01—Abstract
Summary
Summary of the 10-K filed February 28, 2012. Cited figures are marked; the original filing is the authoritative source.
Nucor Corporation's 2011 Form 10-K reports a sharp recovery in earnings.
Net sales rose 26% to $20.02 billiona in 2011 from $15.84 billion in 2010, and net earnings attributable to Nucor stockholders were $778.2 million, or $2.45 per diluted share, compared with $134.1 million, or $0.42 per share, in 2010. The steel mills segment drove the improvement: its earnings before income taxes were $1.70 billion versus $778.9 million in 2010, aided by a 21% higher average sales price per ton ($832 versus $689) and higher metal margins. The average selling price per ton for the company overall rose 21% to $869, while total tons shipped to outside customers increased 5%.
Management noted that sheet and plate prices declined during the second half of 2011 as domestic sheet capacity and imports increased. Balance sheet liquidity remained strong. Cash, cash equivalents and short-term investments totaled $2.56 billionb at December 31, 2011, and the company had a $1.5 billion undrawn revolving credit facility.
Long-term debt including current maturities was $4.28 billionc, and the funded debt to total capital ratio was 36%. Cash provided by operating activities was $1.03 billion, while capital expenditures were $440.5 million. Management projected 2012 capital expenditures of approximately $1.0 billion, including the $750 million direct reduced iron (DRI) plant under construction in St. James Parish, Louisiana, with start-up projected for mid-2013.
Management stated it expects 2012 net sales and financial results to be stronger than 2011, while cautioning that the nonresidential construction market remains depressed and that Europe's financial sector uncertainty and rising imports present risks. The filing also flags risks including exposure to volatile scrap steel and energy costs, a pending antitrust class action in which Nucor is one of several steel producer co-defendants, and the potential cost of greenhouse gas regulation. The company declared a quarterly dividend of $0.365d per share in February 2012, and the base dividend was increased from $0.3625 in December 2011.
02—Key points
Key Highlights
- Net sales rose 26% to $20,023.6 million in 2011 from $15,844.6 million in 2010, with the average sales price per ton up 21% to $869.
- Net earnings attributable to Nucor stockholders were $778.2 million ($2.45 per diluted share), compared with $134.1 million ($0.42 per diluted share) in 2010.
- The steel mills segment generated earnings before income taxes and noncontrolling interests of $1,703.9 million, versus $778.9 million in 2010, and represented approximately 70% of external sales.
- Cash and cash equivalents plus short-term investments totaled $2.56 billion at year-end 2011, with an additional $585.8 million of restricted cash and investments; the $1.5 billion revolving credit facility was undrawn.
- Long-term debt was $4.28 billion at year-end 2011, with a funded debt to total capital ratio of 36%.
- Capital expenditures were $440.5 million in 2011 and are projected at approximately $1.0 billion in 2012, including the $750 million Louisiana DRI facility with start-up projected for mid-2013.
- The quarterly base dividend was raised to $0.365 per share in December 2011, and the company declared its 156th consecutive quarterly dividend in February 2012.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 28, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $20.02B$15.84B | +26.4% |
| Cost of Revenue | $18.14B$15.06B | +20.5% |
| Gross Profit | $1.88B$783.75M | +140.1% |
| SG&A Expenses | $439.53M$331.45M | +32.6% |
| Interest Expense | $178.81M$161.14M | +11.0% |
| Net Income | $778.19M$134.09M | +480.3% |
| EPS (Basic) | $2.45$0.42 | +483.3% |
| EPS (Diluted) | $2.45$0.42 | +483.3% |
| Shares Outstanding (Basic) | 317.00M315.96M | +0.3% |
| Shares Outstanding (Diluted) | 317.16M316.51M | +0.2% |
05—Questions
Frequently Asked Questions
How did Nucor perform financially in 2011 compared with 2010?
Net sales increased 26% to $20.02 billion, and net earnings attributable to Nucor stockholders rose to $778.2 million, or $2.45 per diluted share, from $134.1 million, or $0.42 per diluted share, in 2010. The increase reflected higher average selling prices and an increase in tons shipped to outside customers.
What drove the improvement in the steel mills segment?
The filing attributes the segment's earnings to increased utilization rates, higher sales prices and metal margins, decreased pre-operating and start-up costs, and decreased losses from unconsolidated affiliates. Average sales price per ton in the steel mills segment rose 21% to $832, while outside tons sold increased 6%.
How strong is Nucor's liquidity and balance sheet?
Cash, cash equivalents and short-term investments totaled $2.56 billion at December 31, 2011. The company's $1.5 billion unsecured revolving credit facility was undrawn, and the funded debt to total capital ratio was 36%, below the 60% covenant limit. Operating cash flow was $1.03 billion in 2011.
What are the key risks Nucor highlights for investors?
Key risks include a slow recovery in nonresidential construction and housing demand, cyclical end markets, overcapacity and imports (with imports accounting for 22% of the U.S. steel market in 2011), volatile scrap steel and energy costs, possible greenhouse gas regulation, and a pending antitrust class action in which Nucor is a co-defendant with other steel producers.
What are Nucor's plans for growth and capital spending?
Nucor is building a 2.5 million tons-per-year DRI facility in St. James Parish, Louisiana, a $750 million project with start-up projected for mid-2013. It also plans about $290 million to expand special bar quality and wire rod capacity by one million tons at its bar mills, with completion projected by the end of 2013. Capital expenditures are projected at approximately $1.0 billion for 2012.
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