Nucor reports results for the First Quarter of 2023

Posted on Apr 20, 2023 in Nuts & Bolts

• Net earnings attributable to Nucor stockholders of $1.14 billion, or $4.45 per diluted share

• Net sales of $8.71 billion

• Net earnings before noncontrolling interests of $1.23 billion; EBITDA of $1.89 billion

• Earnings are expected to increase in the second quarter of 2023 on stronger steel mills segment earnings

Nucor Corporation has announced net earnings attributable to Nucor stockholders of $1.14 billion, or $4.45 per diluted share, for the first quarter of 2023. By comparison, Nucor reported net earnings attributable to Nucor stockholders of $1.26 billion, or $4.89 per diluted share, for the fourth quarter of 2022 and $2.10 billion, or $7.67 per diluted share, for the first quarter of 2022.

Included in the results for the fourth quarter of 2022 was an after-tax net benefit of $60.4 million, or $0.24 per diluted share, related to state tax credits and an after-tax net benefit of $88.0 million, or $0.34 per diluted share, related to a change in the valuation allowance of a state deferred tax asset. Also included in the fourth quarter of 2022 results was a pre-tax $96.0 million, or $0.29 per diluted share, write-off of the remaining carrying value of the Company’s leasehold interest in unproved oil and gas properties that are included in the raw materials segment.

Leon J. Topalian

“We had a very strong quarter, driven by solid performance in our steel products segment and increased demand for steel at our mills,” said Leon Topalian, Nucor’s Chair, President, and Chief Executive Officer.

“Demand from nonresidential construction, our largest end market, continues to be robust driven by strength in infrastructure and manufacturing investment.  Average steel mill utilization rates and profit margins were both up in the first quarter compared to the fourth quarter, with sheet and plate mills seeing some of the largest gains. This, coupled with year-over-year gains in automotive and stability in energy, gives us confidence that 2023 will be another very profitable year for Nucor.  My thanks to our 31,000 teammates for their dedication to safely meeting our customers’ needs while executing our strategic growth agenda.”

Selected Segment Data
Earnings (loss) before income taxes and noncontrolling interests by segment for the first quarter of 2023 and 2022 were as follows (in thousands):

Financial Review
Nucor’s consolidated net sales were $8.71 billion in the first quarter of 2023, similar to $8.72 billion in the fourth quarter of 2022 and 17% lower than the $10.49 billion recorded in the first quarter of 2022. Average sales price per ton in the first quarter of 2023 decreased by 11% compared with the fourth quarter of 2022 and decreased by 18% compared with the first quarter of 2022. A total of 6,443,000 tons were shipped to outside customers in the first quarter of 2023, an increase of 12% compared to the fourth quarter of 2022 and an increase of 1% compared to the first quarter of 2022. Total steel mill shipments in the first quarter of 2023 increased by 18% compared to the fourth quarter of 2022 and increased by 4% compared to the first quarter of 2022. Steel mill shipments to internal customers represented 20% of total steel mill shipments in the first quarter of 2023, compared with 20% in the fourth quarter of 2022 and 22% in the first quarter of 2022. Downstream steel product shipments to outside customers in the first quarter of 2023 decreased by 3% from the fourth quarter of 2022 and decreased by 8% from the first quarter of 2022.

The average scrap and scrap substitute cost per gross ton used in the first quarter of 2023 was $414, a 3% decrease compared to $427 in the fourth quarter of 2022 and a 16% decrease compared to $495 in the first quarter of 2022.

Pre-operating and start-up costs related to the Company’s growth projects were approximately $82 million, or $0.24 per diluted share, in the first quarter of 2023, compared with approximately $73 million, or $0.22 per diluted share, in the fourth quarter of 2022 and approximately $62 million, or $0.17 per diluted share, in the first quarter of 2022.

Overall operating rates at the Company’s steel mills increased to 79% in the first quarter of 2023 as compared to 70% in the fourth quarter of 2022 and 77% in the first quarter of 2022.

Financial Strength
At the end of the first quarter of 2023, we had $4.70 billion in cash and cash equivalents, short-term investments, and restricted cash and cash equivalents on hand. The Company’s $1.75 billion revolving credit facility remains undrawn and does not expire until November 2026.  Nucor continues to have the strongest credit rating in the North American steel sector (A-/A-/Baa1) with stable outlooks at Standard & Poor’s, Fitch Ratings, and Moody’s.

Commitment to Returning Capital to Stockholders
During the first quarter of 2023, Nucor repurchased approximately 2.7 million shares of its common stock at an average price of $156.35 per share. As of April 1, 2023, Nucor had approximately 251 million shares outstanding and approximately $656.9 million remaining for repurchases under its existing authorized share repurchase program. This share repurchase authorization is discretionary and has no scheduled expiration date.

On February 21, 2023, Nucor’s board of directors declared a cash dividend of $0.51 per share. This cash dividend is payable on May 11, 2023, to stockholders of record as of March 31, 2023, and is Nucor’s 200th consecutive quarterly cash dividend.

First Quarter of 2023 Analysis
Steel mill segment earnings in the first quarter of 2023 increased from the fourth quarter of 2022, primarily due to higher margins and volumes. The steel products segment earnings in the first quarter of 2023 decreased relative to the fourth quarter of 2022 due primarily to reductions in realized pricing. Earnings for the raw materials segment increased in the first quarter of 2023 as compared to the fourth quarter of 2022 due to higher volumes at our direct reduced iron (“DRI”) facilities and scrap recycling and brokerage operations.

Second Quarter of 2023 Outlook
We expect earnings in the second quarter of 2023 to increase compared to the first quarter of 2023. We expect earnings for the steel mills segment to improve in the second quarter of 2023 as compared to the first quarter of 2023 primarily due to margin expansion at our sheet mills. The steel products segment is expected to deliver strong results in the second quarter of 2023 but will moderate from the first quarter of 2023 due to expected lower average selling prices offsetting higher volumes. The raw materials segment is expected