Nucor Reports Results for the Fourth Quarter and Full Year 2023
- Nucor reported a diluted EPS of $18.00 for the full year of 2023
- The company has returned approximately $9.7 billion to shareholders through dividends and share repurchases over the past four years
- The company has the strongest credit ratings in the North American steel sector (A-/A-/Baa1) with stable outlooks at Standard & Poor's, Fitch Ratings and Moody's
- Nucor has increased its regular, or base, dividend for 51 consecutive years – every year since it first began paying dividends in 1973
- Consolidated net sales decreased by 12% in the fourth quarter of 2023 compared to the third quarter of 2023
- The average sales price per ton decreased by 8% compared to the third quarter of 2023
Insights
Financial performance analysis: Nucor Corporation's financial results for Q4 and the full year of 2023 show a mixed picture. While the company has reported its third-most profitable year, there is a noticeable decline in net earnings and diluted EPS compared to the previous year. The dip in net earnings from $7.61 billion in 2022 to $4.52 billion in 2023 and the decrease in diluted EPS from $28.79 to $18.00, reflect a significant year-over-year reduction. This drop could be attributed to a combination of factors such as market volatility, pricing pressures and operational challenges.
One key financial metric that stands out is the EBITDA of $7.41 billion for the full year, which, despite the decline in net earnings, indicates that the company is still generating a healthy cash flow from its operations. This robust cash flow is critical for Nucor's ambitious capital expenditure plan of $3.5 billion for 2024, signaling confidence in future growth despite the current downturn. Investors should note the company's commitment to shareholder returns, having repurchased shares and increased dividends, which demonstrates a strong balance sheet and a shareholder-friendly policy.
Market trends and strategy assessment: Nucor's strategic focus on growing its core steelmaking capabilities and expanding into steel-adjacent business lines appears to be a response to steel-intensive megatrends, such as infrastructure development and renewable energy projects. This strategy is aimed at capitalizing on increased demand for steel products. However, the reported decrease in average sales price per ton and the reduction in shipments in Q4 2023 compared to the previous quarters could be indicative of market saturation or increased competition.
The company's anticipation of a resilient U.S. economy is an optimistic outlook that may reassure investors about the potential for rebound in demand. Nevertheless, the steel industry is cyclical and sensitive to global economic trends, which means that Nucor's performance is not insulated from macroeconomic risks. The planned capital expenditures suggest that Nucor is preparing to enhance its operational efficiency and product offerings, which could be a strategic move to maintain its competitive edge in a challenging market environment.
Economic implications and outlook: Nucor's financial results and future outlook can be viewed within the broader context of the steel industry and the economy at large. The decrease in net earnings and EPS year-over-year could be reflective of broader economic headwinds, such as inflationary pressures and supply chain disruptions, which have impacted industrial sectors globally. The company's expectation for a strong 2024, despite these challenges, suggests a forecast of economic stabilization or recovery.
The steel industry is often seen as a barometer for economic health due to its ties to construction, manufacturing and infrastructure. Nucor's capital deployment strategy, focusing on growth and portfolio expansion, may be a positive signal for the industry, indicating potential for increased production and employment. However, this optimism must be tempered with caution, as the steel sector can be volatile, with prices and demand subject to rapid changes due to policy shifts, trade dynamics and global economic conditions.
- Fourth quarter and full year 2023 diluted EPS of
$3.16 $18.00 - Fourth quarter and full year 2023 net earnings before noncontrolling interests of
$872.8 million $4.91 billion $1.36 billion $7.41 billion - 2024 expected to be another strong year as Nucor executes its strategy to grow the core and expand its portfolio of solutions.
- Capital deployment expected to increase in 2024 with planned capital expenditures of
$3.5 billion
For the full year 2023, Nucor reported consolidated net earnings of
"The Nucor team delivered a strong finish to 2023, which represents the third-most profitable year in our Company's history. Nucor's strategy to grow our core steelmaking capabilities and expand beyond into steel-adjacent business lines continues to deliver strong results," said Leon Topalian, Nucor's Chair, President and Chief Executive Officer. "Over the past four years, Nucor has generated an average annual ROE of
Selected Segment Data
Earnings (loss) before income taxes and noncontrolling interests by segment for the fourth quarter and full year 2023 and 2022 were as follows (in thousands):
Three Months (13 Weeks) Ended | Twelve Months (52 Weeks) Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
Steel mills | $ | 587,921 | $ | 516,655 | $ | 3,712,470 | $ | 7,199,087 | ||||||||
Steel products | 655,628 | 1,081,461 | 3,443,950 | 4,093,105 | ||||||||||||
Raw materials | (14,412) | (141,817) | 253,506 | 496,823 | ||||||||||||
Corporate/eliminations | (151,028) | 77,106 | (1,137,169) | (1,544,171) | ||||||||||||
$ | 1,078,109 | $ | 1,533,405 | $ | 6,272,757 | $ | 10,244,844 | |||||||||
Financial Review
Nucor's consolidated net sales decreased
For the full year 2023, Nucor's consolidated net sales of
The average scrap and scrap substitute cost per gross ton used in the fourth quarter of 2023 was
Pre-tax, pre-operating and start-up costs related to the Company's growth projects were approximately
In the full year 2023, pre-tax, pre-operating and start-up costs related to the Company's growth projects were approximately
Overall operating rates at the Company's steel mills were
Included in the results for the fourth quarter of 2022 was an after-tax net benefit of
Financial Strength
At the end of the fourth quarter of 2023, Nucor had
Commitment to Returning Capital to Stockholders
On December 14, 2023, Nucor's Board of Directors declared a cash dividend of
During the fourth quarter of 2023, Nucor repurchased approximately 1.0 million shares of its common stock at an average price of
For the full year 2023, Nucor returned approximately
Fourth Quarter of 2023 Analysis
Earnings in the fourth quarter of 2023 decreased compared to the third quarter of 2023 due to lower pricing and volumes across all three operating segments. In the steel mills segment, the decrease in realized pricing was most pronounced at our sheet and plate mills. In the steel products segment, earnings decreased due to moderating average selling prices at most of the product groups within the segment and lower volumes. Earnings for the raw materials segment decreased in the fourth quarter of 2023 compared to the third quarter of 2023 due to lower pricing for raw materials and planned outages at our direct reduced iron, or DRI, facilities.
First Quarter of 2024 Outlook
We expect earnings in the first quarter of 2024 to increase compared to the fourth quarter of 2023. The steel mills segment's earnings are expected to increase in the first quarter of 2024 due to higher average selling prices and volumes, particularly at our sheet mills. Earnings in the steel products segment are expected to decrease in the first quarter of 2024 due to lower average selling prices. We expect increased earnings in the raw materials segment in the first quarter of 2024 due to the increased profitability of our DRI facilities and our scrap processing and brokerage operations.
Earnings Conference Call
An earnings call is scheduled for January 30, 2024 at 10:00 a.m. Eastern Time to review Nucor's fourth-quarter and full year 2023 financial results and business update. The call can be accessed via webcast from the Investor Relations section of Nucor's website (nucor.com/investors). A presentation with supplemental information to accompany the call has been posted to Nucor's Investor Relations website.
About Nucor
Nucor and its affiliates are manufacturers of steel and steel products, with operating facilities in the United States, Canada and Mexico. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; hollow structural section tubing; electrical conduit; steel racking; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; precision castings; steel fasteners; metal building systems; insulated metal panels; overhead doors; steel grating; wire and wire mesh; and utility structures. Nucor, through The David J. Joseph Company and its affiliates, also brokers ferrous and nonferrous metals, pig iron and hot briquetted iron / direct reduced iron; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.
Non-GAAP Financial Measures
The Company uses certain non-GAAP (Generally Accepted Accounting Principles) financial measures in this news release, including EBITDA. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable financial measure calculated and presented in accordance with GAAP.
We define EBITDA as net earnings before noncontrolling interests, adding back the following items: interest (income) expense, net; provision for income taxes; depreciation; and amortization. First, second and third quarter of 2023 EBITDA was
Management presents the non-GAAP financial measure of EBITDA in this news release because it considers it to be an important supplemental measure of performance. Management believes that this non-GAAP financial measure provides additional insight for analysts and investors evaluating the Company's financial and operational performance by providing a consistent basis of comparison across periods.
Forward-Looking Statements
Certain statements contained in this news release are "forward-looking statements" that 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 news release. 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)
Tonnage Data | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Three Months (13 Weeks) Ended | Twelve Months (52 Weeks) Ended | |||||||||||||||||||||||
December 31, | December 31, | Percent | December 31, | December 31, | Percent | |||||||||||||||||||
Steel mills total shipments: | ||||||||||||||||||||||||
Sheet | 2,675 | 2,314 | 16 | % | 11,003 | 10,310 | 7 | % | ||||||||||||||||
Bars | 1,901 | 1,907 | - | 8,193 | 8,635 | -5 | % | |||||||||||||||||
Structural | 542 | 445 | 22 | % | 2,113 | 2,292 | -8 | % | ||||||||||||||||
Plate | 373 | 375 | -1 | % | 1,807 | 1,626 | 11 | % | ||||||||||||||||
Other | 22 | 69 | -68 | % | 157 | 378 | -58 | % | ||||||||||||||||
5,513 | 5,110 | 8 | % | 23,273 | 23,241 | - | ||||||||||||||||||
Sales tons to outside customers: | ||||||||||||||||||||||||
Steel mills | 4,396 | 4,067 | 8 | % | 18,552 | 18,200 | 2 | % | ||||||||||||||||
Joist | 106 | 174 | -39 | % | 510 | 671 | -24 | % | ||||||||||||||||
Deck | 91 | 127 | -28 | % | 401 | 515 | -22 | % | ||||||||||||||||
Cold finished | 96 | 99 | -3 | % | 428 | 467 | -8 | % | ||||||||||||||||
Rebar fabrication products | 251 | 302 | -17 | % | 1,169 | 1,282 | -9 | % | ||||||||||||||||
Piling | 102 | 94 | 9 | % | 433 | 443 | -2 | % | ||||||||||||||||
Tubular products | 212 | 215 | -1 | % | 949 | 950 | - | |||||||||||||||||
Other steel products | 153 | 167 | -8 | % | 596 | 687 | -13 | % | ||||||||||||||||
Raw materials | 527 | 493 | 7 | % | 2,167 | 2,309 | -6 | % | ||||||||||||||||
5,934 | 5,738 | 3 | % | 25,205 | 25,524 | -1 | % | |||||||||||||||||
Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Three Months (13 Weeks) Ended | Twelve Months (52 Weeks) Ended | |||||||||||||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |||||||||||||
Net sales | $ | 7,704,531 | $ | 8,723,956 | $ | 34,713,501 | $ | 41,512,467 | ||||||||
Costs, expenses and other: | ||||||||||||||||
Cost of products sold | 6,310,813 | 6,626,469 | 26,899,107 | 29,009,187 | ||||||||||||
Marketing, administrative and other expenses | 355,001 | 422,823 | 1,584,052 | 1,997,178 | ||||||||||||
Equity in (earnings) losses of unconsolidated affiliates | (9,112) | 12,532 | (12,783) | (10,714) | ||||||||||||
Losses and impairments of assets | - | 101,756 | - | 101,756 | ||||||||||||
Interest (income) expense, net | (30,280) | 26,971 | (29,632) | 170,216 | ||||||||||||
6,626,422 | 7,190,551 | 28,440,744 | 31,267,623 | |||||||||||||
Earnings before income taxes and noncontrolling interests | 1,078,109 | 1,533,405 | 6,272,757 | 10,244,844 | ||||||||||||
Provision for income taxes | 205,277 | 207,160 | 1,359,966 | 2,165,204 | ||||||||||||
Net earnings before noncontrolling interests | 872,832 | 1,326,245 | 4,912,791 | 8,079,640 | ||||||||||||
Earnings attributable to noncontrolling interests | 87,433 | 70,512 | 387,990 | 472,303 | ||||||||||||
Net earnings attributable to Nucor stockholders | $ | 785,399 | $ | 1,255,733 | $ | 4,524,801 | $ | 7,607,337 | ||||||||
Net earnings per share: | ||||||||||||||||
Basic | $ | 3.17 | $ | 4.90 | $ | 18.05 | $ | 28.88 | ||||||||
Diluted | $ | 3.16 | $ | 4.89 | $ | 18.00 | $ | 28.79 | ||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 246,868 | 255,402 | 249,773 | 262,348 | ||||||||||||
Diluted | 247,249 | 255,838 | 250,412 | 263,176 | ||||||||||||
Condensed Consolidated Balance Sheets (Unaudited) (In thousands) | ||||||||
December 31, | ||||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,383,298 | $ | 4,280,852 | ||||
Short-term investments | 747,479 | 576,946 | ||||||
Accounts receivable, net | 2,953,311 | 3,591,030 | ||||||
Inventories, net | 5,577,758 | 5,453,531 | ||||||
Other current assets | 724,012 | 789,325 | ||||||
Total current assets | 16,385,858 | 14,691,684 | ||||||
Property, plant and equipment, net | 11,049,767 | 9,616,920 | ||||||
Restricted cash and cash equivalents | 3,494 | 80,368 | ||||||
Goodwill | 3,968,847 | 3,920,060 | ||||||
Other intangible assets, net | 3,108,015 | 3,322,265 | ||||||
Other assets | 824,518 | 847,913 | ||||||
Total assets | $ | 35,340,499 | $ | 32,479,210 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 119,211 | $ | 49,081 | ||||
Current portion of long-term debt and finance lease obligations | 74,102 | 28,582 | ||||||
Accounts payable | 2,020,289 | 1,649,523 | ||||||
Salaries, wages and related accruals | 1,326,390 | 1,654,210 | ||||||
Accrued expenses and other current liabilities | 1,054,517 | 948,348 | ||||||
Total current liabilities | 4,594,509 | 4,329,744 | ||||||
Long-term debt and finance lease obligations due after one year | 6,648,873 | 6,613,687 | ||||||
Deferred credits and other liabilities | 1,973,363 | 1,965,873 | ||||||
Total liabilities | 13,216,745 | 12,909,304 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Nucor stockholders' equity: | ||||||||
Common stock | 152,061 | 152,061 | ||||||
Additional paid-in capital | 2,176,243 | 2,143,520 | ||||||
Retained earnings | 28,762,045 | 24,754,873 | ||||||
Accumulated other comprehensive loss, net of income taxes | (162,072) | (137,517) | ||||||
Treasury stock | (9,987,643) | (8,498,243) | ||||||
Total Nucor stockholders' equity | 20,940,634 | 18,414,694 | ||||||
Noncontrolling interests | 1,183,120 | 1,155,212 | ||||||
Total equity | 22,123,754 | 19,569,906 | ||||||
Total liabilities and equity | $ | 35,340,499 | $ | 32,479,210 | ||||
Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | ||||||||
Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
Operating activities: | ||||||||
Net earnings before noncontrolling interests | $ | 4,912,791 | $ | 8,079,640 | ||||
Adjustments: | ||||||||
Depreciation | 930,585 | 826,692 | ||||||
Amortization | 237,730 | 234,942 | ||||||
Stock-based compensation | 130,162 | 136,834 | ||||||
Deferred income taxes | 21,419 | (46,849) | ||||||
Distributions from affiliates | 33,621 | 57,071 | ||||||
Equity in earnings of unconsolidated affiliates | (12,783) | (10,714) | ||||||
Losses and impairments of assets | — | 101,756 | ||||||
Changes in assets and liabilities (exclusive of acquisitions and dispositions): | ||||||||
Accounts receivable | 663,825 | 501,225 | ||||||
Inventories | (75,042) | 962,424 | ||||||
Accounts payable | 361,146 | (496,234) | ||||||
Federal income taxes | 188,344 | (337,359) | ||||||
Salaries, wages and related accruals | (290,859) | 155,005 | ||||||
Other operating activities | 10,992 | (92,379) | ||||||
Cash provided by operating activities | 7,111,931 | 10,072,054 | ||||||
Investing activities: | ||||||||
Capital expenditures | (2,214,157) | (1,947,897) | ||||||
Investment in and advances to affiliates | (35,137) | (258) | ||||||
Sale of business | — | 99,681 | ||||||
Disposition of plant and equipment | 14,907 | 32,277 | ||||||
Acquisitions (net of cash acquired) | (70,824) | (3,553,191) | ||||||
Purchases of investments | (1,471,528) | (913,898) | ||||||
Proceeds from the sale of investments | 1,317,308 | 590,173 | ||||||
Other investing activities | (37,000) | (9,596) | ||||||
Cash used in investing activities | (2,496,431) | (5,702,709) | ||||||
Financing activities: | ||||||||
Net change in short-term debt | (24,870) | (58,642) | ||||||
Proceeds from issuance of long-term debt, net of discount | — | 2,091,934 | ||||||
Repayment of long-term debt | (10,000) | (1,111,000) | ||||||
Bond issuance costs | — | (13,138) | ||||||
Proceeds from exercise of stock options | 11,731 | 22,852 | ||||||
Payment of tax withholdings on certain stock-based compensation | (49,318) | (64,079) | ||||||
Distributions to noncontrolling interests | (435,047) | (332,293) | ||||||
Cash dividends | (514,534) | (533,589) | ||||||
Acquisition of treasury stock | (1,553,933) | (2,762,568) | ||||||
Proceeds from government incentives | — | 275,000 | ||||||
Other financing activities | (16,840) | (25,340) | ||||||
Cash used in financing activities | (2,592,811) | (2,510,863) | ||||||
Effect of exchange rate changes on cash | 2,883 | (5,920) | ||||||
Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | 2,025,572 | 1,852,562 | ||||||
Cash and cash equivalents and restricted cash and cash equivalents - beginning of year | 4,361,220 | 2,508,658 | ||||||
Cash and cash equivalents and restricted cash and cash equivalents - end of year | $ | 6,386,792 | $ | 4,361,220 | ||||
Non-cash investing activity: | ||||||||
Change in accrued plant and equipment purchases | $ | 1,053 | $ | 4,568 | ||||
Non-GAAP Financial Measures | ||||||||
Reconciliation of EBITDA (Unaudited) | ||||||||
(In thousands) | ||||||||
Three months (13 weeks) ended | Twelve months (52 weeks) ended | |||||||
December 31, 2023 | December 31, 2023 | |||||||
Net earnings before noncontrolling interests | $ | 872,832 | $ | 4,912,791 | ||||
Depreciation | 249,432 | 930,585 | ||||||
Amortization | 62,029 | 237,730 | ||||||
Interest income, net | (30,280) | (29,632) | ||||||
Provision for income taxes | 205,277 | 1,359,966 | ||||||
EBITDA | $ | 1,359,290 | $ | 7,411,440 | ||||
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SOURCE Nucor Corporation
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