Nucor sees year-over-year decline in consolidated net sales

Nucor Corp. has reported consolidated net earnings of $844.8 million, or $3.46 per diluted share, for the first quarter of 2024. Those figures have increased from its consolidated net earnings of $785.4 million, or $3.16 per diluted share, in the fourth quarter of 2023, though they represent a decline from the $1.14 billion, or $4.45 per diluted share, in net earnings for the first quarter of 2023.

The Charlotte, North Carolina-based steelmaker’s consolidated net sales were $8.14 billion in the first quarter of this year, a 6 percent increase compared with $7.7 billion in the fourth quarter of 2023 and a 7 percent decrease year over year. Average sales price per ton in the first quarter of 2024 increased modestly by 1 percent compared to the fourth quarter of 2023, though it was 3 percent less than in the first quarter of 2023.

Relative to the fourth quarter of 2023, Nucor shipped 5 percent more to customers in the recently completed quarter for a total of 6.224 million tons. However, that figure represented a 3 percent decrease compared with the first quarter of 2023.

Total steel mill shipments increased 7 percent in the first quarter of this year compared with the fourth quarter of 2023 and decreased 2 percent compared with the first quarter of 2023. Steel mill shipments to internal customers represented 21 percent of its total steel mill shipments compared with 20 percent in the fourth quarter of 2023 and the first quarter of 2023. Downstream steel product shipments to outside customers in the first quarter of 2024 decreased 5 percent from the fourth quarter of 2023 and 15 percent from the first quarter of 2023.

“We believe an unusually wet start to the year may have adversely affected some regional construction activity during the period," Nucor Chief Financial Officer Steve Laxton said in an April 23 earnings call. "While margins for downstream steel products have receded from the historically high levels of recent years, [the] segment continues to generate attractive returns and strong cash flows.

"Highlighting a few individual product lines, the first quarter saw higher pricing and margin from our tubular products divisions. This was more than offset by moderating contributions from our joist and deck, metal buildings and rebar fabrication operations. Our joist and deck business continues to be the largest single contributor to our steel product segment earnings. This business tends to have backlogs and lead times of four to six months.”

The average scrap and scrap substitute cost per gross ton in the first quarter of 2024 was $421, which was 6 percent more than $397 in the fourth quarter of 2023. It also represents a 2 percent increase from $414 in the first quarter of 2023.

Preoperating and startup costs related to its growth projects were approximately $125 million, or 39 cents per diluted share, in the first quarter of 2024, compared with approximately $127 million, or 39 cents per diluted share, in the fourth quarter of 2023 and approximately $82 million, or 24 cents per diluted share, in the first quarter of 2023.

Overall operating rates at its steel mills increased to 82 percent from 74 percent in the fourth quarter of 2023 and 79 percent in the first quarter of 2023.

"Nucor's performance continues to be strong, even as steel market conditions have come off their postpandemic record highs," Nucor CEO Leon Topalian said in comments accompanying its earnings report. "We also took several bold steps to advance our growth, sustainability and commercial strategies during the first quarter. We broadened our capabilities in the rapidly growing data center market, announced new partnerships to supply our customers with low-carbon steel and accelerate the development of cleaner forms of energy and introduced the Nucor Consumer Spot Price for our hot-rolled coil products to provide our customers with more timely and transparent information."

One of the new supply partnerships Nucor is referring to is the agreement it signed in March with Mercedes Benz to supply Econiq-RE for vehicles produced at its Tuscaloosa, Alabama, manufacturing plant, Topalian said during the earnings call.

“Econiq-RE is made with 100 percent renewable energy and has a greenhouse gas intensity less than half that of extractive blast furnace-based steel production across Scopes 1, 2 and 3,” he continued. “Our agreement with Mercedes Benz is another example of how we're partnering with world-class customers to reduce carbon emissions within their supply chain.

“We also announced a new initiative with Google and Microsoft to scale the adoption of clean energy technologies. Developers of such technologies often struggle to find creditworthy and large-scale energy customers to advance early-stage projects. We aim to lower these obstacles by aggregating our energy needs with others like Google and Microsoft that will seek affordable, reliable and cleaner forms of energy.

“Going forward, we'll be working with energy providers, policymakers and other large energy consumers to advance this work.”

The company says steel mills segment earnings increased from the fourth quarter of 2023 largely because of higher average selling prices and increased volumes, particularly at its sheet mills. Earnings in the steel products segment decreased relative to the fourth quarter of 2023 given lower average selling prices and decreased volumes. Earnings in the raw materials segment increased compared with the fourth quarter of 2023.

Topalian also took a moment during the earnings call to mention U.S. trade enforcement policy, saying, “Earlier this month, I attended a World Steel Association meeting, where I currently serve as chair. And during that meeting, we discussed the ongoing challenges posed by global production overcapacity. The U.S. Commerce Department recently published a final rule designed to strengthen its antidumping and countervailing duty regulations. These rule changes are a positive development for Nucor and the entire steel industry as they strengthen the enforcement of existing trade laws.

“We appreciate the Commerce Department for making these necessary changes, but we still believe it's crucial for Congress to pass the Level the Playing Field 2.0 legislation to give commerce additional tools that address trade-distorting behaviors.”

Outlook

The company is forecasting that earnings in the second quarter of this year will decrease relative to the first quarter, driven primarily by decreased earnings in the steel mills segment arising from lower average selling prices partially offset by modestly increased volumes.

Nucor expects its steel products segment to have moderately decreased earnings in the second quarter because of lower average selling prices that partially will be offset by increased volumes. Earnings in the raw materials segment are expected to be higher in the second quarter owing to the increased profitability of the company’s direct-reduced iron facilities and scrap processing operations.

In the conference call, Nucor Executive Vice President Noah Hanners said the profitability of the company’s scrap processing operations, which include David J. Joseph and its six regional companies, River Metals Recycling, Trademark Metals Recycling, Western Metal Recycling, Texas Port Recycling, Advantage Metals Recycling and Metal Recycling Services, will improve because margin compression and scrap pricing have been lower.

“We peaked in December. We’ve seen declining prices month over month since,” he said, adding that the company expected prices to stabilize in May and normalization of margin. “We also are bringing online a new advanced metal recovery plant, [Trademark Metals Recycling’s] Bushnell facility in Florida, and we’ve incurred some additional startup costs related to our commissioning of that facility. We’ll work through those costs in early Q2 and … that will contribute to more normalized margins in the cycle as well.”