01—Abstract
Summary
Summary of the 10-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.
Nucor Corporation, a Delaware corporation, manufactures steel and steel products and is North America's largest recycler, using scrap steel as its primary raw material; it reports three segments: steel mills, steel products and raw materials.
Net sales for 2023 were $34.71 billiona, down 16% from $41.51 billion in 2022, as average sales price per ton fell 15% to $1,377. Net earnings attributable to Nucor stockholders were $4.52 billion, or $18.00 per diluted share, versus $7.61 billion, or $28.79 per diluted share, in 2022. Management attributed the decline primarily to lower metal margins in the steel mills segment, as steel selling prices fell faster than scrap costs, though 2023 was the third most profitable year in the company's history.
Cash and cash equivalents, short-term investments and restricted cash totaled $7.13 billionb at year-end 2023, against $4.94 billion a year earlier. Cash from operations fell to $7.11 billion from $10.07 billion. Management expects capital expenditures of approximately $3.5 billion in 2024, up from about $2.2 billion in 2023, driven by the sheet mill under construction in West Virginia, a sheet mill expansion in Indiana, a rebar micro mill in North Carolina and two NTS manufacturing locations.
Nucor reported debt to total capital of about 24% and the company's credit ratings were A-, A- and Baa1 with stable outlooks. Nucor returned capital to stockholders through a base dividend raised to $0.54c per quarter in December 2023 and share repurchases of $1.55 billion in 2023, and the board's share repurchase authorization stood at about $3.32 billion available at year-end.
The company stated it intends to return at least 40%d of net earnings to stockholders over time. Management expects first-quarter 2024 earnings to increase compared with the fourth quarter of 2023, with steel mills profitability expected to rise and steel products earnings expected to decline.
02—Key points
Key Highlights
- Net sales fell 16% to $34.71 billion in 2023; net earnings attributable to Nucor stockholders were $4.52 billion ($18.00 per diluted share) versus $7.61 billion ($28.79 per diluted share) in 2022.
- Steel mills segment remains the largest, at 58% of 2023 external sales; steel mills segment earnings before taxes fell to $3.71 billion from $7.20 billion, driven by lower metal margins.
- Liquidity strengthened, with cash, short-term investments and restricted cash at $7.13 billion at December 31, 2023, versus $4.94 billion a year earlier; the company holds A-/A-/Baa1 credit ratings.
- Planned 2024 capital expenditures of approximately $3.5 billion, up from about $2.2 billion in 2023, including the West Virginia sheet mill, an Indiana sheet mill expansion, and a North Carolina rebar micro mill.
- Capital returns totaled $1.55 billion in share repurchases in 2023; the base quarterly dividend was raised to $0.54 from $0.51, and about $3.32 billion remained under the repurchase authorization.
- Scrap and scrap substitute costs fell 14% to $421 per gross ton, while average selling prices fell 15%, compressing metal margins; pre-operating and start-up costs for new facilities rose to approximately $400 million.
- Management expects first-quarter 2024 earnings to rise versus the fourth quarter of 2023, led by the steel mills segment on higher average prices and volumes, particularly at sheet mills.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 27, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $34.71B$41.51B | −16.4% |
| Cost of Revenue | $26.90B$29.01B | −7.3% |
| Gross Profit | $7.82B$12.50B | −37.5% |
| SG&A Expenses | $1.58B$2.00B | −20.6% |
| Interest Expense | $246.00M$219.00M | +12.3% |
| Net Income | $4.53B$7.61B | −40.5% |
| EPS (Basic) | $18.05$28.88 | −37.5% |
| EPS (Diluted) | $18.00$28.79 | −37.5% |
| Shares Outstanding (Basic) | 249.80M262.30M | −4.8% |
| Shares Outstanding (Diluted) | 250.40M263.20M | −4.9% |
05—Questions
Frequently Asked Questions
How did Nucor's profitability change in 2023?
Net earnings attributable to Nucor stockholders were $4.52 billion, or $18.00 per diluted share, compared with $7.61 billion, or $28.79 per diluted share, in 2022. The filing attributes the decline mainly to the steel mills segment, where metal margins fell because average selling prices decreased more than scrap and substitute costs. Gross margin was $7.81 billion (23% of sales), down from $12.50 billion (30%).
What are Nucor's main capital spending plans?
Management expects capital expenditures of approximately $3.5 billion in 2024, compared with about $2.2 billion in 2023. The largest projects are the sheet mill expansion in Indiana, the sheet mill under construction in Mason County, West Virginia (estimated at a net cost of $3.1 billion), the rebar micro mill under construction in Lexington, North Carolina, and two new NTS manufacturing locations.
How much capital did Nucor return to shareholders?
Nucor returned approximately $2.07 billion to stockholders in 2023 through base dividends and share repurchases, including $1.55 billion of repurchased common stock. The company paid total dividends of $2.04 per share in 2023 and intends to return at least 40% of net earnings to stockholders over time. About $3.32 billion remained available under the $4.00 billion repurchase authorization at year-end.
How strong is Nucor's balance sheet?
At December 31, 2023, debt to total capital was approximately 24%, and cash, short-term investments and restricted cash totaled $7.13 billion. Nucor had an undrawn $1.75 billion revolving credit facility maturing November 5, 2026, and was in compliance with its covenants. Credit ratings were A- (S&P), Baa1 (Moody's) and A- (Fitch), with stable outlooks.
What risks does Nucor highlight for investors?
The filing highlights global steel overcapacity, which the OECD estimated would grow from approximately 556.1 million metric tons in 2022 to more than 600 million metric tons in 2023, and rising steel imports. Other key risks include volatile scrap and energy prices, cyclical end markets such as nonresidential construction, environmental and greenhouse gas regulation, and goodwill impairment risk in certain steel products reporting units, which the auditor identified as a critical audit matter.
06—Continue