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NUCOR CORP - Quarter Report: 2021 October (Form 10-Q)

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 2, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-4119

 

NUCOR CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

13-1860817

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

1915 Rexford Road, Charlotte, North Carolina

 

28211

(Address of principal executive offices)

 

(Zip Code)

(704) 366-7000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.40 per share

 

NUE

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes        No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

285,798,874 shares of the registrant’s common stock were outstanding at October 2, 2021.

 

 

 


Table of Contents

 

Nucor Corporation

Quarterly Report on Form 10-Q

For the Three Months and Nine Months Ended October 2, 2021

Table of Contents

 

 

 

 

 

 

 

Page

Part I

 

Financial Information

 

 

 

 

 

 

 

 

 

 

 

Item 1

 

Financial Statements (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Earnings – Three Months (13 Weeks) and Nine Months (39 Weeks) Ended October 2, 2021 and October 3, 2020

 

1

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income – Three Months (13 Weeks) and Nine Months (39 Weeks) Ended October 2, 2021 and October 3, 2020

 

2

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets – October 2, 2021 and December 31, 2020

 

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows – Nine Months (39 Weeks) Ended October 2, 2021 and October 3, 2020

 

4

 

 

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

5

 

 

 

 

 

 

 

 

 

Item 2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

 

 

 

 

 

 

Item 4

 

Controls and Procedures

 

27

 

 

 

 

 

 

 

Part II

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

Item 1

 

Legal Proceedings

 

28

 

 

 

 

 

 

 

 

 

Item 1A

 

Risk Factors

 

28

 

 

 

 

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

 

 

 

 

 

 

 

 

Item 5

 

Other Information

 

28

 

 

 

 

 

 

 

 

 

Item 6

 

Exhibits

 

29

 

 

 

 

 

 

 

Signatures

 

30

 

 

 

 

 

 

 

 

 

i


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Nucor Corporation Condensed Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Net sales

 

$

10,313,223

 

 

$

4,927,960

 

 

$

26,119,527

 

 

$

14,879,603

 

Costs, expenses and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

6,906,950

 

 

 

4,425,765

 

 

 

18,617,314

 

 

 

13,370,181

 

Marketing, administrative and other expenses

 

 

526,345

 

 

 

165,513

 

 

 

1,204,539

 

 

 

460,922

 

Equity in (earnings) losses of unconsolidated affiliates

 

 

(32,464

)

 

 

(479

)

 

 

(65,106

)

 

 

14,422

 

Losses on assets

 

 

-

 

 

 

6,604

 

 

 

50,970

 

 

 

299,450

 

Interest expense, net

 

 

43,285

 

 

 

40,139

 

 

 

118,709

 

 

 

116,856

 

 

 

 

7,444,116

 

 

 

4,637,542

 

 

 

19,926,426

 

 

 

14,261,831

 

Earnings before income taxes and noncontrolling interests

 

 

2,869,107

 

 

 

290,418

 

 

 

6,193,101

 

 

 

617,772

 

Provision for income taxes

 

 

645,842

 

 

 

67,788

 

 

 

1,410,863

 

 

 

207,610

 

Net earnings

 

 

2,223,265

 

 

 

222,630

 

 

 

4,782,238

 

 

 

410,162

 

Earnings attributable to noncontrolling interests

 

 

95,522

 

 

 

29,215

 

 

 

205,195

 

 

 

87,535

 

Net earnings attributable to Nucor stockholders

 

$

2,127,743

 

 

$

193,415

 

 

$

4,577,043

 

 

$

322,627

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

7.29

 

 

$

0.63

 

 

$

15.37

 

 

$

1.06

 

Diluted

 

$

7.28

 

 

$

0.63

 

 

$

15.34

 

 

$

1.06

 

Average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

290,510

 

 

 

303,394

 

 

 

296,431

 

 

 

303,072

 

Diluted

 

 

291,152

 

 

 

303,441

 

 

 

296,928

 

 

 

303,099

 

 

See notes to condensed consolidated financial statements.

1


Table of Contents

 

 

Nucor Corporation Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

 

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Net earnings

 

$

2,223,265

 

 

$

222,630

 

 

$

4,782,238

 

 

$

410,162

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized income on hedging derivatives, net

   of income taxes of $6,100 and $2,000 for the third

   quarter of 2021 and 2020, respectively, and $9,100

   and $1,400 for the first nine months of 2021 and

   2020, respectively

 

 

19,057

 

 

 

6,387

 

 

 

28,260

 

 

 

4,888

 

Reclassification adjustment for settlement of hedging

   derivatives included in net income, net of income

   taxes of $(800) and $700 for the third quarter of 2021

   and 2020, respectively, and $(700) and $2,300 for the

   first nine months of 2021 and 2020, respectively

 

 

(2,457

)

 

 

2,113

 

 

 

(1,760

)

 

 

6,712

 

Foreign currency translation gain (loss), net of income

   taxes of $0 for the third quarter and first nine months

   of 2021 and 2020

 

 

(28,772

)

 

 

16,867

 

 

 

6,460

 

 

 

(24,103

)

 

 

 

(12,172

)

 

 

25,367

 

 

 

32,960

 

 

 

(12,503

)

Comprehensive income

 

 

2,211,093

 

 

 

247,997

 

 

 

4,815,198

 

 

 

397,659

 

Comprehensive income attributable to noncontrolling

   interests

 

 

95,522

 

 

 

29,215

 

 

 

205,195

 

 

 

87,535

 

Comprehensive income attributable to Nucor stockholders

 

$

2,115,571

 

 

$

218,782

 

 

$

4,610,003

 

 

$

310,124

 

 

See notes to condensed consolidated financial statements.

2


Table of Contents

 

 

Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

 

 

Oct. 2, 2021

 

 

Dec 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,764,293

 

 

$

2,639,671

 

Short-term investments

 

 

247,247

 

 

 

408,004

 

Accounts receivable, net

 

 

4,087,293

 

 

 

2,298,850

 

Inventories, net

 

 

5,678,715

 

 

 

3,569,089

 

Other current assets

 

 

346,277

 

 

 

573,048

 

Total current assets

 

 

12,123,825

 

 

 

9,488,662

 

Property, plant and equipment, net

 

 

7,777,277

 

 

 

6,899,110

 

Restricted cash and cash equivalents

 

 

281,345

 

 

 

115,258

 

Goodwill

 

 

2,787,992

 

 

 

2,229,672

 

Other intangible assets, net

 

 

1,171,292

 

 

 

668,021

 

Other assets

 

 

807,748

 

 

 

724,671

 

Total assets

 

$

24,949,479

 

 

$

20,125,394

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Short-term debt

 

$

102,737

 

 

$

57,906

 

Current portion of long-term debt and finance lease obligations

 

 

615,130

 

 

 

10,885

 

Accounts payable

 

 

1,870,035

 

 

 

1,432,159

 

Salaries, wages and related accruals

 

 

1,323,365

 

 

 

462,727

 

Accrued expenses and other current liabilities

 

 

886,332

 

 

 

664,183

 

Total current liabilities

 

 

4,797,599

 

 

 

2,627,860

 

Long-term debt and finance lease obligations due after one year

 

 

4,949,945

 

 

 

5,271,789

 

Deferred credits and other liabilities

 

 

1,251,643

 

 

 

993,884

 

Total liabilities

 

 

10,999,187

 

 

 

8,893,533

 

EQUITY

 

 

 

 

 

 

 

 

Nucor stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

152,061

 

 

 

152,061

 

Additional paid-in capital

 

 

2,131,514

 

 

 

2,121,288

 

Retained earnings

 

 

15,561,261

 

 

 

11,343,852

 

Accumulated other comprehensive loss,

   net of income taxes

 

 

(85,901

)

 

 

(118,861

)

Treasury stock

 

 

(4,336,415

)

 

 

(2,709,675

)

Total Nucor stockholders' equity

 

 

13,422,520

 

 

 

10,788,665

 

Noncontrolling interests

 

 

527,772

 

 

 

443,196

 

Total equity

 

 

13,950,292

 

 

 

11,231,861

 

Total liabilities and equity

 

$

24,949,479

 

 

$

20,125,394

 

 

See notes to condensed consolidated financial statements.

3


Table of Contents

 

 

Nucor Corporation Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Operating activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

4,782,238

 

 

$

410,162

 

Adjustments:

 

 

 

 

 

 

 

 

Depreciation

 

 

546,619

 

 

 

525,688

 

Amortization

 

 

76,656

 

 

 

62,877

 

Stock-based compensation

 

 

97,652

 

 

 

56,122

 

Deferred income taxes

 

 

166,748

 

 

 

140,606

 

Distributions from affiliates

 

 

200

 

 

 

3,021

 

Equity in (earnings) losses of unconsolidated affiliates

 

 

(65,106

)

 

 

14,422

 

Losses on assets

 

 

50,970

 

 

 

299,450

 

Changes in assets and liabilities (exclusive of acquisitions and dispositions):

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,622,668

)

 

 

37,547

 

Inventories

 

 

(1,976,738

)

 

 

590,434

 

Accounts payable

 

 

343,014

 

 

 

15,366

 

Federal income taxes

 

 

262,195

 

 

 

18,848

 

Salaries, wages and related accruals

 

 

835,381

 

 

 

(69,235

)

Other operating activities

 

 

123,202

 

 

 

100,283

 

Cash provided by operating activities

 

 

3,620,363

 

 

 

2,205,591

 

Investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(1,207,088

)

 

 

(1,179,081

)

Investment in and advances to affiliates

 

 

(193

)

 

 

(16,542

)

Disposition of plant and equipment

 

 

15,581

 

 

 

19,492

 

Acquisitions (net of cash acquired)

 

 

(1,346,608

)

 

 

(20,368

)

Purchase of investments

 

 

(394,141

)

 

 

(401,986

)

Proceeds from the sale of investments

 

 

554,898

 

 

 

301,249

 

Other investing activities

 

 

1,042

 

 

 

(33,536

)

Cash used in investing activities

 

 

(2,376,509

)

 

 

(1,330,772

)

Financing activities:

 

 

 

 

 

 

 

 

Net change in short-term debt

 

 

44,831

 

 

 

1,334

 

Proceeds from long-term debt, net of discount

 

 

196,990

 

 

 

1,237,635

 

Repayment of long-term debt

 

 

-

 

 

 

(97,150

)

Bond issuance related costs

 

 

-

 

 

 

(6,250

)

Proceeds from exercise of stock options

 

 

143,874

 

 

 

-

 

Payment of tax withholdings on certain stock-based compensation

 

 

(71,494

)

 

 

(17,691

)

Distributions to noncontrolling interests

 

 

(120,619

)

 

 

(106,193

)

Cash dividends

 

 

(366,606

)

 

 

(368,636

)

Acquisition of treasury stock

 

 

(1,773,848

)

 

 

(39,499

)

Other financing activities

 

 

(7,993

)

 

 

(6,983

)

Cash (used in) provided by financing activities

 

 

(1,954,865

)

 

 

596,567

 

Effect of exchange rate changes on cash

 

 

1,720

 

 

 

(7,790

)

(Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents

 

 

(709,291

)

 

 

1,463,596

 

Cash and cash equivalents and restricted cash and cash

   equivalents - beginning of year

 

 

2,754,929

 

 

 

1,534,605

 

Cash and cash equivalents and restricted cash and cash

   equivalents - end of nine months

 

$

2,045,638

 

 

$

2,998,201

 

Non-cash investing activity:

 

 

 

 

 

 

 

 

Change in accrued plant and equipment purchases

 

$

14,997

 

 

$

-

 

 

See notes to condensed consolidated financial statements.

4


Table of Contents

 

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Interim Presentation

The information furnished in this Item 1 reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented and are of a normal and recurring nature unless otherwise noted. The information furnished has not been audited; however, the December 31, 2020 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited condensed consolidated financial statements included in this Item 1 should be read in conjunction with the audited consolidated financial statements and the notes thereto included in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2020.

2. Inventories

Inventories consisted of approximately 44% raw materials and supplies and 56% finished and semi-finished products at October 2, 2021 (42% and 58%, respectively, at December 31, 2020). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which products are sold to customers at various stages throughout the process. Since most steel products can be classified as either finished or semi-finished products, these two categories of inventory are combined.

3. Property, Plant and Equipment

Property, plant and equipment is recorded net of accumulated depreciation of $10.33 billion at October 2, 2021 ($9.86 billion at December 31, 2020).

Nucor reviews its natural gas well assets for impairment if and when circumstances indicate that a decline in value below their carrying amounts may have occurred. Nucor last assessed its proved producing natural gas well assets in the fourth quarter of 2020 due to the continued low-price natural gas pricing environment. After completing its assessment, Nucor determined that as of such time there were no impairments of any of its three groups of proved well assets. Changes in the natural gas industry or a prolonged low-price environment beyond what has already been assumed in the assessments could cause management to revise the natural gas and natural gas liquids price assumptions, the estimated reserves or the estimated lease operating costs. Therefore, it is reasonably possible that unfavorable revisions to these assumptions or estimates could result in further impairment of some or all of the groups of proved well assets. The combined carrying value of the three groups of wells was $66.7 million at October 2, 2021 ($71.7 million at December 31, 2020).

Nucor owns a 49% leasehold interest in unproved oil and natural gas properties in the South Piceance Basin located in Colorado. Nucor has full discretion on its participation in all future drilling capital investments related to the leasehold interest. Nucor is continually evaluating the market environment for natural gas and has the ability to increase output in a rising or higher natural gas price environment.

In the second quarter of 2021, Nucor made the decision that it would not develop a portion of its unproved oil and natural gas properties (“Portion A”) within the contractually specified time period related to Portion A. As a result of this decision, the Company will forfeit its leasehold rights for Portion A. The Company recorded a charge of $42.0 million to write off the value of Portion A that is included in losses on assets on the condensed consolidated statements of earnings for the nine months ended October 2, 2021. The decision not to develop Portion A was heavily influenced by the approaching deadline to commence development combined with Portion A’s expected near-term profitability not achieving management’s desired returns relative to the cost of development. A significant portion of the Company’s remaining leasehold interest in unproved oil and natural gas properties are held by production. Accordingly, management does not believe the value assigned to those portions needs to be evaluated at this time. The carrying value of the remaining portions of unproved oil and natural gas properties was $96.0 million at October 2, 2021.

 

4. Goodwill and Other Intangible Assets

The change in the net carrying amount of goodwill for the nine months ended October 2, 2021 by segment was as follows (in thousands):

5


Table of Contents

 

 

 

 

Steel Mills

 

 

Steel Products

 

 

Raw Materials

 

 

Total

 

Balance at December 31, 2020

 

$

612,470

 

 

$

887,625

 

 

$

729,577

 

 

$

2,229,672

 

Acquisitions

 

 

705

 

 

 

535,099

 

 

 

20,464

 

 

 

556,268

 

Other

 

 

-

 

 

 

(129

)

 

 

-

 

 

 

(129

)

Translation

 

 

-

 

 

 

2,181

 

 

 

-

 

 

 

2,181

 

Balance at October 2, 2021

 

$

613,175

 

 

$

1,424,776

 

 

$

750,041

 

 

$

2,787,992

 

 

Nucor completed its most recent annual goodwill impairment testing during the fourth quarter of 2020 and concluded that as of such time there was no impairment of goodwill for any of its reporting units.

The annual assessment performed in 2020 for one of the Company’s reporting units, Rebar Fabrication, used forward-looking projections in future cash flows. The fair value of this reporting unit exceeded its carrying value by approximately 99% in the most recent assessment. The reporting unit was profitable in 2020 and we expect it to be profitable in 2021. If our assessment of the relevant facts and circumstances changes, or the actual performance of this reporting unit falls short of expected results, non-cash impairment charges may be required. Total goodwill associated with the Rebar Fabrication reporting unit was $366.2 million as of October 2, 2021 ($364.3 million as of December 31, 2020). An impairment of goodwill may also lead us to record an impairment of other intangible assets. Total finite-lived intangible assets associated with the Rebar Fabrication reporting unit were $52.2 million as of October 2, 2021 ($58.8 million as of December 31, 2020). There have been no triggering events requiring an interim assessment for impairment of the Rebar Fabrication reporting unit since the most recent annual goodwill impairment testing date.

The annual assessment performed in 2020 for one of the Company’s reporting units, Grating, used forward-looking projections and included continued positive future cash flows. The fair value of this reporting unit exceeded its carrying value by approximately 88% in the most recent assessment. If our assessment of the relevant facts and circumstances changes, or the actual performance of this reporting unit falls short of expected results, non-cash impairment charges may be required. Total goodwill associated with the Grating reporting unit was $37.1 million as of October 2, 2021 ($37.0 million as of December 31, 2020).

Intangible assets with estimated useful lives of five to 22 years are amortized on a straight-line or accelerated basis and were comprised of the following as of October 2, 2021 and December 31, 2020 (in thousands):

 

 

 

October 2, 2021

 

 

December 31, 2020

 

 

 

Gross Amount

 

 

Accumulated

Amortization

 

 

Gross Amount

 

 

Accumulated

Amortization

 

Customer relationships

 

$

1,874,831

 

 

$

897,952

 

 

$

1,421,962

 

 

$

838,443

 

Trademarks and trade names

 

 

233,423

 

 

 

106,928

 

 

 

162,365

 

 

 

100,000

 

Other

 

 

119,822

 

 

 

51,904

 

 

 

63,822

 

 

 

41,685

 

 

 

$

2,228,076

 

 

$

1,056,784

 

 

$

1,648,149

 

 

$

980,128

 

 

Intangible asset amortization expense in the third quarter of 2021 and 2020 was $34.8 million and $20.7 million, respectively, and $76.7 million and $62.9 million in the first nine months of 2021 and 2020, respectively. Annual amortization expense is estimated to be $124.1 million in 2021; $169.9 million in 2022; $133.9 million in 2023; $133.1 million in 2024; and $132.2 million in 2025.

5. Current Liabilities

Book overdrafts, included in accounts payable in the condensed consolidated balance sheets, were $147.8 million at October 2, 2021 ($210.5 million at December 31, 2020). Dividends payable, included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, were $116.9 million at October 2, 2021 ($123.9 million at December 31, 2020).

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6. Fair Value Measurements

The following table summarizes information regarding Nucor’s financial assets and financial liabilities that were measured at fair value as of October 2, 2021 and December 31, 2020 (in thousands). Nucor does not have any non-financial assets or non-financial liabilities that are measured at fair value on a recurring basis.

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

Description

 

Carrying

Amount in

Condensed

Consolidated

Balance

Sheets

 

 

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

As of October 2, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,111,994

 

 

$

1,111,994

 

 

$

-

 

 

$

-

 

Short-term investments

 

 

247,247

 

 

 

247,247

 

 

 

-

 

 

 

-

 

Restricted cash and cash equivalents

 

 

281,345

 

 

 

281,345

 

 

 

-

 

 

 

-

 

Derivative contracts

 

 

31,257

 

 

 

-

 

 

 

31,257

 

 

 

-

 

Total assets

 

$

1,671,843

 

 

$

1,640,586

 

 

$

31,257

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts

 

$

(4,133

)

 

$

-

 

 

$

(4,133

)

 

$

-

 

As of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

2,186,820

 

 

$

2,186,820

 

 

$

-

 

 

$

-

 

Short-term investments

 

 

408,004

 

 

 

408,004

 

 

 

-

 

 

 

-

 

Restricted cash and cash equivalents

 

 

115,258

 

 

 

115,258

 

 

 

-

 

 

 

-

 

Total assets

 

$

2,710,082

 

 

$

2,710,082

 

 

$

-

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts

 

$

(14,361

)

 

$

-

 

 

$

(14,361

)

 

$

-

 

 

Fair value measurements for Nucor’s cash equivalents, short-term investments and restricted cash and cash equivalents are classified under Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Our short-term investments at October 2, 2021 consisted of certificates of deposit, commercial paper and corporate notes. Fair value measurements for Nucor’s derivatives are classified under Level 2 because such measurements are based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices, and spot and future exchange rates. There were no transfers between the levels in the fair value hierarchy for the periods presented.

The fair value of short-term and long-term debt, including current maturities, was approximately $6.09 billion at October 2, 2021 ($6.05 billion at December 31, 2020). The debt fair value estimates are classified under Level 2 because such estimates are based on readily available market prices of our debt at October 2, 2021 and December 31, 2020, or similar debt with the same maturities, ratings and interest rates.

7. Contingencies

Nucor is subject to environmental laws and regulations established by federal, state and local authorities and, accordingly, makes provisions for the estimated costs of compliance. Of the undiscounted total of $14.2 million of accrued environmental costs at October 2, 2021 ($16.0 million at December 31, 2020), $2.9 million was classified in accrued expenses and other current liabilities ($5.6 million at December 31, 2020) and $11.3 million was classified in deferred credits and other liabilities ($10.4 million at December 31, 2020). Inherent uncertainties exist in these estimates primarily due to unknown conditions, evolving remediation technology and changing governmental regulations, legal standards and enforcement priorities.

We are from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position or cash flows. Nucor maintains liability insurance with self-insurance limits for certain risks.

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Table of Contents

 

8. Stock-Based Compensation

Overview

The Company maintains the Nucor Corporation 2014 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) under which the Company may award stock-based compensation to key employees, officers and non-employee directors. The Company’s stockholders approved an amendment and restatement of the Omnibus Plan on May 14, 2020. The Omnibus Plan, as amended and restated, permits the award of stock options, restricted stock units, restricted shares and other stock-based awards for up to 19.0 million shares of the Company’s common stock. As of October 2, 2021, 7.0 million shares remained available for award under the Omnibus Plan.

The Company also maintains a number of inactive plans under which stock-based awards remain outstanding but no further awards may be made. As of October 2, 2021, 0.5 million shares were reserved for issuance upon the future settlement of outstanding awards under such inactive plans.

Stock Options

Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at 100% of the market value on the date of the grant. The stock options granted are generally exercisable at the end of three years and have a term of 10 years.

A summary of activity under Nucor’s stock option plans for the first nine months of 2021 is as follows (shares in thousands):

 

 

 

 

 

 

 

Weighted-

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

Average

 

 

Average

 

Aggregate

 

 

 

 

 

 

 

Exercise

 

 

Remaining

 

Intrinsic

 

 

 

Shares

 

 

Price

 

 

Contractual Life

 

Value

 

Number of shares under stock options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

 

 

3,916

 

 

$

50.03

 

 

 

 

 

 

 

Granted

 

 

138

 

 

$

110.74

 

 

 

 

 

 

 

Exercised

 

 

(2,839

)

 

$

50.68

 

 

 

 

$

65,859

 

Canceled

 

 

-

 

 

$

-

 

 

 

 

 

 

 

Outstanding at October 2, 2021

 

 

1,215

 

 

$

55.40

 

 

6.8 years

 

$

53,125

 

Stock options exercisable at October 2, 2021

 

 

552

 

 

$

54.36

 

 

4.7 years

 

$

24,083

 

 

Stock options granted to employees who are eligible for retirement on the date of the grant are expensed immediately since these awards vest upon retirement from the Company. Retirement, for purposes of vesting in these stock options, means termination of employment after satisfying age and years of service requirements. Similarly, stock options granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible. Compensation expense for stock options granted to employees who will not become retirement-eligible prior to the end of the vesting term is recognized on a straight-line basis over the vesting period. Compensation expense for stock options was $0.5 million and $0.3 million in the third quarter of 2021 and 2020, respectively, and $3.4 million and $2.4 million in the first nine months of 2021 and 2020, respectively. As of October 2, 2021, unrecognized compensation expense related to stock options was $3.5 million, which is expected to be recognized over a weighted-average period of 2.2 years.

Restricted Stock Units

Nucor annually grants restricted stock units (“RSUs”) to key employees, officers and non-employee directors. The RSUs granted to key employees and officers vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date. Retirement, for purposes of vesting in these RSUs only, means termination of employment with approval of the Compensation and Executive Development Committee of the Board of Directors after satisfying age and years of service requirements. RSUs granted to a non-employee director are fully vested on the grant date and are payable to the non-employee director in the form of common stock after the termination of the director’s service on the Board of Directors.

RSUs granted to employees who are eligible for retirement on the date of the grant are expensed immediately, and RSUs granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since these awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who will not become retirement-eligible prior to the end of the vesting term is recognized on a straight-line basis over the vesting period.

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Table of Contents

 

Cash dividend equivalents are paid to holders of RSUs each quarter. Dividend equivalents paid on RSUs expected to vest are recognized as a reduction in retained earnings.

The fair value of an RSU is determined based on the closing price of Nucor’s common stock on the date of the grant.

A summary of Nucor’s RSU activity for the first nine months of 2021 is as follows (shares in thousands):

 

 

 

Shares

 

 

Grant Date

Fair Value

 

Restricted stock units:

 

 

 

 

 

 

 

 

Unvested at beginning of year

 

 

1,830

 

 

$

47.33

 

Granted

 

 

397

 

 

$

110.74

 

Vested

 

 

(918

)

 

$

57.41

 

Canceled

 

 

(58

)

 

$

48.67

 

Unvested at October 2, 2021

 

 

1,251

 

 

$

60.00

 

 

Compensation expense for RSUs was $10.4 million and $11.1 million in the third quarter of 2021 and 2020, respectively, and $42.4 million and $47.9 million in the first nine months of 2021 and 2020, respectively. As of October 2, 2021, unrecognized compensation expense related to unvested RSUs was $53.2 million, which is expected to be recognized over a weighted-average period of 1.3 years.

Restricted Stock Awards

Prior to their expiration effective December 31, 2017, the Nucor Corporation Senior Officers Long-Term Incentive Plan and the Nucor Corporation Senior Officers Annual Incentive Plan authorized the award of shares of common stock to officers subject to certain conditions and restrictions. Effective January 1, 2018, the Company adopted supplements to the Omnibus Plan with terms that permit the award of shares of common stock to officers subject to the conditions and restrictions described below, which are substantially similar to those of the expired Senior Officers Long-Term Incentive Plan and Senior Officers Annual Incentive Plan. The expired Senior Officers Long-Term Incentive Plan, together with the applicable supplement, is referred to below as the “LTIP,” and the expired Senior Officers Annual Incentive Plan, together with the applicable supplement, is referred to below as the “AIP.”

The LTIP provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period. One-third of the LTIP restricted stock award vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age 55 while employed by Nucor. Although participants are entitled to cash dividends and may vote such awarded shares, the sale or transfer of such shares is limited during the restricted period.

The AIP provides for the payment of annual cash incentive awards. An AIP participant may elect, however, to defer payment of up to one-half of an AIP award. In such event, the deferred AIP award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock units, equal to 25% of the number of common stock units attributable to the deferred AIP award. Common stock units attributable to deferred AIP awards are fully vested. Common stock units credited as a deferral incentive vest upon the AIP participant’s attainment of age 55 while employed by Nucor. Vested common stock units are paid to AIP participants in the form of shares of common stock following their termination of employment with Nucor.


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Table of Contents

 

A summary of Nucor’s restricted stock activity under the AIP and the LTIP for the first nine months of 2021 is as follows (shares in thousands):

 

 

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Restricted stock units and restricted stock awards:

 

 

 

 

 

 

 

 

Unvested at beginning of year

 

 

127

 

 

$

49.94

 

Granted

 

 

262

 

 

$

65.61

 

Vested

 

 

(243

)

 

$

62.92

 

Canceled

 

 

(9

)

 

$

48.75

 

Unvested at October 2, 2021

 

 

137

 

 

$

56.93

 

 

Compensation expense for common stock and common stock units awarded under the AIP and the LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $20.1 million and $3.3 million in the third quarter of 2021 and 2020, respectively, and $51.9 million and $5.8 million in the first nine months of 2021 and 2020, respectively. As of October 2, 2021, unrecognized compensation expense related to unvested restricted stock awards was $1.7 million, which is expected to be recognized over a weighted-average period of 1.8 years.

9. Employee Benefit Plan

Nucor makes contributions to a Profit Sharing and Retirement Savings Plan for qualified employees based on the profitability of the Company. Nucor’s expense for these benefits totaled $274.9 million and $27.5 million in the third quarter of 2021 and 2020, respectively, and $596.2 million and $59.5 million in the first nine months of 2021 and 2020, respectively. The related liability for these benefits is included in salaries, wages and related accruals in the condensed consolidated balance sheets.

10. Interest Expense (Income)

The components of net interest expense for the third quarter and first nine months of 2021 and 2020 are as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Interest expense

 

$

43,908

 

 

$

42,281

 

 

$

122,539

 

 

$

128,726

 

Interest income

 

 

(623

)

 

 

(2,142

)

 

 

(3,830

)

 

 

(11,870

)

Interest expense, net

 

$

43,285

 

 

$

40,139

 

 

$

118,709

 

 

$

116,856

 

 

11. Income Taxes

The effective tax rate for the third quarter of 2021 was 22.5% compared to 23.3% for the third quarter of 2020.

Nucor has concluded U.S. federal income tax matters for tax years through 2014 and for tax year 2016. The tax years 2015 and 2017 through 2020 remain open to examination by the Internal Revenue Service. The 2015 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 2014 through 2020 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

Non-current deferred tax liabilities included in deferred credits and other liabilities in the condensed consolidated balance sheets were $771.4 million at October 2, 2021 ($596.4 million at December 31, 2020).

 

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Table of Contents

 

 

12. Stockholders’ Equity

The following tables reflect the changes in stockholders’ equity attributable to both Nucor and the noncontrolling interests of Nucor’s joint ventures, primarily Nucor-Yamato Steel Company (Limited Partnership) (“NYS”) of which Nucor owns 51%, for the three months and nine months ended October 2, 2021 and October 3, 2020 (in thousands):

 

 

 

 

 

 

 

Three Months (13 Weeks) Ended October 2, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Treasury Stock

 

 

Nucor

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

(at cost)

 

 

Stockholders'

 

 

Noncontrolling

 

 

 

Total

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Shares

 

 

Amount

 

 

Equity

 

 

Interests

 

BALANCES, July 3, 2021

 

$

12,709,651

 

 

 

380,154

 

 

$

152,061

 

 

$

2,117,155

 

 

$

13,550,406

 

 

$

(73,729

)

 

 

86,459

 

 

$

(3,491,915

)

 

$

12,253,978

 

 

$

455,673

 

Net earnings

 

 

2,223,265

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,127,743

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,127,743

 

 

 

95,522

 

Other comprehensive income (loss)

 

 

(12,172

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,172

)

 

 

-

 

 

 

-

 

 

 

(12,172

)

 

 

-

 

Stock options exercised

 

 

15,075

 

 

 

-

 

 

 

-

 

 

 

2,699

 

 

 

-

 

 

 

-

 

 

 

(285

)

 

 

12,376

 

 

 

15,075

 

 

 

-

 

Stock option expense

 

 

458

 

 

 

-

 

 

 

-

 

 

 

458

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

458

 

 

 

-

 

Issuance of stock under award plans,

   net of forfeitures

 

 

11,629

 

 

 

-

 

 

 

-

 

 

 

10,802

 

 

 

-

 

 

 

-

 

 

 

(19

)

 

 

827

 

 

 

11,629

 

 

 

-

 

Amortization of unearned

   compensation

 

 

400

 

 

 

-

 

 

 

-

 

 

 

400

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

400

 

 

 

-

 

Treasury stock acquired

 

 

(857,703

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,200

 

 

 

(857,703

)

 

 

(857,703

)

 

 

-

 

Cash dividends declared

 

 

(116,888

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(116,888

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(116,888

)

 

 

-

 

Distributions to noncontrolling

   interests

 

 

(23,423

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23,423

)

BALANCES, October 2, 2021

 

$

13,950,292

 

 

 

380,154

 

 

$

152,061

 

 

$

2,131,514

 

 

$

15,561,261

 

 

$

(85,901

)

 

 

94,355

 

 

$

(4,336,415

)

 

$

13,422,520

 

 

$

527,772

 

 

 

 

 

 

 

 

Nine Months (39 Weeks) Ended October 2, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Treasury Stock

 

 

Nucor

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

(at cost)

 

 

Stockholders'

 

 

Noncontrolling

 

 

 

Total

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Shares

 

 

Amount

 

 

Equity

 

 

Interests

 

BALANCES, December 31, 2020

 

$

11,231,861

 

 

 

380,154

 

 

$

152,061

 

 

$

2,121,288

 

 

$

11,343,852

 

 

$

(118,861

)

 

 

77,909

 

 

$

(2,709,675

)

 

$

10,788,665

 

 

$

443,196

 

Net earnings

 

 

4,782,238

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,577,043

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,577,043

 

 

 

205,195

 

Other comprehensive income (loss)

 

 

32,960

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

32,960

 

 

 

-

 

 

 

-

 

 

 

32,960

 

 

 

-

 

Stock options exercised

 

 

143,874

 

 

 

-

 

 

 

-

 

 

 

38,523

 

 

 

-

 

 

 

-

 

 

 

(2,839

)

 

 

105,351

 

 

 

143,874

 

 

 

-

 

Stock option expense

 

 

3,367

 

 

 

-

 

 

 

-

 

 

 

3,367

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,367

 

 

 

-

 

Issuance of stock under award plans,

   net of forfeitures

 

 

8,893

 

 

 

-

 

 

 

-

 

 

 

(32,864

)

 

 

-

 

 

 

-

 

 

 

(1,060

)

 

 

41,757

 

 

 

8,893

 

 

 

-

 

Amortization of unearned

   compensation

 

 

1,200

 

 

 

-

 

 

 

-

 

 

 

1,200

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,200

 

 

 

-

 

Treasury stock acquired

 

 

(1,773,848

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20,345

 

 

 

(1,773,848

)

 

 

(1,773,848

)

 

 

-

 

Cash dividends declared

 

 

(359,634

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(359,634

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(359,634

)

 

 

-

 

Distributions to noncontrolling

   interests

 

 

(120,619

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(120,619

)

BALANCES, October 2, 2021

 

$

13,950,292

 

 

 

380,154

 

 

$

152,061

 

 

$

2,131,514

 

 

$

15,561,261

 

 

$

(85,901

)

 

 

94,355

 

 

$

(4,336,415

)

 

$

13,422,520

 

 

$

527,772

 

11


Table of Contents

 

 

 

 

 

 

 

 

Three Months (13 Weeks) Ended October 3, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Treasury Stock

 

 

Nucor

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

(at cost)

 

 

Stockholders'

 

 

Noncontrolling

 

 

 

Total

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Shares

 

 

Amount

 

 

Equity

 

 

Interests

 

BALANCES, July 4, 2020

 

$

10,623,485

 

 

 

380,154

 

 

$

152,061

 

 

$

2,106,907

 

 

$

10,998,533

 

 

$

(340,836

)

 

 

78,259

 

 

$

(2,721,845

)

 

$

10,194,820

 

 

$

428,665

 

Net earnings

 

 

222,630

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

193,415

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

193,415

 

 

 

29,215

 

Other comprehensive income (loss)

 

 

25,367

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,367

 

 

 

-

 

 

 

-

 

 

 

25,367

 

 

 

-

 

Stock option expense

 

 

263

 

 

 

-

 

 

 

-

 

 

 

263

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

263

 

 

 

-

 

Issuance of stock under award plans,

   net of forfeitures

 

 

11,189

 

 

 

-

 

 

 

-

 

 

 

10,012

 

 

 

-

 

 

 

-

 

 

 

(34

)

 

 

1,177

 

 

 

11,189

 

 

 

-

 

Amortization of unearned

   compensation

 

 

400

 

 

 

-

 

 

 

-

 

 

 

400

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

400

 

 

 

-

 

Cash dividends declared

 

 

(123,039

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(123,039

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(123,039

)

 

 

-

 

Distributions to noncontrolling

   interests

 

 

(43,228

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(43,228

)

Other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

1

 

BALANCES, October 3, 2020

 

$

10,717,067

 

 

 

380,154

 

 

$

152,061

 

 

$

2,117,582

 

 

$

11,068,908

 

 

$

(315,469

)

 

 

78,225

 

 

$

(2,720,668

)

 

$

10,302,414

 

 

$

414,653

 

 

 

 

 

 

 

 

Nine Months (39 Weeks) Ended October 3, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Treasury Stock

 

 

Nucor

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

(at cost)

 

 

Stockholders'

 

 

Noncontrolling

 

 

 

Total

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Shares

 

 

Amount

 

 

Equity

 

 

Interests

 

BALANCES, December 31, 2019

 

$

10,791,176

 

 

 

380,154

 

 

$

152,061

 

 

$

2,107,646

 

 

$

11,115,056

 

 

$

(302,966

)

 

 

78,342

 

 

$

(2,713,931

)

 

$

10,357,866

 

 

$

433,310

 

Net earnings

 

 

410,162

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

322,627

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

322,627

 

 

 

87,535

 

Other comprehensive income (loss)

 

 

(12,503

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,503

)

 

 

-

 

 

 

-

 

 

 

(12,503

)

 

 

-

 

Stock option expense

 

 

2,402

 

 

 

-

 

 

 

-

 

 

 

2,402

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,402

 

 

 

-

 

Issuance of stock under award plans,

   net of forfeitures

 

 

38,996

 

 

 

-

 

 

 

-

 

 

 

6,234

 

 

 

-

 

 

 

-

 

 

 

(942

)

 

 

32,762

 

 

 

38,996

 

 

 

-

 

Amortization of unearned

   compensation

 

 

1,300

 

 

 

-

 

 

 

-

 

 

 

1,300

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,300

 

 

 

-

 

Treasury stock acquired

 

 

(39,499

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

825

 

 

 

(39,499

)

 

 

(39,499

)

 

 

-

 

Cash dividends declared

 

 

(368,774

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(368,774

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(368,774

)

 

 

-

 

Distributions to noncontrolling

   interests

 

 

(106,193

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(106,193

)

Other

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

1

 

BALANCES, October 3, 2020

 

$

10,717,067

 

 

 

380,154

 

 

$

152,061

 

 

$

2,117,582

 

 

$

11,068,908

 

 

$

(315,469

)

 

 

78,225

 

 

$

(2,720,668

)

 

$

10,302,414

 

 

$

414,653

 

 

Dividends declared per share were $0.405 per share in the third quarter of 2021 ($0.4025 per share in the third quarter of 2020) and $1.215 per share in the first nine months of 2021 ($1.2075 per share in the first nine months of 2020).

On May 13, 2021, the Company announced that the Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $3.00 billion of the Company’s common stock and terminated any previously authorized share repurchase programs. Share repurchases will be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. As of October 2, 2021, the Company had approximately $1.94 billion remaining available for share repurchases under the program.

 

 

12


Table of Contents

 

13. Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive income (loss) by component for the three months and nine months ended October 2, 2021 and October 3, 2020 (in thousands):

 

 

 

Three-Month (13-Week) Period Ended

 

 

 

October 2, 2021

 

 

 

Gains and Losses on

 

 

Foreign Currency

 

 

Adjustment to Early

 

 

 

 

 

 

 

Hedging Derivatives

 

 

Gain (Loss)

 

 

Retiree Medical Plan

 

 

Total

 

Accumulated other comprehensive

  income (loss) at July 3, 2021

 

$

5,200

 

 

$

(85,595

)

 

$

6,666

 

 

$

(73,729

)

Other comprehensive income (loss)

   before reclassifications

 

 

19,057

 

 

 

(28,772

)

 

 

-

 

 

 

(9,715

)

Amounts reclassified from accumulated

   other comprehensive income (loss)

   into earnings (1)

 

 

(2,457

)

 

 

-

 

 

 

-

 

 

 

(2,457

)

Net current-period other comprehensive

   income (loss)

 

 

16,600

 

 

 

(28,772

)

 

 

-

 

 

 

(12,172

)

Accumulated other comprehensive

   income (loss) at October 2, 2021

 

$

21,800

 

 

$

(114,367

)

 

$

6,666

 

 

$

(85,901

)

 

 

 

Nine-Month (39-Week) Period Ended

 

 

 

October 2, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains and Losses on

 

 

Foreign Currency

 

 

Adjustment to Early

 

 

 

 

 

 

 

Hedging Derivatives

 

 

Gain (Loss)

 

 

Retiree Medical Plan

 

 

Total

 

Accumulated other comprehensive

   income (loss) at December 31, 2020

 

$

(4,700

)

 

$

(120,827

)

 

$

6,666

 

 

$

(118,861

)

Other comprehensive income (loss)

   before reclassifications

 

 

28,260

 

 

 

6,460

 

 

 

-

 

 

 

34,720

 

Amounts reclassified from accumulated

   other comprehensive income (loss)

   into earnings (1)

 

 

(1,760

)

 

 

-

 

 

 

-

 

 

 

(1,760

)

Net current-period other comprehensive

   income (loss)

 

 

26,500

 

 

 

6,460

 

 

 

-

 

 

 

32,960

 

Accumulated other comprehensive

   income (loss) at October 2, 2021

 

$

21,800

 

 

$

(114,367

)

 

$

6,666

 

 

$

(85,901

)

 

(1)   Includes $(2,457) and $(1,760) of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net losses on commodity contracts in the third quarter and first nine months of 2021, respectively. The tax impact of those reclassifications was $(800) and $(700) in the third quarter and first nine months of 2021, respectively.

 

 

 

Three-Month (13-Week) Period Ended

 

 

 

October 3, 2020

 

 

 

Gains and Losses on

 

 

Foreign Currency

 

 

Adjustment to Early

 

 

 

 

 

 

 

Hedging Derivatives

 

 

Gain (Loss)

 

 

Retiree Medical Plan

 

 

Total

 

Accumulated other comprehensive

   income (loss) at July 4, 2020

 

$

(10,900

)

 

$

(337,743

)

 

$

7,807

 

 

$

(340,836

)

Other comprehensive income (loss)

   before reclassifications

 

 

6,387

 

 

 

16,867

 

 

 

-

 

 

 

23,254

 

Amounts reclassified from accumulated

   other comprehensive income (loss)

   into earnings (2)

 

 

2,113

 

 

 

-

 

 

 

-

 

 

 

2,113

 

Net current-period other comprehensive

   income (loss)

 

 

8,500

 

 

 

16,867

 

 

 

-

 

 

 

25,367

 

Accumulated other comprehensive

   income (loss) at October 3, 2020

 

$

(2,400

)

 

$

(320,876

)

 

$

7,807

 

 

$

(315,469

)

13


Table of Contents

 

 

 

 

Nine-Month (39-Week) Period Ended

 

 

 

October 3, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains and Losses on

 

 

Foreign Currency

 

 

Adjustment to Early

 

 

 

 

 

 

 

Hedging Derivatives

 

 

Gain (Loss)

 

 

Retiree Medical Plan

 

 

Total

 

Accumulated other comprehensive

  income (loss) at December 31, 2019

 

$

(14,000

)

 

$

(296,773

)

 

$

7,807

 

 

$

(302,966

)

Other comprehensive income (loss)

   before reclassifications

 

 

4,888

 

 

 

(24,103

)

 

 

-

 

 

 

(19,215

)

Amounts reclassified from accumulated

   other comprehensive income (loss)

   into earnings (2)

 

 

6,712

 

 

 

-

 

 

 

-

 

 

 

6,712

 

Net current-period other comprehensive

   income (loss)

 

 

11,600

 

 

 

(24,103

)

 

 

-

 

 

 

(12,503

)

Accumulated other comprehensive

   income (loss) at October 3, 2020

 

$

(2,400

)

 

$

(320,876

)

 

$

7,807

 

 

$

(315,469

)

 

(2)   Includes $2,113 and $6,712 of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net losses on commodity contracts in the third quarter and first nine months of 2020, respectively. The tax impact of those reclassifications was $700 and $2,300 in the third quarter and first nine months of 2020, respectively.

14. Segments

Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate; steel trading businesses; rebar distribution businesses; and Nucor’s equity method investments in NuMit LLC (“NuMit”) and Nucor-JFE Steel Mexico, S. de R.L. de C.V. (“Nucor-JFE”). The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, precision castings, steel fasteners, metal building systems, insulated metal panels, steel grating, tubular products businesses, steel racking, piling products business and wire and wire mesh. The raw materials segment includes The David J. Joseph Company and its affiliates (“DJJ”), primarily a scrap broker and processor; Nu-Iron Unlimited and Nucor Steel Louisiana LLC (“Nucor Steel Louisiana”), two facilities that produce direct reduced iron (“DRI”) used by the steel mills; and our natural gas production operations.

Net interest expense on long-term debt, charges and credits associated with changes in allowances to eliminate intercompany profit in inventory, profit sharing expense and stock-based compensation are shown under Corporate/eliminations. Corporate assets primarily include cash and cash equivalents, short-term investments, restricted cash and cash equivalents, allowances to eliminate intercompany profit in inventory, deferred income tax assets, federal and state income taxes receivable and investments in and advances to affiliates.

14


Table of Contents

 

Nucor’s results by segment for the third quarter and first nine months of 2021 and 2020 were as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Net sales to external customers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steel mills

 

$

6,862,133

 

 

$

2,842,625

 

 

$

17,380,819

 

 

$

8,875,856

 

Steel products

 

 

2,744,279

 

 

 

1,738,004

 

 

 

6,795,441

 

 

 

4,988,026

 

Raw materials

 

 

706,811

 

 

 

347,331

 

 

 

1,943,267

 

 

 

1,015,721

 

 

 

$

10,313,223

 

 

$

4,927,960

 

 

$

26,119,527

 

 

$

14,879,603

 

Intercompany sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steel mills

 

$

1,840,007

 

 

$

731,942

 

 

$

4,561,418

 

 

$

2,264,278

 

Steel products

 

 

93,910

 

 

 

51,029

 

 

 

245,523

 

 

 

197,603

 

Raw materials

 

 

4,355,702

 

 

 

1,863,796

 

 

 

12,011,705

 

 

 

5,772,583

 

Corporate/eliminations

 

 

(6,289,619)

 

 

 

(2,646,767

)

 

 

(16,818,646)

 

 

 

(8,234,464

)

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

Earnings (losses) before income taxes and

   noncontrolling interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steel mills

 

$

3,116,539

 

 

$

205,152

 

 

$

6,606,320

 

 

$

512,082

 

Steel products

 

 

368,595

 

 

 

186,976

 

 

 

839,737

 

 

 

502,409

 

Raw materials

 

 

161,870

 

 

 

6,232

 

 

 

505,248

 

 

 

(3,068

)

Corporate/eliminations

 

 

(777,897)

 

 

 

(107,942

)

 

 

(1,758,204)

 

 

 

(393,651

)

 

 

$

2,869,107

 

 

$

290,418

 

 

$

6,193,101

 

 

$

617,772

 

 

 

 

Oct. 2, 2021

 

 

Dec. 31, 2020

 

Segment assets:

 

 

 

 

 

 

 

 

Steel mills

 

$

12,800,019

 

 

$

9,708,260

 

Steel products

 

 

7,667,192

 

 

 

4,461,042

 

Raw materials

 

 

3,788,291

 

 

 

3,324,489

 

Corporate/eliminations

 

 

693,977

 

 

 

2,631,603

 

 

 

$

24,949,479

 

 

$

20,125,394

 

 

15. Revenue

The following tables disaggregate our revenue by major source for the third quarter and first nine months of 2021 and 2020 (in thousands):

 

 

 

Three Months (13 Weeks) Ended October 2, 2021

 

 

Nine Months (39 Weeks) Ended October 2, 2021

 

 

 

Steel

Mills

 

 

Steel

Products

 

 

Raw

Materials

 

 

Total

 

 

Steel

Mills

 

 

Steel

Products

 

 

Raw

Materials

 

 

Total

 

Sheet

 

$

3,643,599

 

 

$

-

 

 

$

-

 

 

$

3,643,599

 

 

$

9,099,358

 

 

$

-

 

 

$

-

 

 

$

9,099,358

 

Bar

 

 

1,633,641

 

 

 

-

 

 

 

-

 

 

 

1,633,641

 

 

 

4,409,798

 

 

 

-

 

 

 

-

 

 

 

4,409,798

 

Structural

 

 

765,440

 

 

 

-

 

 

 

-

 

 

 

765,440

 

 

 

1,862,176

 

 

 

-

 

 

 

-

 

 

 

1,862,176

 

Plate

 

 

819,453

 

 

 

-

 

 

 

-

 

 

 

819,453

 

 

 

2,009,487

 

 

 

-

 

 

 

-

 

 

 

2,009,487

 

Tubular Products

 

 

-

 

 

 

678,178

 

 

 

-

 

 

 

678,178

 

 

 

-

 

 

 

1,565,334

 

 

 

-

 

 

 

1,565,334

 

Rebar Fabrication

 

 

-

 

 

 

475,861

 

 

 

-

 

 

 

475,861

 

 

 

-

 

 

 

1,343,145

 

 

 

-

 

 

 

1,343,145

 

Other Steel Products

 

 

-

 

 

 

1,590,240

 

 

 

-

 

 

 

1,590,240

 

 

 

-

 

 

 

3,886,962

 

 

 

-

 

 

 

3,886,962

 

Raw Materials

 

 

-

 

 

 

-

 

 

 

706,811

 

 

 

706,811

 

 

 

-

 

 

 

-

 

 

 

1,943,267

 

 

 

1,943,267

 

 

 

$

6,862,133

 

 

$

2,744,279

 

 

$

706,811

 

 

$

10,313,223

 

 

$

17,380,819

 

 

$

6,795,441

 

 

$

1,943,267

 

 

$

26,119,527

 

15


Table of Contents

 

 

 

 

Three Months (13 Weeks) Ended October 3, 2020

 

 

Nine Months (39 Weeks) Ended October 3, 2020

 

 

 

Steel

Mills

 

 

Steel

Products

 

 

Raw

Materials

 

 

Total

 

 

Steel

Mills

 

 

Steel

Products

 

 

Raw

Materials

 

 

Total

 

Sheet

 

$

1,256,537

 

 

$

-

 

 

$

-

 

 

$

1,256,537

 

 

$

3,899,970

 

 

$

-

 

 

$

-

 

 

$

3,899,970

 

Bar

 

 

957,216

 

 

 

-

 

 

 

-

 

 

 

957,216

 

 

 

2,830,936

 

 

 

-

 

 

 

-

 

 

 

2,830,936

 

Structural

 

 

362,192

 

 

 

-

 

 

 

-

 

 

 

362,192

 

 

 

1,159,949

 

 

 

-

 

 

 

-

 

 

 

1,159,949

 

Plate

 

 

266,680

 

 

 

-

 

 

 

-

 

 

 

266,680

 

 

 

985,001

 

 

 

-

 

 

 

-

 

 

 

985,001

 

Tubular Products

 

 

-

 

 

 

274,915

 

 

 

-

 

 

 

274,915

 

 

 

-

 

 

 

830,283

 

 

 

-

 

 

 

830,283

 

Rebar Fabrication

 

 

-

 

 

 

463,286

 

 

 

-

 

 

 

463,286

 

 

 

-

 

 

 

1,300,518

 

 

 

-

 

 

 

1,300,518

 

Other Steel Products

 

 

-

 

 

 

999,803

 

 

 

-

 

 

 

999,803

 

 

 

-

 

 

 

2,857,225

 

 

 

-

 

 

 

2,857,225

 

Raw Materials

 

 

-

 

 

 

-

 

 

 

347,331

 

 

 

347,331

 

 

 

-

 

 

 

-

 

 

 

1,015,721

 

 

 

1,015,721

 

 

 

$

2,842,625

 

 

$

1,738,004

 

 

$

347,331

 

 

$

4,927,960

 

 

$

8,875,856

 

 

$

4,988,026

 

 

$

1,015,721

 

 

$

14,879,603

 

 

Contract liabilities are primarily related to deferred revenue resulting from cash payments received in advance from customers to protect against credit risk. Contract liabilities totaled $232.3 million as of October 2, 2021 ($120.2 million as of December 31, 2020), and are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

16. Earnings Per Share

The computations of basic and diluted net earnings per share for the third quarter and first nine months of 2021 and 2020 are as follows (in thousands, except per share amounts):

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Basic net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net earnings

 

$

2,127,743

 

 

$

193,415

 

 

$

4,577,043

 

 

$

322,627

 

Earnings allocated to participating securities

 

 

(9,442

)

 

 

(1,201

)

 

 

(22,272

)

 

 

(2,182

)

Net earnings available to common stockholders

 

$

2,118,301

 

 

$

192,214

 

 

$

4,554,771

 

 

$

320,445

 

Basic average shares outstanding

 

 

290,510

 

 

 

303,394

 

 

 

296,431

 

 

 

303,072

 

Basic net earnings per share

 

$

7.29

 

 

$

0.63

 

 

$

15.37

 

 

$

1.06

 

Diluted net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net earnings

 

$

2,127,743

 

 

$

193,415

 

 

$

4,577,043

 

 

$

322,627

 

Earnings allocated to participating securities

 

 

(9,401

)

 

 

(1,202

)

 

 

(22,194

)

 

 

(2,182

)

Net earnings available to common stockholders

 

$

2,118,342

 

 

$

192,213

 

 

$

4,554,849

 

 

$

320,445

 

Diluted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic average shares outstanding

 

 

290,510

 

 

 

303,394

 

 

 

296,431

 

 

 

303,072

 

Dilutive effect of stock options and other

 

 

642

 

 

 

47

 

 

 

497

 

 

 

27

 

 

 

 

291,152

 

 

 

303,441

 

 

 

296,928

 

 

 

303,099

 

Diluted net earnings per share

 

$

7.28

 

 

$

0.63

 

 

$

15.34

 

 

$

1.06

 

 

The following stock options were excluded from the computation of diluted net earnings per share for the third quarter and first nine months of 2021 and 2020 because their effect would have been anti-dilutive (shares in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Anti-dilutive stock options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares

 

 

52

 

 

 

3,463

 

 

 

119

 

 

 

3,638

 

Weighted-average exercise price

 

$

110.74

 

 

$

51.38

 

 

$

78.91

 

 

$

51.15

 

 

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17. Acquisitions

 

On August 9, 2021, Nucor used cash on hand to acquire the assets of the insulated metal panels (“IMP”) business of Cornerstone Building Brands, Inc. for a purchase price of $1.00 billion. The Company believes this acquisition is strategically compelling and will broaden the value-added solutions that Nucor Buildings Group provides to targeted end markets such as warehousing, distribution and data centers. We expect these end-use markets to continue to grow in the coming years and that the use of IMP products within them will also increase. IMPs facilitate cost-effective climate control in the built environment and reduce energy usage and overall operations-related greenhouse gas emissions for owners and lessees. The IMP business Nucor acquired is comprised of two industry leading brands, CENTRIA and Metl-Span, and has seven manufacturing facilities located throughout North America, complementing the Company’s existing IMP business, Truecore. The IMP business financial results are included as part of the steel products segment (see Note 14).

 

We have allocated the purchase price for the IMP business to its individual assets acquired and liabilities assumed. While the purchase price allocation is substantially complete, it is still preliminary and subject to change.

 

The following table summarizes the fair values of the assets acquired and liabilities assumed of the IMP business as of the date of acquisition (in thousands):

 

Cash

 

$

 

Accounts receivable

 

 

49,869

 

Inventory

 

 

73,000

 

Other current assets

 

 

4,478

 

Property, plant and equipment

 

 

102,966

 

Goodwill

 

 

454,549

 

Other intangible assets

 

 

378,300

 

Other assets

 

 

13,515

 

Total assets acquired

 

 

1,076,677

 

Current liabilities

 

 

45,320

 

Other liabilities

 

 

12,855

 

Total liabilities assumed

 

 

58,175

 

Net assets acquired

 

$

1,018,502

 

 

The following table summarizes the purchase price allocation to the identifiable intangible assets of the IMP business as of the date of acquisition (in thousands, except years):

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

Average Life

Customer relationships

 

$

309,000

 

 

10 years

Trademarks and trade names

 

 

45,000

 

 

10 years

Backlog

 

 

24,300

 

 

1 year

 

 

$

378,300

 

 

 

 

The goodwill of $454.5 million is calculated as the excess of the purchase price over the fair values of the assets acquired and liabilities assumed and has been allocated to the steel products segment (see Note 4). The goodwill is attributable to expected synergies within the steel products segment. Goodwill recognized for tax purposes was $454.5 million, all of which is deductible for tax purposes.

 

On August 20, 2021, Nucor used cash on hand to acquire Hannibal Industries, Inc. (“Hannibal”) for a purchase price of $370.0 million. Nucor purchased 100% of Hannibal's outstanding shares from its Employee Stock Ownership Plan. Hannibal is a leading national provider of steel racking solutions to warehouses. We expect that Hannibal’s business, serving customers in the e-commerce, industrial, food storage and retail segments, will also continue to grow in the coming years. Hannibal has manufacturing facilities in Los Angeles and Houston, as well as three distribution centers.

 

Together, the acquisitions of the IMP business and Hannibal reflect the Company’s strategy to target the fastest growing segments of steel intensive construction markets. Hannibal’s financial results are included as part of the steel products segment (see Note 14).

 

We have allocated the purchase price for Hannibal to its individual assets acquired and liabilities assumed. While the purchase price allocation is substantially complete, it is still preliminary and subject to change.

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The following table summarizes the fair values of the assets acquired and liabilities assumed of Hannibal as of the date of acquisition (in thousands):

 

Cash

 

$

125,628

 

Accounts receivable

 

 

115,728

 

Inventory

 

 

65,005

 

Other current assets

 

 

1,050

 

Property, plant and equipment

 

 

116,955

 

Goodwill

 

 

80,550

 

Other intangible assets

 

 

201,700

 

Other assets

 

 

8,776

 

Total assets acquired

 

 

715,392

 

Current liabilities

 

 

231,356

 

Finance lease obligations

 

 

80,124

 

Other liabilities

 

 

10,655

 

Total liabilities assumed

 

 

322,135

 

Net assets acquired

 

$

393,257

 

 

The following table summarizes the purchase price allocation to the identifiable intangible assets of Hannibal as of the date of acquisition (in thousands, except years):

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

Average Life

Customer relationships

 

$

144,000

 

 

10 years

Trademarks and trade names

 

 

26,000

 

 

7 years

Backlog

 

 

31,700

 

 

1 year

 

 

$

201,700

 

 

 

 

The goodwill of $80.6 million is calculated as the excess of the purchase price over the fair values of the assets acquired and liabilities assumed and has been allocated to the steel products segment (see Note 4). The goodwill is attributable to expected synergies within the steel products segment. Goodwill recognized for tax purposes was $80.6 million, all of which is deductible for tax purposes.

 

The results of operations for the IMP business and Hannibal upon the effective date of the transactions have been included in the accompanying financial statements.  Pro-forma results of operations of the Company would not be materially different as a result of the acquisitions of the IMP business and Hannibal and, therefore, this information is not presented.

18. Subsequent Events

 

On November 5, 2021, Nucor amended and restated its revolving credit facility to increase the borrowing capacity from $1.50 billion to $1.75 billion and to extend its maturity date to November 5, 2026. This facility remains undrawn.

On November 5, 2021, Nucor completed an offer to exchange its existing 2.979% Notes due 2055 (the “2055 Notes”) that have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) for a like principal amount of notes having terms substantially identical as the 2055 Notes and that are registered under the Securities Act.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements made in this Quarterly Report on Form 10-Q, or in other public filings, press releases, or other written or oral communications made by Nucor, which are not historical facts are forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements 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 report. 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) U.S. and foreign trade policies affecting steel imports or exports; (3) the sensitivity of the results of our operations to prevailing market steel prices and changes in the supply and cost of raw materials, including pig iron, iron ore and scrap steel; (4) the availability and cost of electricity and natural gas, which could negatively affect our cost of steel production or result in a delay or cancellation of existing or future drilling within our natural gas drilling programs; (5) critical equipment failures and business interruptions; (6) market demand for steel products, which, in the case of many of our products, is driven by the level of nonresidential construction activity in the United States; (7) impairment in the recorded value of inventory, equity investments, fixed assets, goodwill or other long-lived assets; (8) uncertainties surrounding the global economy, including excess world capacity for steel production; (9) fluctuations in currency conversion rates; (10) significant changes in laws or government regulations affecting environmental compliance, including legislation and regulations that result in greater regulation of greenhouse gas emissions that could increase our energy costs, capital expenditures and operating costs or cause one or more of our permits to be revoked or make it more difficult to obtain permit modifications; (11) the cyclical nature of the steel industry; (12) capital investments and their impact on our performance; (13) our safety performance; (14) the impact of the COVID-19 pandemic and any variants of the virus; and (15) the risks discussed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and elsewhere in this report.

Caution should be taken not to place undue reliance on the forward-looking statements included in this report. We assume no obligation to update any forward-looking statements except as may be required by law. In evaluating forward-looking statements, these risks and uncertainties should be considered, together with the other risks described from time to time in our reports and other filings with the Securities and Exchange Commission.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this report, as well as the audited consolidated financial statements and the notes thereto, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2020.

Overview

Nucor and its affiliates manufacture steel and steel products. Nucor also produces DRI for use in its steel mills. Through DJJ, the Company also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron and DRI. Most of Nucor’s operating facilities and customers are located in North America. Nucor’s operations include international trading and sales companies that buy and sell steel and steel products manufactured by the Company and others. Nucor is North America’s largest recycler, using scrap steel as the primary raw material in producing steel and steel products.

Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate; steel trading businesses; rebar distribution businesses; and Nucor’s equity method investments in NuMit and Nucor-JFE. The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, precision castings, steel fasteners, metal building systems, insulated metal panels, steel grating, tubular products businesses, steel racking, piling products business and wire and wire mesh. The raw materials segment includes DJJ, primarily a scrap broker and processor; Nu-Iron Unlimited and Nucor Steel Louisiana, two facilities that produce DRI used by the steel mills; and our natural gas production operations.

 

On August 9, 2021, Nucor acquired the assets of the IMP business of Cornerstone Building Brands, Inc. for a cash purchase price of approximately $1 billion. The Company believes this acquisition is strategically compelling and will broaden the value-added solutions that Nucor Buildings Group provides to targeted end markets such as warehousing, distribution and data centers. We expect these end-use markets to continue to grow in the coming years and that the use of

19


Table of Contents

 

IMP products within them will also increase. IMPs facilitate cost-effective climate control in the built environment and reduce energy usage and overall operations-related greenhouse gas emissions for owners and lessees. The IMP business Nucor acquired is comprised of two industry leading brands, CENTRIA and Metl-Span, and has seven manufacturing facilities located throughout North America, complementing the Company’s existing IMP business, Truecore.

 

On August 20, 2021, Nucor acquired Hannibal for a cash purchase price of approximately $370 million. Hannibal is a leading national provider of steel racking solutions to warehouses. We expect that Hannibal’s business, serving customers in the e-commerce, industrial, food storage and retail segments, will also continue to grow in the coming years. Hannibal has manufacturing facilities in Los Angeles and Houston, as well as three distribution centers.

 

Together, the acquisitions of the IMP business and Hannibal reflect Nucor’s strategy to target the fastest growing segments of steel intensive construction markets.

The average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 96%, 77% and 75%, respectively, in the first nine months of 2021 compared with approximately 80%, 71% and 65%, respectively, in the first nine months of 2020.

Results of Operations

 

For the third quarter in a row, Nucor reported the most profitable quarter in the Company’s history. The Company reported record consolidated net earnings of $2.13 billion, or $7.28 per diluted share, in the third quarter of 2021. This surpassed the previous quarterly record for consolidated net earnings of $1.51 billion, or $5.04 per diluted share, that was set in the second quarter of 2021.

 

Demand for steel and steel products has been very strong throughout the first nine months of 2021. The average selling prices realized by our steel mills and steel products segments in the third quarter of 2021 were the highest they have been all year, leading both segments to report record quarterly profitability in the third quarter of 2021. Demand remains robust across most end-use markets that we serve, and backlogs in our steel mills and steel products segments remain elevated compared to historical levels.

 

The profitability of the raw materials segment improved in the third quarter of 2021 compared to the second quarter of 2021. However, the difference was mainly due to the $42.0 million impairment charge related to our leasehold interest in unproved oil and natural gas properties recorded in the second quarter of 2021.

 

Nucor reported consolidated net earnings of $193.4 million, or $0.63 per diluted share, in the third quarter of 2020. The onset of the COVID-19 pandemic late in the first quarter of 2020 has had a major negative impact on the markets that we serve. The worst of these negative impacts were felt in the second quarter of 2020, but nonresidential construction markets continued to be resilient and other end markets would begin to recover in the third quarter of 2020. The acceleration of the recovery over the remainder of 2020 and into 2021, combined with lean inventory levels across the supply chains, contributed to the dramatic increase in average selling prices in the third quarter of 2021 as compared to the third quarter of 2020.

 

The following discussion will provide greater quantitative and qualitative analysis of Nucor’s performance in the third quarter and first nine months of 2021 as compared to the third quarter and first nine months of 2020.

Net Sales

 

Net sales to external customers by segment for the third quarter and first nine months of 2021 and 2020 were as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

Nine Months (39 Weeks) Ended

 

 

Oct. 2, 2021

 

Oct. 3, 2020

 

% Change

 

Oct. 2, 2021

 

Oct. 3, 2020

 

% Change

Steel mills

 

$6,862,133

 

$2,842,625

 

141%

 

$17,380,819

 

$8,875,856

 

96%

Steel products

 

2,744,279

 

1,738,004

 

58%

 

6,795,441

 

4,988,026

 

36%

Raw materials

 

706,811

 

347,331

 

103%

 

1,943,267

 

1,015,721

 

91%

Total net sales

 

$10,313,223

 

$4,927,960

 

109%

 

$26,119,527

 

$14,879,603

 

76%

 

Net sales for the third quarter of 2021 increased 109% from the third quarter of 2020. Average sales price per ton increased 86% from $774 in the third quarter of 2020 to $1,438 in the third quarter of 2021. Total tons shipped to outside customers in the third quarter of 2021 were 7,172,000 tons, a 13% increase from the third quarter of 2020.

 

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Net sales for the first nine months of 2021 increased 76% from the first nine months of 2020. Average sales price per ton increased 53% from $782 in the first nine months of 2020 to $1,196 in the first nine months of 2021. Total tons shipped to outside customers in the first nine months of 2021 were 21,830,000, a 15% increase from the first nine months of 2020.

In the steel mills segment, sales tons for the third quarter and first nine months of 2021 and 2020 were as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

Nine Months (39 Weeks) Ended

 

 

Oct. 2, 2021

 

Oct. 3, 2020

 

% Change

 

Oct. 2, 2021

 

Oct. 3, 2020

 

% Change

Outside steel shipments

 

5,144

 

4,442

 

16%

 

15,690

 

13,382

 

17%

Inside steel shipments

 

1,399

 

1,184

 

18%

 

4,131

 

3,511

 

18%

Total steel shipments

 

6,543

 

5,626

 

16%

 

19,821

 

16,893

 

17%

 

Net sales for the steel mills segment increased 141% in the third quarter of 2021 from the third quarter of 2020, due primarily to a 110% increase in the average sales price per ton from $639 to $1,339 as well as a 16% increase in tons sold to outside customers. Average selling prices increased across all product groups within the steel mills segment in the third quarter of 2021 as compared to the third quarter of 2020.

 

Net sales for the steel mills segment increased 96% in the first nine months of 2021 from the first nine months of 2020, due to a 67% increase in the average sales price per ton from $664 to $1,112 and a 17% increase in tons sold to outside customers.

Outside sales tonnage for the steel products segment for the third quarter and first nine months of 2021 and 2020 was as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

Nine Months (39 Weeks) Ended

 

 

Oct. 2, 2021

 

Oct. 3, 2020

 

% Change

 

Oct. 2, 2021

 

Oct. 3, 2020

 

% Change

Joist sales

 

190

 

153

 

24%

 

529

 

406

 

30%

Deck sales

 

139

 

129

 

8%

 

404

 

365

 

11%

Cold finished sales

 

123

 

99

 

24%

 

383

 

300

 

28%

Rebar fabrication sales

 

323

 

328

 

-2%

 

943

 

948

 

-1%

Piling products sales

 

144

 

186

 

-23%

 

451

 

522

 

-14%

Tubular products sales

 

272

 

280

 

-3%

 

791

 

816

 

-3%

Other steel products sales

 

116

 

92

 

26%

 

325

 

278

 

17%

Total steel products sales

 

1,307

 

1,267

 

3%

 

3,826

 

3,635

 

5%

 

Net sales for the steel products segment increased 58% in the third quarter of 2021 compared to the third quarter of 2020, due to a 53% increase in the average sales price per ton from $1,371 to $2,101 and a 3% increase in tons sold to outside customers. Average selling prices increased across all businesses within the steel products segment in the third quarter of 2021 as compared to the third quarter of 2020, most notably at our tubular products businesses.

 

Net sales for the steel products segment increased 36% in the first nine months of 2021 compared to the first nine months of 2020, due to a 29% increase in the average sales price per ton from $1,372 to $1,776 and a 5% increase in tons sold to outside customers. Average selling prices increased across all businesses within the steel products segment in the first nine months of 2021 as compared to the first nine months of 2020, most notably at our tubular products businesses.

Net sales for the raw materials segment increased 103% and 91% in the third quarter and first nine months of 2021, respectively, from the respective prior year periods. The increases were due to increased average selling prices and volumes at DJJ’s brokerage and scrap processing operations. In the third quarter of 2021, approximately 91% of outside sales for the raw materials segment were from the brokerage operations of DJJ, and approximately 7% of outside sales were from the scrap processing operations of DJJ (89% and 9%, respectively, in the third quarter of 2020). In the first nine months of 2021, approximately 90% of outside sales for the raw materials segment were from the brokerage operations of DJJ, and approximately 8% of outside sales were from the scrap processing operations of DJJ (89% and 9%, respectively, in the first nine months of 2020).

Gross Margins

Nucor recorded gross margins of $3.41 billion (33%) in the third quarter of 2021, which was a significant increase compared with $502.2 million (10%) in the third quarter of 2020.

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The primary driver for the increase in gross margins in the third quarter of 2021 as compared to the third quarter of 2020 was increased metal margins in the steel mills segment. Metal margin is the difference between the selling price of steel and the cost of scrap and scrap substitutes.

 

Scrap and scrap substitutes are the most significant element in the total cost of steel production. The average scrap and scrap substitute cost per gross ton used in the third quarter of 2021 was $511, an 84% increase compared to $277 in the third quarter of 2020. The increase in the average scrap and scrap substitute cost per gross ton used was more than offset by the previously mentioned increases in average selling prices and volumes.

Scrap prices are driven by the global supply and demand for scrap and other iron-based raw materials used to make steel. Scrap prices have increased dramatically since the beginning of 2021 and we expect continued strong demand for scrap and some volatility in scrap prices as we begin the fourth quarter.

 

Pre-operating and start-up costs of new facilities were approximately $36 million in the third quarter of 2021 and $22 million in the third quarter 2020. Pre-operating and start-up costs in the third quarter of 2021 included costs related to the plate mill being built in Kentucky, the sheet mill expansion in Kentucky, the merchant bar quality mill expansion at our bar mill in Illinois and the sheet mill expansion in Arkansas. Nucor defines pre-operating and start-up costs, all of which are expensed, as the losses attributable to facilities or major projects that are either under construction or in the early stages of operation. Once these facilities or projects have attained a utilization rate that is consistent with our similar operating facilities, they are no longer considered by Nucor to be in start-up.

 

Gross margins in the steel products segment increased in the third quarter of 2021 as compared to the third quarter of 2020. The largest increase in gross margins was at our tubular products businesses. Led by large commercial, warehouse and data center projects, demand in nonresidential construction markets continues to be strong. As we enter the fourth quarter of 2021, backlogs for the steel products segment are strong.

 

Gross margins in the raw materials segment significantly increased in the third quarter of 2021 as compared to the third quarter of 2020, primarily due to rising raw materials selling prices and margin expansion. The largest improvement in gross margins in the third quarter of 2021 as compared to the third quarter of 2020 was at our DRI facilities. The profitability of DJJ’s brokerage and scrap processing operations also significantly increased in the third quarter of 2021 as compared to the third quarter of 2020.

Nucor recorded gross margins of $7.50 billion (29%) in the first nine months of 2021, which was a significant increase compared with $1.51 billion (10%) in the first nine months of 2020.

 

The primary driver for the increase in gross margins in the first nine months of 2021 as compared to the first nine months of 2020 was increased metal margins in the steel mills segment. The average scrap and scrap substitute cost per gross ton used in the first nine months of 2021 was $457, a 60% increase compared to $285 in the first nine months of 2020. The increase in the average scrap and scrap substitute cost per gross ton used was more than offset by the previously mentioned increases in average selling prices and volumes.

 

Pre-operating and start-up costs of new facilities increased to approximately $76 million in the first nine months of 2021 from approximately $73 million in the first nine months of 2020. Pre-operating and start-up costs in the first nine months of 2021 included costs related to the plate mill being built in Kentucky, the sheet mill expansion in Kentucky, the merchant bar quality mill expansion at our bar mill in Illinois and the sheet mill expansion in Arkansas.

 

Gross margins in the steel products segment increased in the first nine months of 2021 as compared to the first nine months of 2020. The primary driver was the increased margins at our tubular products, joist and cold finish businesses.

 

Gross margins in the raw materials segment significantly increased in the first nine months of 2021 as compared to the first nine months of 2020, primarily due to rising raw materials selling prices and margin expansion. The largest improvement in gross margins in the first nine months of 2021 as compared to the first nine months of 2020 was at our DRI facilities. The profitability of DJJ’s brokerage and scrap processing operations also significantly increased in the first nine months of 2021 as compared to the first nine months of 2020.

Marketing, Administrative and Other Expenses

A major component of marketing, administrative and other expenses is profit sharing and other incentive compensation costs. These costs, which are based upon and fluctuate with Nucor’s financial performance, increased by $341.1 million in the third quarter of 2021 as compared to the third quarter of 2020, and increased by $692.6 million in the first nine months of 2021 as compared to the first nine months of 2020. These increases were due to Nucor’s increased profitability in the third quarter and first nine months of 2021 as compared to the respective prior year periods, which resulted

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in significantly increased accruals related to profit sharing.

Included in marketing, administrative and other expenses in the first nine months of 2020 was $18.2 million of restructuring charges related to the realignment of Nucor’s metal buildings business in the steel products segment. Of that amount, $16.4 million was recorded in the third quarter of 2020.

Equity in (Earnings) Losses of Unconsolidated Affiliates

 

Equity in earnings of unconsolidated affiliates was $32.5 million and $0.5 million in the third quarter of 2021 and 2020, respectively, and $65.1 million and losses of $14.4 million in the first nine months of 2021 and 2020, respectively. The increases in equity method investment earnings were primarily due to increased earnings at NuMit and Nucor-JFE.

 

Losses on Assets

 

Included in the first nine months of 2021 earnings was a non-cash loss on assets of $42.0 million related to our leasehold interest in unproved oil and natural gas properties in the raw materials segment. Also included in the first nine months of 2021 earnings were losses on assets of $9.0 million in the steel products segment.

 

Included in the first nine months of 2020 earnings were losses on assets of $299.5 million related to our equity method investment in Duferdofin Nucor S.r.l. (“Duferdofin Nucor”) that we have since exited. Nucor determined that a triggering event occurred in the first quarter of 2020 due to adverse developments in the joint venture’s commercial outlook, which were exacerbated by the COVID19 pandemic, all of which negatively impacted the joint venture’s strategic direction.

Interest Expense (Income)

 

Net interest expense for the third quarter and first nine months of 2021 and 2020 was as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

Nine Months (39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Interest expense

 

$

43,908

 

 

$

42,281

 

 

$

122,539

 

 

$

128,726

 

Interest income

 

 

(623

)

 

 

(2,142

)

 

 

(3,830

)

 

 

(11,870

)

Interest expense, net

 

$

43,285

 

 

$

40,139

 

 

$

118,709

 

 

$

116,856

 

 

Interest expense increased in the third quarter of 2021 compared to the third quarter of 2020 due to a decrease in capitalized interest in the third quarter of 2021. Interest expense decreased in the first nine months of 2021 compared to the first nine months of 2020 due primarily to the lower average interest rates on debt and an increase in capitalized interest in the first nine months of 2021.

 

Interest income decreased in the third quarter and first nine months of 2021 compared to the third quarter and first nine months of 2020 due to a decrease in average interest rates on investments.

Earnings (Losses) Before Income Taxes and Noncontrolling Interests

 

Earnings (losses) before income taxes and noncontrolling interests by segment for the third quarter and first nine months of 2021 and 2020 were as follows (in thousands). The changes between periods were driven by the quantitative and qualitative factors previously discussed.

 

 

 

Three Months

 

 

Nine Months

 

 

 

(13 Weeks) Ended

 

 

(39 Weeks) Ended

 

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

 

Oct. 2, 2021

 

 

Oct. 3, 2020

 

Steel mills

 

$

3,116,539

 

 

$

205,152

 

 

$

6,606,320

 

 

$

512,082

 

Steel products

 

 

368,595

 

 

 

186,976

 

 

 

839,737

 

 

 

502,409

 

Raw materials

 

 

161,870

 

 

 

6,232

 

 

 

505,248

 

 

 

(3,068

)

Corporate/eliminations

 

 

(777,897

)

 

 

(107,942

)

 

 

(1,758,204

)

 

 

(393,651

)

 

 

$

2,869,107

 

 

$

290,418

 

 

$

6,193,101

 

 

$

617,772

 

 

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Noncontrolling Interests

Noncontrolling interests represent the income attributable to the noncontrolling partners of Nucor’s joint ventures, primarily NYS of which Nucor owns 51%. The increase in earnings attributable to noncontrolling interests in the third quarter and first nine months of 2021 as compared to the third quarter and first nine months of 2020 was primarily due to the increased earnings of NYS, which was a result of the increased metal margins. Under the NYS limited partnership agreement, the minimum amount of cash to be distributed each year to the partners is the amount needed by each partner to pay applicable U.S. federal and state income taxes. In the first nine months of 2020, the amount of cash distributed to noncontrolling interest holders exceeded the earnings attributable to noncontrolling interests based on mutual agreement of the general partners.

Provision for Income Taxes

The effective tax rate for the third quarter of 2021 was 22.5% compared to 23.3% for the third quarter of 2020. The expected effective rate for the full year of 2021 is approximately 22.9%.

We estimate that in the next 12 months our gross unrecognized tax benefits, which totaled $67.1 million at October 2, 2021, exclusive of interest, could decrease by as much as $5.7 million as a result of the expiration of the statute of limitations and closures of examinations, substantially all of which would impact the effective tax rate.

Nucor has concluded U.S. federal income tax matters for tax years through 2014 and for tax year 2016. The tax years 2015 and 2017 through 2020 remain open to examination by the Internal Revenue Service. The 2015 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 2014 through 2020 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

Net Earnings Attributable to Nucor Stockholders and Return on Equity

Nucor reported consolidated net earnings of $2.13 billion, or $7.28 per diluted share, in the third quarter of 2021 as compared to consolidated net earnings of $193.4 million, or $0.63 per diluted share, in the third quarter of 2020. Net earnings attributable to Nucor stockholders as a percentage of net sales were 21% and 4% in the third quarter of 2021 and 2020, respectively.

Nucor reported consolidated net earnings of $4.58 billion, or $15.34 per diluted share, in the first nine months of 2021 as compared to consolidated net earnings of $322.6 million, or $1.06 per diluted share, in the first nine months of 2020. Net earnings attributable to Nucor stockholders as a percentage of net sales were 18% and 2% in the first nine months of 2021 and 2020, respectively. Annualized return on average stockholders’ equity was 50% and 4% in the first nine months of 2021 and 2020, respectively.

 

Outlook

We expect continued strong results for the fourth quarter of 2021, potentially exceeding the net earnings record set in the third quarter of 2021. Demand remains robust across most end-use markets, a trend we expect will continue well into 2022. Backlogs in our steel mills and steel products segments remain elevated compared to historical levels.

 

We expect the profitability of the steel mills segment to improve in the fourth quarter of 2021 as compared to the third quarter of 2021, driven by additional earnings growth at our sheet and plate mills. We expect the profitability of the steel products segment to increase in the fourth quarter of 2021 compared to the third quarter of 2021. The raw materials segment's earnings in the fourth quarter of 2021 are expected to decrease compared to the third quarter of 2021 due primarily to margin compression at our DRI facilities.

Nucor’s largest exposure to market risk is via our steel mills and steel products segments. Our largest single customer in the third quarter of 2021 represented approximately 5% of sales and has consistently paid within terms. In the raw materials segment, we are exposed to price fluctuations related to the purchase of scrap and scrap substitutes, pig iron and iron ore. Our exposure to market risk is mitigated by the fact that our steel mills use a significant portion of the products of the raw materials segment.

Liquidity and Capital Resources

Nucor operates a capital-intensive business in highly cyclical markets. We therefore attempt to utilize conservative financial practices that maximize our financial strength during economic downturns like the one we experienced as a result

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of the COVID-19 pandemic. Our liquidity position, consisting of cash and cash equivalents, short-term investments and restricted cash and cash equivalents, remained strong at $2.29 billion as of October 2, 2021. Additionally, Nucor has no significant debt maturities until September 2022.

We believe that our conservative financial practices have served us well in the past and are serving us well today. Nucor’s financial strength allows for a consistent, balanced approach to capital allocation throughout the business cycle. Nucor’s highest capital allocation priority is to reinvest in our business to ensure our continued profitable growth over the long term. We have historically done this by investing to optimize our existing operations, initiate greenfield expansions and make acquisitions. Our second priority is to return capital to our stockholders through cash dividends and share repurchases. We intend to return a minimum of 40% of our net earnings to our stockholders, while maintaining a debt-to-capital ratio that supports a strong investment grade credit rating. In May 2021, Nucor’s Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $3.00 billion of its common stock and contemporaneously terminated any previously authorized share repurchase programs. As of October 2, 2021, the Company had approximately $1.94 billion remaining for share repurchases under the program.

Cash provided by operating activities was $3.62 billion in the first nine months of 2021 as compared to $2.21 billion in the prior year period. Net earnings in the first nine months of 2021 improved by $4.37 billion over the prior year period. Included in the first nine months of 2021 earnings was a non-cash loss on assets of $42.0 million related to our leasehold interest in unproved oil and natural gas properties in the raw materials segment. Included in the first nine months of 2020 earnings was a non-cash loss on assets of $299.5 million related to our previously held equity method investment in Duferdofin Nucor. Changes in operating assets and operating liabilities (exclusive of acquisitions) resulted in a cash reduction of $2.04 billion in the first nine months of 2021 compared with a cash increase of $693.2 million in the first nine months of 2020. The funding of our working capital in the first nine months of 2021 increased as compared to the first nine months of 2020 mainly due to increases in inventories and accounts receivable, partially offset by changes in salaries, wages, and other accruals. Inventory tons increased by 14% at the end of the third quarter of 2021 compared to year-end 2020, and the cost of scrap and scrap substitutes in our inventory increased 57% from year-end 2020. Inventories at the end of the third quarter of 2020 decreased by over one million tons, or 17%, compared to year-end 2019 due to working capital reduction initiatives focused on maintaining inventory levels at our anticipated near-term production requirements in response to the COVID-19 pandemic. Accounts receivable increased in the first nine months of 2021 from year-end 2020 due to a 78% increase in composite sales price in the third quarter of 2021 compared to the fourth quarter of 2020, whereas the prior year period saw relatively little change in composite sales price. The increase in salaries, wages and other accruals on the balance sheet in the first nine months of 2021 provided cash of $835.4 million versus using cash of $69.2 million in the prior year period mainly due to increased profit-sharing and other incentive compensation accruals from the significantly higher earnings of the Company.

The current ratio was 2.5 at the end of the third quarter of 2021 and 3.6 at year-end 2020. The current ratio decreased due to the following: a 186% increase in salaries, wages, and related accruals due to the previously discussed incentive compensation; reclassification of $600.0 million in bonds due September 2022 from long-term to short-term debt; and a 31% increase in accounts payable driven by the previously discussed increased inventory costs. Partially offsetting these items were a 78% and 59% increase in accounts receivable and inventories, respectively, due to the previously discussed increases in inventory costs and selling prices. In the first nine months of 2021, accounts receivable turned approximately every five weeks and inventories turned approximately every 10 weeks, compared to six and 10 weeks, respectively, in the first nine months of 2020.

Cash used in investing activities during the first nine months of 2021 was $2.38 billion as compared to $1.33 billion in the prior year period. The increase in cash used in investing activities was primarily due to a $1.33 billion increase in cash used to fund acquisitions, mainly the purchases of the IMP business and Hannibal in August 2021.

Cash used in financing activities for the first nine months of 2021 was $1.95 billion as compared to cash provided by financing activities of $596.6 million in the prior year period. The largest driver of this change was the $1.77 billion of stock repurchases in the first nine months of 2021 as compared to $39.5 million in the prior year period. Another significant component of this change was the issuance of $500.0 million of 2.000% Notes due 2025 and $500.0 million of 2.700% Notes due 2030 in the first nine months of 2020. Offsetting the increase in cash used for acquisition of stock in the first nine months of 2021 was $143.9 million of proceeds from the exercise of stock options.

Nucor’s revolving credit facility is undrawn and was amended and restated on November 5, 2021 to extend the maturity date to November 5, 2026 and to increase its borrowing capacity from $1.50 billion to $1.75 billion. We believe our financial strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. Nucor continues to have the strongest credit rating in the North American steel sector (Baa1/A-) with stable outlooks at both Moody's and Standard & Poor's. Our credit ratings are dependent, however, upon a number of factors, both

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qualitative and quantitative, and are subject to change at any time. The disclosure of our credit ratings is made in order to enhance investors’ understanding of our sources of liquidity and the impact of our credit ratings on our cost of funds.

Our credit facility includes only one financial covenant, which is a limit of 60% on the ratio of funded debt to total capitalization. In addition, the credit facility contains customary non-financial covenants, including a limit on Nucor’s ability to pledge the Company’s assets and a limit on consolidations, mergers and sales of assets. As of October 2, 2021, our funded debt to total capital ratio was 28.9% and we were in compliance with all non-financial covenants under our credit facility. No borrowings were outstanding under the credit facility as of October 2, 2021.

Our financial strength allows a number of capital preservation options. Nucor’s robust capital investment and maintenance practices give us the flexibility to reduce spending by prioritizing our capital projects, potentially rescheduling certain projects and selectively allocating capital to investments with the greatest impact on our long-term earnings power. Nucor currently estimates its 2021 capital expenditures to be $1.70 billion. The projects that we anticipate will have the largest capital expenditures in 2021 are the plate mill under construction in Brandenburg, Kentucky, the sheet mill expansion at Nucor Steel Gallatin, and the hot band galvanizing line at Nucor Steel Arkansas.

In September 2021, Nucor’s Board of Directors declared a quarterly cash dividend on Nucor’s common stock of $0.405 per share payable on November 10, 2021, to stockholders of record on September 30, 2021. This dividend is Nucor’s 194th consecutive quarterly cash dividend.

Funds provided from operations, cash and cash equivalents, short-term investments, restricted cash and cash equivalents and new borrowings under our existing credit facilities are expected to be adequate to meet future capital expenditures, acquisitions and working capital requirements for existing operations for at least the next 24 months.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, Nucor is exposed to a variety of market risks. We continually monitor these risks and develop strategies to manage them.

Interest Rate Risk

Nucor manages interest rate risk by using a combination of variable-rate and fixed-rate debt. Nucor also occasionally makes use of interest rate swaps to manage net exposure to interest rate changes. Management does not believe that Nucor’s exposure to interest rate risk has significantly changed since December 31, 2020. There were no interest rate swaps outstanding at October 2, 2021.

Commodity Price Risk

In the ordinary course of business, Nucor is exposed to market risk for price fluctuations of raw materials and energy, principally scrap steel, other ferrous and nonferrous metals, alloys and natural gas. We attempt to negotiate the best prices for our raw material and energy requirements and to obtain prices for our steel products that match market price movements in response to supply and demand. In periods of strong or stable demand for our products, we are more likely to be able to effectively reduce the normal time lag in passing through higher raw material costs so that we can maintain our gross margins. When demand for our products is weaker, this becomes more challenging. Our DRI facilities in Trinidad and Louisiana provide us with flexibility in managing our input costs. DRI is particularly important for operational flexibility when demand for prime scrap increases due to increased domestic steel production.

Natural gas produced by Nucor’s drilling operations is being sold to third parties to offset our exposure to changes in the price of natural gas consumed by our Louisiana DRI facility and our steel mills in the United States.

Nucor also periodically uses derivative financial instruments to hedge a portion of our exposure to price risk related to natural gas purchases used in the production process and to hedge a portion of our scrap, aluminum and copper purchases and sales. Gains and losses from derivatives designated as hedges are deferred in accumulated other comprehensive loss, net of income taxes on the condensed consolidated balance sheets and recognized in net earnings in the same period as the underlying physical transaction. At October 2, 2021, accumulated other comprehensive loss, net of income taxes included $21.8 million in unrealized net-of-tax gains for the fair value of these derivative instruments. Changes in the fair values of derivatives not designated as hedges are recognized in net earnings each period.

The following table presents the negative effect on pre-tax earnings of a hypothetical change in the fair value of derivative instruments outstanding at October 2, 2021, due to an assumed 10% and 25% change in the market price of each of the indicated commodities (in thousands):

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Commodity Derivative

 

10% Change

 

 

25% Change

 

Natural gas

 

$

14,085

 

 

$

35,212

 

Aluminum

 

$

7,724

 

 

$

19,310

 

Copper

 

$

3,765

 

 

$

9,394

 

 

Any resulting changes in fair value would be recorded as adjustments to accumulated other comprehensive loss, net of income taxes or recognized in net earnings, as appropriate. These hypothetical losses would be partially offset by the benefit of lower prices paid or higher prices received for the physical commodities.

 

Foreign Currency Risk

Nucor is exposed to foreign currency risk primarily through its operations in Canada, Europe and Mexico. We periodically use derivative contracts to mitigate the risk of currency fluctuations. Open foreign currency derivative contracts at October 2, 2021 were insignificant.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the evaluation date.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended October 2, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Nucor is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position or cash flows. Nucor maintains liability insurance with self-insurance limits for certain risks.

There were no proceedings that were pending or contemplated under federal, state or local environmental laws that the Company reasonably believes may result in monetary sanctions of at least $1.0 million (the threshold chosen by Nucor as permitted by Item 103 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, and which Nucor believes is reasonably designed to result in disclosure of any such proceeding that is material to its business or financial condition).

Item 1A. Risk Factors

There have been no material changes in Nucor’s risk factors from those included in “Item 1A. Risk Factors” in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our share repurchase program activity for each of the three months and the quarter ended October 2, 2021 was as follows (in thousands, except per share amounts):

 

 

 

Total

Number

of Shares

Purchased

 

 

Average

Price Paid

per Share (1)

 

 

Total Number of

Shares Purchased

as Part of Publicly

Announced Plans

or Programs (2)

 

 

Approximate

Dollar Value of

Shares that

May Yet Be

Purchased

Under the

Plans or

Programs (2)

 

July 4, 2021 - July 31, 2021

 

 

2,500

 

 

$

99.96

 

 

 

2,500

 

 

$

2,547,877

 

August 1, 2021 - August 28, 2021

 

 

4,200

 

 

$

108.93

 

 

 

4,200

 

 

$

2,090,350

 

August 29, 2021 - October 2, 2021

 

 

1,500

 

 

$

100.19

 

 

 

1,500

 

 

$

1,940,065

 

For the Quarter Ended October 2, 2021

 

 

8,200

 

 

 

 

 

 

 

8,200

 

 

 

 

 

 

(1)

Includes commissions of $0.02 per share.

(2)

On May 13, 2021, the Company announced that the Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $3.00 billion of the Company’s common stock and terminated any previously authorized share repurchase programs. The share repurchase authorization is discretionary and has no expiration date.

Item 5. Other Information

On November 5, 2021, Nucor amended and restated its revolving credit facility to increase the borrowing capacity from $1.50 billion to $1.75 billion and to extend its maturity date to November 5, 2026. The amended and restated revolving credit facility was entered into by and among Nucor Corporation and certain subsidiaries of Nucor Corporation as borrowers, Bank of America, N.A. as administrative agent, and other financial institutions from time to time party thereto as lenders. The lenders on the revolving credit facility are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the lenders and their respective affiliates have engaged in, and may in the future engage in, commercial and investment banking and other commercial dealings in the ordinary course of business with Nucor or its affiliates. They have received, or may in the future receive, customary fees and commissions or other payments for these transactions. Further, U.S. Bank National Association, one of the lenders, is the trustee for certain series of Nucor’s notes. For an understanding of the terms and provisions of the revolving credit facility, reference should be made to the copy of that agreement attached as Exhibit 10 to this Form 10-Q and incorporated by reference herein.

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Item 6. Exhibits

 

Exhibit No.

 

Description of Exhibit

 

 

 

 

 

3

  

Restated Certificate of Incorporation of Nucor Corporation (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed September 14, 2010 (File No. 001-04119))

 

 

3.1

  

Bylaws of Nucor Corporation, as amended and restated February 22, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed February 24, 2021 (File No. 001-04119))

 

 

 

10*

  

Fourth Amended and Restated Multi-Year Revolving Credit Agreement, dated as of November 5, 2021, by and among Nucor Corporation and certain subsidiaries of Nucor Corporation, as borrowers, Bank of America, N.A., as administrative agent, and the lenders party thereto.

 

 

 

31*

  

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

31.1*

  

Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

32**

  

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

32.1**

  

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

101*

  

Financial Statements (Unaudited) from the Quarterly Report on Form 10-Q of Nucor Corporation for the quarter ended October 2, 2021, filed November 10, 2021, formatted in Inline XBRL: (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

 

 

 

104*

 

Cover Page from the Quarterly Report on Form 10-Q of Nucor Corporation for the quarter ended October 2, 2021, filed November 10, 2021, formatted in Inline XBRL (included in Exhibit 101).

 

*

Filed herewith.

**

Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

NUCOR CORPORATION

 

 

 

 

 

By:

 

/s/ James D. Frias

 

 

 

James D. Frias

 

 

 

Chief Financial Officer, Treasurer and Executive

 

 

 

Vice President

 

Dated: November 10, 2021

30