Jan. 26, 2007 — Nucor Corp. announced consolidated net earnings of $408.2 million on consolidated net sales of $3.47 billion for the fourth quarter, and record consolidated net earnings of $1.76 billion on record consolidated net sales of $14.75 billion for the full year 2006.
Fourth Quarter Results — The $408.2 million consolidated net earnings ($1.35 per diluted share) reflect an increase of 20% compared with net earnings of $341.0 million ($1.09 per diluted share) in the fourth quarter of 2005 and a 21% decrease from the $517.6 million ($1.68 per diluted share) earned in the third quarter of 2006.
Consolidated net sales of $3.47 billion reflect an 8% increase compared with net sales of $3.21 billion in the fourth quarter of 2005, and a 12% decrease compared with net sales of $3.93 billion in the third quarter of 2006. Average sales price per ton increased 8% from the fourth quarter of 2005 and decreased 3% from the third quarter of 2006.
Total tons shipped to outside customers remained flat at 5,075,000 tons when compared to the fourth quarter of 2005 and decreased 9% from the third quarter of 2006, and a 5% decrease from $257 in the third quarter of 2006.
The average scrap and scrap substitute cost per ton used, $243, reflects a 1% increase compared to $240 in the fourth quarter of 2005. Total energy costs decreased approximately $6 per ton from the fourth quarter of 2005, and remained flat when comparing the third quarter of 2006 to the fourth quarter of 2006.
Nucor incurred a LIFO credit of $39.6 million, compared with a credit of $3.6 million in the fourth quarter of 2005, and a charge of $20.5 million in the third quarter of 2006.
Full Year Results — The $1.76 billion consolidated net earnings ($5.68 per diluted share) reflect an increase of 34% over net earnings of $1.31 billion ($4.13 per diluted share) in 2005. Consolidated net sales of $14.75 billion reflect a 16% increase compared with consolidated net sales of $12.70 billion in 2005. Average sales price per ton increased 7% while total tons shipped to outside customers increased 8% from 2005.
The average scrap and scrap substitute cost per ton used, $246, reflects a 1% increase compared to $244 in 2006. Total energy costs decreased approximately $1 per ton from 2005 to 2006. Nucor incurred a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $5.4 million in 2006, compared with a credit of $151.6 million in 2005.
Production Results — In 2006, Nucor established company records in its steel mills segment for steel production, total steel shipments and steel sales to outside customers.
- Steel production was 22,382,000 tons, compared with 20,332,000 tons produced in 2005, an increase of 10%.
- Total steel shipments increased 8% to 22,346,000 tons in 2006, compared with 20,669,000 tons in 2005.
- Steel shipments to outside customers increased 9% to 20,649,000 tons in 2006, compared with 19,020,000 tons in 2005.
- In the steel products segment, steel joist production during 2006 increased to 570,000 tons, compared with 554,000 tons in 2005.
- Steel deck sales increased to a record 398,000 tons in 2006, compared with 380,000 tons in 2005.
- Cold finished steel sales decreased to 327,000 tons, compared with 342,000 tons in 2005.
Financial Results — In December 2006, Nucor's Board of Directors declared a supplemental dividend of $0.50 per share in addition to the $0.10 per share base dividend. The total dividend of $0.60 per share is payable on February 9, 2007 to shareholders of record on December 29, 2006. Nucor's dividends paid to shareholders have increased more than nine-fold since 2003: $62 million paid in 2003, $70 million paid in 2004, $210 million paid in 2005, and $578 million paid in 2006.
Nucor repurchased approximately 1.6 million shares of its common stock at a cost of approximately $84.4 million under a publicly announced stock repurchase program during the fourth quarter of 2006, and repurchased approximately 11.7 million shares at a cost of about $599.4 million during 2006. Approximately 14.1 million shares remain authorized for repurchase under the current program. Since the first quarter of 2005, Nucor has repurchased approximately 22.8 million shares of common stock.
Mergers and Acquisitions — On January 2, 2007, Nucor announced an agreement to make an all-cash tender offer for all of the shares of Harris Steel Group, Inc. at C$46.25 per share. The offer, which has the full support of the Boards of Directors of both Nucor and Harris Steel, will remain open for acceptance until March 2, 2007, unless extended or withdrawn. Shareholders owning or exercising control over 13.7 million shares, or approximately 51% of the issued and outstanding shares, have entered into a lock-up agreement to irrevocably tender their shares to this offer. Completion of the acquisition will occur upon satisfactory resolution of regulatory approvals in the United States and Canada. The transaction is expected to be immediately accretive to Nucor.
Outlook — Nucor says it continues to expect good demand for its products in 2007, as evidenced by recently announced price increases for many products. In addition, says Nucor, excess inventory levels at service centers and OEMs should continue to decline. The company expects inventories to be at more normal levels by the end of the first quarter, but says this will depend on a continued decrease in imports from the record levels of 2006.
As a result of the expected continuation of healthy demand and margins, Nucor anticipates continued solid earnings in the first quarter. Risks include import levels and the movement of scrap prices in the quarter. The company says the continued increases in scrap costs would, at the very least, result in a LIFO charge for the quarter versus the credit that was recorded in the fourth quarter.
Nucor and its affiliates manufacture steel products, with operating facilities in nineteen states. Products include carbon and alloy steel bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor is the nation's largest recycler.
Harris Steel is engaged in the fabrication and placing of concrete reinforcing steel; the design and installation of concrete post-tensioning systems; the manufacture and distribution of wire and wire products, welded wire mesh and cold finished bar; and the manufacture and distribution of heavy industrial steel grating, aluminum grating and expanded metal. These operations serve customers throughout Canada and the United States. Harris Steel also participates in steel trading on a worldwide basis, and in the distribution of reinforcing steel and related products to U.S. customers.