 2019.2020. The current ratio was positively impacteddecreased due to the following: a 49% decrease in other current assets, most notably, the federal income tax receivable; a 54% increase in accounts payable driven by the 79%previously discussed increased inventory costs; and an 84% increase in cash and cash equivalents and short-term investments and the 15% decrease in salaries, wages and related accruals partially offset bydue to increased profit sharing accruals resulting from the 15% decrease in inventory previously discussed. Theincreased earnings of the Company. Partially offsetting these items were a 48% and 47% increase in cashaccounts receivable and cash equivalents and short-term investments was a result of the debt issuance and robust cash provided by operations during the first nine months of 2020. The decrease in salaries, wages and related accruals wasinventories, respectively, due to the reasons cited above.previously discussed increases in inventory costs and selling prices. In the first ninesix months of both 2021 and 2020, accounts receivable turned approximately every 5.5five weeks and inventories turned approximately every 10 weeks, compared to approximately every 5.5 weeks and 11 weeks, respectively, in the first nine months of 2019.weeks.
Cash used in investing activities during the first ninesix months of 2020 was $1.33 billion as2021 of $681.4 million decreased compared to $1.17 billion in the prior year period.period of $714.9 million. Cash used for capital expenditures in the first ninesix months of 2020 increased2021 decreased by 20%10%, or $194.4$74.9 million, from the same period in 2019.2020. The higher levels ofprojects that had the largest capital expenditures through the first six months of 2021 were primarily related toassociated with the new microplate mill greenfield expansionunder construction in Frostproof, Florida, the flex galvanizing line at Nucor Steel Arkansas, andBrandenburg, Kentucky, the sheet mill expansion at Nucor Steel Gallatin. Also impacting cash usedGallatin, and the hot band galvanizing line at Nucor Steel Arkansas. The reduction in investing activitiescapital spending was partially offset by the net increase in purchases of investments (purchases less sales of investments) in the first ninesix months of 2020 was the purchase2021 of $402.0$43.0 million, of investments, as opposedcompared to $249.6 million in the prior year period, offset by proceeds from the sale of investments of $301.2 million.Additionally,period.
Cash used in financing activities for the first ninesix months of 2019 benefited from2021 was $1.16 billion as compared to cash provided by the divestiture of an affiliate of $67.6 million related to the sale of an equity method investment.
Cash provided by financing activities during the first nine months of 2020 was $596.6 million as compared to cash used in financing activities of $664.5$623.8 million in the prior year period. The majorityA significant component of this change related to was the issuance of $500.0 million of 2.000% Notes due 2025 and $500.0 million of 2.700% Notes due 2030 as well as Nucor becoming an obligor with respect to $162.6 million in 40-year variable-rate Green Bonds as discussed previously.the first six months of 2020. In addition, there were approximately $39.5$916.1 million of treasury stock repurchases in the first ninesix months of 2020 (none in the second or third quarter of 2020)2021 as compared to $197.5$39.5 million in the prior year period. Offsetting the increase in cash used for acquisition of stock in the first ninesix months of 2019. In the first quarter of 2020, one of the remarketing agents for Nucor’s industrial development revenue bonds (“IDRBs”) put a portion of two bonds to us, resulting in repayment of $32.0 million in long-term debt. We subsequently remarketed the bonds and received $32.0 million in proceeds. Nucor’s IDRBs are variable-rate, tax-exempt bonds which have interest rates that reset on a weekly basis through an ongoing remarketing process. We expect our bonds to be successfully placed with investors at the market driven rates in the future. However, there have been times in severe economic downturns, as2021 was the case during the first quarter of 2020 as a result of the economic impacts of COVID-19, that a remarketing agent is unable to remarket Nucor’s bonds successfully and is unwilling to temporarily hold the bonds. In that situation, which has been rare in our experience, it is possible that the bonds could be put back to us in the future. In this instance during the first quarter of 2020, the IDRBs were remarketed successfully in a short period of time. However, in the event of a prolonged failed remarketing, we have, among other options, availability under our $1.50 billion revolver credit facility to repurchase the IDRBs until they are remarketed successfully. In general, Nucor has the ability and intent to refinance the IDRB debt on a long-term basis, therefore we classify the IDRBs as a long-term liability. The remaining $65.2$128.8 million of debt that was repaid duringproceeds from the first nine monthsexercise of 2020 was related to a different tranche of Nucor’s IDRBs that was repurchased as part of our investment strategy and the payoff of a series of IDRBs that matured during the third quarter.stock options.
Nucor’s $1.50 billion revolving credit facility is undrawn and was amended and restated in April 2018 to extend the maturity date to April 2023. We believe our financial strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. We believe this was demonstratedNucor continues to have the strongest credit rating in the North American steel sector (Baa1/A-) with the second quarter of 2020 issuance of $500.0 million of 2.000% Notes due 2025stable outlooks at both Moody's and $500.0 million of 2.700% Notes due 2030, the coupon rates of which were the lowest in Nucor’s history for fixed-rate debt of those durations. We currently carry the highest credit ratings of
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any steel producer headquartered in North America, with an A- long-term rating from Standard & Poor’s and a Baa1 long-term rating from Moody’s.Poor'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
24
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.
Our credit facility includes only one financial covenant, which is a limit of 60% on the ratio of funded debt to total capitalization. In addition, the credit facility contains customary non-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 OctoberJuly 3, 2020,2021, our funded debt to total capital ratio was 34%29.8% and we were in compliance with all non-financial covenants under our credit facility. No borrowings were outstanding under the credit facility as of OctoberJuly 3, 2020.2021.
Although our business is capital intensive, we maintainOur financial strength allows a number of capital preservation options. Nucor’s robust capital investment and maintenance practices give us the flexibility to reduce spending by prioritizing our capital projects, potentially rescheduling certain projects and selectively allocating capital to investments with the greatest impact on our long-term earnings power. We have taken advantage of this flexibility in the current environment. Nucor originally estimatedcurrently estimates its 20202021 capital expenditures to be $2.00 billion, adjusted it to less than $1.50 billion at the end of the first quarter, and now estimates 2020 capital expenditures to be $1.70$1.80 billion. As previously mentioned, Nucor reviewed its capital spending budget and decided delay capitalThe projects that had not begun, briefly pause a few of our larger projects and continue with certain projects that are either close to completion or where work had been scheduled. We have made the decision to reaccelerate our investment in the Brandenburg, Kentucky plate mill and the expansion and modernization of our Gallatin, Kentucky sheet mill. We are taking this step after a thorough review of these projects and their compelling projected economic returns as well as our strong cash flow performance in the first nine months of 2020. We expect these projects, as well as the flex galvanizing line at Nucor Steel Arkansas and the micro mill greenfield expansion in Frostproof, Florida,we anticipate will have the largest capital expenditures in 2020.2021 are the plate mill under construction in Brandenburg, Kentucky, the sheet mill expansion at Nucor Steel Gallatin, and the hot band galvanizing line at Nucor Steel Arkansas.
In September 2020,June 2021, Nucor’s Board of Directors declared a quarterly cash dividend on Nucor’s common stock of $0.4025$0.405 per share payable on November 10, 2020August 11, 2021, to stockholders of record on SeptemberJune 30, 2020.2021. This dividend is Nucor’s 190th193rd 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 expenditureexpenditures, acquisitions and working capital requirements for existing operations for at least the next 24 months.
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 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 risk has significantly changed since December 31, 2019.2020. There were no interest rate swaps outstanding at OctoberJuly 3, 2020.2021.
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 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 drilling operations is being sold to third parties to 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.
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 loss,
27
net of income taxes inon the condensed consolidated balance sheets and recognized in net earnings in the same period as the underlying physical transaction. At OctoberJuly 3, 2020,2021, accumulated other comprehensive loss, net of income taxes included $2.4$5.2 million in unrealized net-of-tax lossesgains for the fair value of these derivative instruments. Changes in the fair valuevalues of derivatives not designated as hedges are recognized in net earnings each period.
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The following table presents the negative effect on pre-tax earnings of a hypothetical change in the fair value of derivative instruments outstanding at OctoberJuly 3, 2020,2021, 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 |
| $ | 7,010 |
|
| $ | 17,525 |
|
| $ | 5,474 |
|
| $ | 13,686 |
|
Aluminum |
| $ | 5,803 |
|
| $ | 14,507 |
|
| $ | 6,654 |
|
| $ | 16,634 |
|
Copper |
| $ | 2,016 |
|
| $ | 4,969 |
|
| $ | 4,000 |
|
| $ | 9,998 |
|
Any resulting changes in fair value would be recorded as adjustments to accumulated other comprehensive 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 OctoberJuly 3, 20202021 were insignificant.
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 OctoberJuly 3, 20202021 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. 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 risks.
Nucor Steel Louisiana LLC, our DRI facility located in St. James Parish, Louisiana, has received a Consolidated Compliance Order and Notice of Potential Penalty from the Office of Environmental Enforcement of the Louisiana Department of Environmental Quality (“LDEQ”) related to emissions issuesThere were no proceedings that were pending or contemplated under federal, state or local environmental laws that the facility voluntarily reportedCompany 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, and which Nucor believes is reasonably designed to LDEQ. Nucor Steel Louisiana LLC and LDEQ areresult in discussions regarding a Consolidated Settlement Agreement with LDEQ, but no penalty has been finalized. We believe the aggregate civil penalty for these compliance issues will not bedisclosure of any such proceeding that is material to Nucor but will likely exceed $100,000.its business or financial condition).
Item 1A. Risk Factors
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 Form 10-K for the year ended December 31, 2019, except as follows:2020.
The COVID-19 pandemic, as well as similar epidemicsItem 2. Unregistered Sales of Equity Securities and public health emergencies in the future, could have a material adverse effect on our business, resultsUse of operations, financial condition and cash flows.Proceeds
Our operations expose us to risks associated with pandemics, epidemics and other public health emergencies, such as the recent COVID-19 pandemic which has spread from China to the restshare repurchase program activity for each of the world. In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic,three months and the President of the United States declared the COVID-19 pandemic a national emergency.quarter ended July 3, 2021 was as follows (in thousands, except per share amounts):
We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Shelter‐in‐place or stay‐at‐home orders have been implemented in the jurisdictions in the United States where we operate production facilities. In all of these jurisdictions, Nucor has been deemed an essential or life‐sustaining operation and, accordingly, we are maintaining operations sufficient to meet our customers’ ongoing needs. In spite of our continued operations, the COVID-19 pandemic has had, and we expect will continue to have, further negative impacts on our operations, supply chain, transportation networks and customers, which may compress our margins, including as a result of preventative and precautionary measures that we, other businesses and governments are taking. The COVID-19 pandemic is a widespread public health crisis that is adversely affecting financial markets and the economies of many countries, including that of the United States. The resulting economic downturn could adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products and raw materials. The progression of the COVID-19 pandemic could also negatively impact our business or results of operations through the temporary closure of our operating facilities or those of our customers or suppliers.
|
| 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) |
| ||||
April 4, 2021 - May 1, 2021 |
|
| 2,500 |
|
| $ | 81.27 |
|
|
| 2,500 |
|
| $ | 654,332 |
|
May 2, 2021 - May 29, 2021 |
|
| 4,265 |
|
| $ | 96.39 |
|
|
| 4,265 |
|
| $ | 2,797,768 |
|
May 30, 2021 - July 3, 2021 |
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | 2,797,768 |
|
For the Quarter Ended July 3, 2021 |
|
| 6,765 |
|
|
|
|
|
|
| 6,765 |
|
|
|
|
|
(1) | Includes commissions of $0.02 per share. |
(2) | On September 6, 2018, the Company announced that the Board of Directors had approved a share repurchase program under which the Company was authorized to repurchase up to $2.00 billion of the Company’s common stock. This $2.00 billion share repurchase program had no stated expiration and replaced any previously authorized repurchase programs. On May 13, 2021, the Company announced that the Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $3.00 billion of the Company’s common stock and terminated any previously authorized share repurchase programs, including the previously mentioned program. The share repurchase authorization is discretionary and has no expiration date. |
In addition, the ability of our teammates and our suppliers’ and customers’ teammates to work may be significantly impacted by individuals contracting or being exposed to COVID-19 or, as a result of governmental control measures, which may significantly impact our production throughout the supply chain and constrict sales channels. Our customers may be directly impacted by business interruptions or weak market conditions and may not be willing or able to fulfill their contractual obligations. Furthermore, the progression of and global response to the COVID-19 pandemic has begun to cause, and increases the risk of, further delays in construction activities and equipment deliveries related to our capital projects, including potential delays in obtaining permits from government agencies. The extent of such delays and other effects of COVID-19 on our capital projects, certain of which are outside of our control, is unknown, but they could impact or delay the timing of anticipated benefits on capital projects.
The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the pandemic and the effectiveness of actions globally to contain or mitigate its effects. While we expect the COVID-19 pandemic to negatively impact our results of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time.
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Item 6. Exhibits
Exhibit No. |
| Description of Exhibit |
2* | ||
|
| |
3 |
| |
|
| |
3.1 |
| |
10* | ||
10.1 | ||
|
|
|
31* |
| |
|
| |
31.1* |
| |
|
| |
32** |
| |
|
| |
32.1** |
| |
|
| |
101* |
| Financial Statements (Unaudited) from the Quarterly Report on Form 10-Q of Nucor Corporation for the quarter ended |
|
|
|
104* |
| Cover Page from the Quarterly Report on Form 10-Q of Nucor Corporation for the quarter ended |
* | Filed herewith. |
** | Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K. |
(#) | 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/ James D. Frias |
|
|
| James D. Frias |
|
|
| Chief Financial Officer, Treasurer and Executive |
|
|
| Vice President |
Dated: November 12, 2020August 11, 2021
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