Nucor(US:NUE)2022-07-21 21:43Financial Performance - Nucor achieved record second quarter earnings per share of $9.67 and record first half earnings of $17.30, driven by strength across its diversified portfolio of businesses [8][17] - The company has grown revenues by more than 13% per year since its listing, reaching a record of $36.5 billion last year [9] - Cash provided by operating activities during the quarter was $2.3 billion, enabling significant investments and returning approximately $900 million to shareholders via dividends and share repurchases [20][21] Business Segment Performance - The steel products segment generated $1.1 billion in operating profits, with strong contributions from joist and deck, tubular products, and metal buildings [18] - Shipping volumes in the steel mills segment increased by 10%, primarily in sheet and plate, benefiting from strong demand and attractive pricing [19] - The raw materials segment outperformed first quarter results due to increasing selling prices for DRI and scrap [20] Market Conditions - Demand appears stable and resilient across key end-use markets, although prices in the steel segment have softened due to import pressures and commodity pricing declines [25] - Nonresidential construction remains a strong market, with expectations for continued robust performance in 2023 [36] Company Strategy and Development - Nucor is focused on organic growth projects, with several completed projects already contributing to profitability, including the modernization of Nucor Steel Gallatin and the new plate mill in Brandenburg, Kentucky [10][22] - The company is committed to expanding beyond its core steelmaking business, with recent acquisitions aimed at diversifying its portfolio and enhancing its market position [11][69] Management Commentary on Future Outlook - Management expressed confidence in Nucor's ability to grow and create value for shareholders despite economic uncertainties, citing a sustainable and flexible business model [16][25] - The company anticipates that earnings per share will establish a new annual record for 2022, with a strong outlook for the long term [25] Other Important Information - Nucor's capital allocation priorities include deploying capital to create long-term value, maintaining a regular quarterly dividend, and returning at least 40% of net earnings to shareholders [21][24] - The company has a strong balance sheet with a debt to capital ratio of 29% and ample liquidity [24] Q&A Session Summary Question: Insights on plate and structural markets - Management noted that while utilization rates have been soft, pricing remains strong, and they expect continued robust markets in nonresidential construction [28][36] Question: Update on Gallatin and commercial expectations - Gallatin is expected to ramp up to nameplate capacity by the fourth quarter, with significant production increases anticipated [39][66] Question: Raw material strategy and DRI pricing - Management discussed the reduction in pig iron use and stable DRI pricing, with expectations for a decline in pig prices in the fourth quarter [42][43] Question: Outlook for steel product business - The steel products segment is expected to maintain strong performance, with backlogs still significantly higher than pre-pandemic levels [47][50] Question: Infrastructure package demand - Management indicated that while there is dialogue around the infrastructure package, significant material orders are not expected until early 2023 [55] Question: M&A opportunities - The company has a rich pipeline for potential acquisitions, focusing on businesses that provide differentiated value propositions and enhance construction solutions [68][69]