Nucor Corp. (NUE) filed Quarterly Report for the period ended 2009-10-03.
Nucor Corporation manufactures and sells steel products. Principal steel products are hot-rolled steel (angles, rounds, flats, channels, sheet, wide-flange beams, pilings, billets, blooms and beam blanks), cold-rolled steel, cold finished steel, steel joists and joist girders, steeldeck, steel fasteners and steel grinding balls. Nucor is the largest recycler in the United States. Nucor and affiliates are manufacturers of steel products, with operating facilities in fourteen states. Nucor Corp. has a market cap of $13.02 billion; its shares were traded at around $41.38 with and P/S ratio of 0.5. The dividend yield of Nucor Corp. stocks is 3.4%. Nucor Corp. had an annual average earning growth of 26.2% over the past 10 years.
Highlight of Business Operations:
The decrease in gross margin was partially offset by a LIFO credit of $120.0 million in the third quarter of 2009, compared with a charge of $140.0 million in last year’s third quarter. (LIFO charges or credits for interim periods are based on management’s estimates of both inventory prices and quantities at year-end. The actual amounts will likely differ from these estimated amounts, and such differences may be significant.) The decrease in gross margin was also partially offset by an $8 per ton decrease in energy costs from the prior year period.
Nucor incurred equity method investment losses, which are also included in marketing, administrative and other expenses, of $9.6 million in the third quarter of 2009 and earnings of $2.1 million in the third quarter of 2008, and incurred losses of $69.4 million and $16.3 million in the first nine months of 2009 and 2008, respectively. The increase in the equity method investment losses is primarily due to losses at Duferdofin-Nucor S.r.l., including, a pre-tax charge to write-down inventories to the lower of cost or market of $45.8 million in the first nine months of 2009. Nucor acquired a 50% economic and voting interest in Duferdofin-Nucor in July 2008.
Net Earnings and Return on Equity Nucor reported a net consolidated loss of $29.5 million, or $0.10 per diluted share, in the third quarter of 2009 compared to consolidated net earnings of $734.6 million, or $2.31 per diluted share, in the third quarter of 2008. Net earnings (loss) attributable to Nucor stockholders as a percentage of net sales were (1%) and 10% in the third quarters of 2009 and 2008, respectively.
Nucor reported a net consolidated loss of $352.5 million, or $1.12 per diluted share, in the first nine months of 2009, compared to net consolidated earnings of $1.73 billion, or $5.70 per diluted share, in the first nine months of 2008. Net earnings (loss) attributable to Nucor stockholders as a percentage of net sales were (4%) and 9% in the first nine months of 2009 and 2008, respectively. Return on average stockholders’ equity was approximately (6.1%) and 34.9% in the first nine months of 2009 and 2008, respectively.
Nucor’s conservative financial practices have served us well in the past and are serving us well today. Our cash and cash equivalents and short-term investments position remains robust at $2.22 billion as of October 3, 2009, and our $1.3 billion revolving credit facility is undrawn and does not expire until November 2012. Nucor repaid $180.4 million in notes that matured in 2009, and we have no other material debt maturities until 2012. We believe our financial strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. We carry the highest credit ratings of any metals and mining company in North America at A from Standard and Poor’s and A1 from Moody’s. Both ratings are with a stable outlook. The credit markets have largely remained open and receptive to companies with an investment grade credit rating throughout the economic crisis, and Nucor’s present ratings place us four and five notches above the investment grade minimum of BBB-. Accordingly, we expect to continue to have access to the capital markets if needed.
In severely depressed market conditions such as we are experiencing today, we have several additional liquidity benefits. Nucor’s capital investment and maintenance practices give us the flexibility to reduce our current spending on our facilities to very low levels. Capital expenditures decreased 61% from $806.2 million during the first nine months of 2008 to $316.0 million in the first nine months of 2009. Capital expenditures for 2009 are projected to be $400 million compared to $1 billion in 2008. Also, in the first quarter of 2009, we suspended our supplemental dividend. As a result, we expect to reduce our total dividends paid when compared to 2008 by approximately $215 million in 2009.
NUE is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, Kenneth Fisher of Fisher Asset Management, LLC, Bill Miller of Legg Mason Value Trust, David Dreman of Dreman Value Management, Dodge & Cox.
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