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NUCOR CORP - Quarter Report: 2022 April (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 April 2, 2022

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  

266,061,964 shares of the registrant’s common stock were outstanding at April 2, 2022.

 

 

 

 


Table of Contents

 

 

Nucor Corporation

Quarterly Report on Form 10-Q

For the Three Months Ended April 2, 2022

Table of Contents

 

 

 

 

 

 

 

Page

Part I

 

Financial Information

 

 

 

 

 

 

 

 

 

 

 

Item 1

 

Financial Statements (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Earnings – Three Months (13 Weeks) Ended April 2, 2022 and April 3, 2021

 

1

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income – Three Months (13 Weeks) Ended April 2, 2022 and April 3, 2021

 

2

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets – April 2, 2022 and December 31, 2021

 

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows – Three Months (13 Weeks) Ended April 2, 2022 and April 3, 2021

 

4

 

 

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

5

 

 

 

 

 

 

 

 

 

Item 2

 

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

 

16

 

 

 

 

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

 

 

 

 

 

 

 

 

Item 4

 

Controls and Procedures

 

23

 

 

 

 

 

 

 

Part II

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

Item 1

 

Legal Proceedings

 

24

 

 

 

 

 

 

 

 

 

Item 1A

 

Risk Factors

 

24

 

 

 

 

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

24

 

 

 

 

 

 

 

 

 

Item 6

 

Exhibits

 

25

 

 

 

 

 

 

 

Signatures

 

26

 

 

 

 

 

 

 

 

 

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

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Net sales

 

$

10,493,282

 

 

$

7,017,140

 

Costs, expenses and other:

 

 

 

 

 

 

 

 

Cost of products sold

 

 

7,035,143

 

 

 

5,394,703

 

Marketing, administrative and other expenses

 

 

524,584

 

 

 

291,124

 

Equity in earnings of unconsolidated affiliates

 

 

(7,695

)

 

 

(13,239

)

Losses on assets

 

 

-

 

 

 

6,662

 

Interest expense, net

 

 

43,135

 

 

 

39,644

 

 

 

 

7,595,167

 

 

 

5,718,894

 

Earnings before income taxes and noncontrolling interests

 

 

2,898,115

 

 

 

1,298,246

 

Provision for income taxes

 

 

671,000

 

 

 

310,732

 

Net earnings

 

 

2,227,115

 

 

 

987,514

 

Earnings attributable to noncontrolling interests

 

 

131,492

 

 

 

45,082

 

Net earnings attributable to Nucor stockholders

 

$

2,095,623

 

 

$

942,432

 

Net earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

7.69

 

 

$

3.10

 

Diluted

 

$

7.67

 

 

$

3.10

 

Average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

271,564

 

 

 

301,846

 

Diluted

 

 

272,094

 

 

 

302,518

 

 

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

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Net earnings

 

$

2,227,115

 

 

$

987,514

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Net unrealized income on hedging derivatives, net

   of income taxes of $16,800 and $400 for the first

   quarter of 2022 and 2021, respectively

 

 

53,476

 

 

 

999

 

Reclassification adjustment for settlement of hedging

   derivatives included in net earnings, net of income

   taxes of $(1,700) and $100 for the first quarter of 2022

   and 2021, respectively

 

 

(5,390

)

 

 

501

 

Foreign currency translation gain, net of income

   taxes of $0 for the first quarter of 2022 and 2021

 

 

22,692

 

 

 

13,801

 

 

 

 

70,778

 

 

 

15,301

 

Comprehensive income

 

 

2,297,893

 

 

 

1,002,815

 

Comprehensive income attributable to noncontrolling

   interests

 

 

131,492

 

 

 

45,082

 

Comprehensive income attributable to Nucor stockholders

 

$

2,166,401

 

 

$

957,733

 

 

See notes to condensed consolidated financial statements.

2


Table of Contents

 

 

Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

 

 

April 2, 2022

 

 

Dec 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,725,266

 

 

$

2,364,858

 

Short-term investments

 

 

446,868

 

 

 

253,005

 

Accounts receivable, net

 

 

4,111,478

 

 

 

3,853,972

 

Inventories, net

 

 

6,245,679

 

 

 

6,011,182

 

Other current assets

 

 

252,060

 

 

 

316,540

 

Total current assets

 

 

14,781,351

 

 

 

12,799,557

 

Property, plant and equipment, net

 

 

8,921,263

 

 

 

8,114,818

 

Restricted cash and cash equivalents

 

 

88,242

 

 

 

143,800

 

Goodwill

 

 

2,904,134

 

 

 

2,827,344

 

Other intangible assets, net

 

 

1,063,210

 

 

 

1,103,759

 

Other assets

 

 

874,668

 

 

 

833,794

 

Total assets

 

$

28,632,868

 

 

$

25,823,072

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Short-term debt

 

$

86,521

 

 

$

107,723

 

Current portion of long-term debt and finance lease obligations

 

 

629,536

 

 

 

615,678

 

Accounts payable

 

 

1,900,536

 

 

 

1,974,041

 

Salaries, wages and related accruals

 

 

832,999

 

 

 

1,495,166

 

Accrued expenses and other current liabilities

 

 

1,081,706

 

 

 

964,805

 

Federal income taxes payable

 

 

602,537

 

 

 

-

 

Total current liabilities

 

 

5,133,835

 

 

 

5,157,413

 

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

 

 

6,112,331

 

 

 

4,961,410

 

Deferred credits and other liabilities

 

 

1,243,582

 

 

 

1,100,455

 

Total liabilities

 

 

12,489,748

 

 

 

11,219,278

 

Commitments and contingencies

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

Nucor stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

152,061

 

 

 

152,061

 

Additional paid-in capital

 

 

2,163,129

 

 

 

2,140,608

 

Retained earnings

 

 

19,635,277

 

 

 

17,674,100

 

Accumulated other comprehensive loss,

   net of income taxes

 

 

(44,504

)

 

 

(115,282

)

Treasury stock

 

 

(6,701,401

)

 

 

(5,835,098

)

Total Nucor stockholders' equity

 

 

15,204,562

 

 

 

14,016,389

 

Noncontrolling interests

 

 

938,558

 

 

 

587,405

 

Total equity

 

 

16,143,120

 

 

 

14,603,794

 

Total liabilities and equity

 

$

28,632,868

 

 

$

25,823,072

 

 

See notes to condensed consolidated financial statements.

3


Table of Contents

 

 

Nucor Corporation Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Operating activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

2,227,115

 

 

$

987,514

 

Adjustments:

 

 

 

 

 

 

 

 

Depreciation

 

 

195,478

 

 

 

179,820

 

Amortization

 

 

41,411

 

 

 

21,130

 

Stock-based compensation

 

 

26,422

 

 

 

19,859

 

Deferred income taxes

 

 

(18,764

)

 

 

62,705

 

Distributions from affiliates

 

 

1,500

 

 

 

180

 

Equity in earnings of unconsolidated affiliates

 

 

(7,695

)

 

 

(13,239

)

Losses on assets

 

 

-

 

 

 

6,662

 

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

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(92,394

)

 

 

(524,570

)

Inventories

 

 

124,201

 

 

 

(795,940

)

Accounts payable

 

 

(165,476

)

 

 

225,333

 

Federal income taxes

 

 

672,142

 

 

 

200,888

 

Salaries, wages and related accruals

 

 

(658,267

)

 

 

69,780

 

Other operating activities

 

 

126,495

 

 

 

90,289

 

Cash provided by operating activities

 

 

2,472,168

 

 

 

530,411

 

Investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(447,682

)

 

 

(313,510

)

Investment in and advances to affiliates

 

 

(63

)

 

 

(118

)

Disposition of plant and equipment

 

 

7,288

 

 

 

5,735

 

Acquisitions (net of cash acquired)

 

 

(347,177

)

 

 

300

 

Purchases of investments

 

 

(274,197

)

 

 

(214,427

)

Proceeds from the sale of investments

 

 

80,333

 

 

 

219,777

 

Other investing activities

 

 

(183

)

 

 

249

 

Cash used in investing activities

 

 

(981,681

)

 

 

(301,994

)

Financing activities:

 

 

 

 

 

 

 

 

Net change in short-term debt

 

 

(21,202

)

 

 

(1,607

)

Proceeds from issuance of long-term debt, net of discount

 

 

1,093,059

 

 

 

-

 

Repayment of long-term debt

 

 

(2,500

)

 

 

-

 

Bond issuance costs

 

 

(8,388

)

 

 

-

 

Proceeds from exercise of stock options

 

 

16,586

 

 

 

107,524

 

Payment of tax withholdings on certain stock-based compensation

 

 

(8,512

)

 

 

(14,521

)

Distributions to noncontrolling interests

 

 

(211,558

)

 

 

(73,795

)

Cash dividends

 

 

(137,587

)

 

 

(123,901

)

Acquisition of treasury stock

 

 

(905,324

)

 

 

(301,859

)

Other financing activities

 

 

(3,883

)

 

 

(2,505

)

Cash used in financing activities

 

 

(189,309

)

 

 

(410,664

)

Effect of exchange rate changes on cash

 

 

3,672

 

 

 

3,307

 

Increase (decrease) in cash and cash equivalents and

   restricted cash and cash equivalents

 

 

1,304,850

 

 

 

(178,940

)

Cash and cash equivalents and restricted cash and cash

   equivalents - beginning of year

 

 

2,508,658

 

 

 

2,754,929

 

Cash and cash equivalents and restricted cash and cash

   equivalents - end of three months

 

$

3,813,508

 

 

$

2,575,989

 

Non-cash investing activity:

 

 

 

 

 

 

 

 

Change in accrued plant and equipment purchases

 

$

(7,789

)

 

$

4,461

 

 

See notes to condensed consolidated financial statements.

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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, 2021 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, 2021.

2. Inventories

Inventories consisted of approximately 43% raw materials and supplies and 57% finished and semi-finished products at both April 2, 2022 and December 31, 2021. 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 $10.57 billion at April 2, 2022 ($10.39 billion at December 31, 2021).   

 

4. Goodwill and Other Intangible Assets

The change in the net carrying amount of goodwill for the three months ended April 2, 2022 by segment was as follows (in thousands):

 

 

 

Steel Mills

 

 

Steel Products

 

 

Raw Materials

 

 

Total

 

Balance at December 31, 2021

 

$

613,175

 

 

$

1,439,874

 

 

$

774,295

 

 

$

2,827,344

 

Acquisitions

 

 

69,097

 

 

 

(62

)

 

 

-

 

 

 

69,035

 

Translation

 

 

-

 

 

 

7,755

 

 

 

-

 

 

 

7,755

 

Balance at April 2, 2022

 

$

682,272

 

 

$

1,447,567

 

 

$

774,295

 

 

$

2,904,134

 

 

Nucor completed its most recent annual goodwill impairment testing as of the first day of the fourth quarter of 2021 and concluded that as of such date there was no impairment of goodwill for any of its reporting units.

The annual assessment performed in 2021 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 54% in the most recent assessment. If our assessment of the relevant facts and circumstances changes, including if the expected future performance of this reporting unit declines from the most recent assessment, non-cash impairment charges may be required. Total goodwill associated with the Rebar Fabrication reporting unit was $369.8 million as of April 2, 2022 ($363.0 million as of December 31, 2021). 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 $43.5 million as of April 2, 2022 ($45.0 million as of December 31, 2021). 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.

5


Table of Contents

 

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 April 2, 2022 and December 31, 2021 (in thousands):

 

 

 

April 2, 2022

 

 

December 31, 2021

 

 

 

Gross Amount

 

 

Accumulated

Amortization

 

 

Gross Amount

 

 

Accumulated

Amortization

 

Customer relationships

 

$

1,872,636

 

 

$

952,967

 

 

$

1,872,348

 

 

$

924,506

 

Trademarks and trade names

 

 

217,829

 

 

 

104,161

 

 

 

217,255

 

 

 

99,906

 

Other

 

 

105,522

 

 

 

75,649

 

 

 

105,522

 

 

 

66,954

 

 

 

$

2,195,987

 

 

$

1,132,777

 

 

$

2,195,125

 

 

$

1,091,366

 

 

Intangible asset amortization expense in the first quarter of 2022 and 2021 was $41.4 million and $21.1 million, respectively. Annual amortization expense is estimated to be $154.6 million in 2022; $132.9 million in 2023; $132.1 million in 2024; $131.2 million in 2025; and $128.2 million in 2026.

5. Current Liabilities

Book overdrafts, included in accounts payable in the condensed consolidated balance sheets, were $128.1 million at April 2, 2022 ($143.8 million at December 31, 2021). Dividends payable, included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, were $134.5 million at April 2, 2022 ($137.6 million at December 31, 2021).

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 April 2, 2022 and December 31, 2021 (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 April 2, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

3,129,506

 

 

$

3,129,506

 

 

$

-

 

 

$

-

 

Short-term investments

 

 

446,868

 

 

 

446,868

 

 

 

-

 

 

 

-

 

Restricted cash and cash equivalents

 

 

88,242

 

 

 

88,242

 

 

 

-

 

 

 

-

 

Derivative contracts

 

 

69,020

 

 

-

 

 

 

69,020

 

 

 

-

 

Total assets

 

$

3,733,636

 

 

$

3,664,616

 

 

$

69,020

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts

 

$

(5,457

)

 

$

-

 

 

$

(5,457

)

 

$

-

 

As of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,776,477

 

 

$

1,776,477

 

 

$

-

 

 

$

-

 

Short-term investments

 

 

253,005

 

 

 

253,005

 

 

 

-

 

 

 

-

 

Restricted cash and cash equivalents

 

 

143,800

 

 

 

143,800

 

 

 

-

 

 

 

-

 

Derivative contracts

 

 

6,633

 

 

 

-

 

 

 

6,633

 

 

 

-

 

Total assets

 

$

2,179,915

 

 

$

2,173,282

 

 

$

6,633

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative contracts

 

$

(2,666

)

 

$

-

 

 

$

(2,666

)

 

$

-

 

 

6


Table of Contents

 

 

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 April 2, 2022 consisted of certificates of deposit, commercial paper and corporate notes. Fair value measurements for Nucor’s derivatives, which are typically commodity or foreign exchange contracts, 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 $6.77 billion at April 2, 2022 (approximately $6.06 billion at December 31, 2021). The debt fair value estimates are classified under Level 2 because such estimates are based on readily available market prices of our debt at April 2, 2022 and December 31, 2021, or similar debt with the same maturities, ratings and interest rates.

7. Contingencies

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 for certain risks with self-insurance limits.

8. Stock-Based Compensation

Stock Options 

A summary of activity under Nucor’s stock option plans for the first quarter of 2022 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

 

 

1,186

 

 

$

55.58

 

 

 

 

 

 

 

Granted

 

 

-

 

 

$

-

 

 

 

 

 

 

 

Exercised

 

 

(310

)

 

$

53.51

 

 

 

 

$

20,040

 

Canceled

 

 

-

 

 

$

-

 

 

 

 

 

 

 

Outstanding at April 2, 2022

 

 

876

 

 

$

56.31

 

 

7.5 years

 

$

81,417

 

Stock options exercisable at April 2, 2022

 

 

213

 

 

$

56.46

 

 

5.7 years

 

$

19,761

 

 

Compensation expense for stock options was $0.5 million and $0.3 million in the first quarter of 2022 and 2021, respectively. As of April 2, 2022, unrecognized compensation expense related to stock options was $2.6 million, which is expected to be recognized over a weighted-average period of 1.8 years.

Restricted Stock Units

A summary of Nucor’s restricted stock unit (“RSU”) activity for the first quarter of 2022 is as follows (shares in thousands):

 

 

 

Shares

 

 

Grant Date

Fair Value

 

Restricted stock units:

 

 

 

 

 

 

 

 

Unvested at beginning of year

 

 

1,167

 

 

$

60.45

 

Granted

 

 

-

 

 

$

-

 

Vested

 

 

(14

)

 

$

60.40

 

Canceled

 

 

(3

)

 

$

66.00

 

Unvested at April 2, 2022

 

 

1,150

 

 

$

60.44

 

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Compensation expense for RSUs was $9.0 million and $9.3 million in the first quarter of 2022 and 2021, respectively. As of April 2, 2022, unrecognized compensation expense related to unvested RSUs was $34.6 million, which is expected to be recognized over a weighted-average period of 0.9 years.

Restricted Stock Awards  

A summary of Nucor’s restricted stock activity under the Nucor Corporation Senior Officers Annual Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “AIP”) and the Nucor Corporation Senior Officers Long-Term Incentive Plan (a supplement to the Nucor Corporation 2014 Omnibus Incentive Compensation Plan, the “LTIP”) for the first quarter of 2022 is as follows (shares in thousands):

 

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Restricted stock units and restricted stock awards:

 

 

 

 

 

 

 

 

Unvested at beginning of year

 

 

107

 

 

$

57.17

 

Granted

 

 

465

 

 

$

128.62

 

Vested

 

 

(341

)

 

$

119.52

 

Canceled

 

 

-

 

 

$

-

 

Unvested at April 2, 2022

 

 

231

 

 

$

109.02

 

 

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 $17.0 million and $10.2 million in the first quarter of 2022 and 2021, respectively. As of April 2, 2022, unrecognized compensation expense related to unvested restricted stock awards was $8.7 million, which is expected to be recognized over a weighted-average period of 2.4 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 $286.9 million and $129.0 million in the first quarter of 2022 and 2021, 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 first quarter of 2022 and 2021 are as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Interest expense

 

$

44,076

 

 

$

40,970

 

Interest income

 

 

(941

)

 

 

(1,326

)

Interest expense, net

 

$

43,135

 

 

$

39,644

 

 

11. Income Taxes

The effective tax rate for the first quarter of 2022 was 23.2% compared to 23.9% for the first quarter of 2021.

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 and 2018 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 2015 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 $740.4 million at April 2, 2022 ($610.3 million at December 31, 2021).

 

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12. Stockholders’ Equity

The following tables reflect the changes in stockholders’ equity attributable to Nucor and the noncontrolling interests of Nucor’s joint ventures, Nucor-Yamato Steel Company (Limited Partnership) (“NYS”) and California Steel Industries, Inc. (“CSI”), both of which Nucor owns 51%, for the three months ended April 2, 2022 and April 3, 2021 (in thousands):

 

 

 

 

 

 

 

Three Months (13 Weeks) Ended April 2, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2021

 

$

14,603,794

 

 

 

380,154

 

 

$

152,061

 

 

$

2,140,608

 

 

$

17,674,100

 

 

$

(115,282

)

 

 

107,742

 

 

$

(5,835,098

)

 

$

14,016,389

 

 

$

587,405

 

Net earnings

 

 

2,227,115

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,095,623

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,095,623

 

 

 

131,492

 

Other comprehensive income (loss)

 

 

70,778

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

70,778

 

 

 

-

 

 

 

-

 

 

 

70,778

 

 

 

-

 

Stock options exercised

 

 

16,586

 

 

 

-

 

 

 

-

 

 

 

(507

)

 

 

-

 

 

 

-

 

 

 

(310

)

 

 

17,093

 

 

 

16,586

 

 

 

-

 

Stock option expense

 

 

458

 

 

 

-

 

 

 

-

 

 

 

458

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

458

 

 

 

-

 

Issuance of stock under award plans,

   net of forfeitures

 

 

43,098

 

 

 

-

 

 

 

-

 

 

 

21,170

 

 

 

-

 

 

 

-

 

 

 

(388

)

 

 

21,928

 

 

 

43,098

 

 

 

-

 

Amortization of unearned

   compensation

 

 

1,400

 

 

 

-

 

 

 

-

 

 

 

1,400

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,400

 

 

 

-

 

Treasury stock acquired

 

 

(905,324

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,048

 

 

 

(905,324

)

 

 

(905,324

)

 

 

-

 

Cash dividends declared

 

 

(134,446

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(134,446

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(134,446

)

 

 

-

 

Distributions to noncontrolling

   interests

 

 

(211,558

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(211,558

)

Acquisition of noncontrolling interest in CSI

 

 

431,219

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

431,219

 

BALANCES, April 2, 2022

 

$

16,143,120

 

 

 

380,154

 

 

$

152,061

 

 

$

2,163,129

 

 

$

19,635,277

 

 

$

(44,504

)

 

 

114,092

 

 

$

(6,701,401

)

 

$

15,204,562

 

 

$

938,558

 

 

 

 

 

 

 

 

 

Three Months (13 Weeks) Ended April 3, 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

 

 

987,514

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

942,432

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

942,432

 

 

 

45,082

 

Other comprehensive income (loss)

 

 

15,301

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,301

 

 

 

-

 

 

 

-

 

 

 

15,301

 

 

 

-

 

Stock options exercised

 

 

107,524

 

 

 

-

 

 

 

-

 

 

 

30,488

 

 

 

-

 

 

 

-

 

 

 

(2,135

)

 

 

77,036

 

 

 

107,524

 

 

 

-

 

Stock option expense

 

 

333

 

 

 

-

 

 

 

-

 

 

 

333

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

333

 

 

 

-

 

Issuance of stock under award plans,

   net of forfeitures

 

 

15,602

 

 

 

-

 

 

 

-

 

 

 

6,900

 

 

 

-

 

 

 

-

 

 

 

(242

)

 

 

8,702

 

 

 

15,602

 

 

 

-

 

Amortization of unearned

   compensation

 

 

1,900

 

 

 

-

 

 

 

-

 

 

 

1,900

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,900

 

 

 

-

 

Treasury stock acquired

 

 

(301,859

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,380

 

 

 

(301,859

)

 

 

(301,859

)

 

 

-

 

Cash dividends declared

 

 

(122,658

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(122,658

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(122,658

)

 

 

-

 

Distributions to noncontrolling

   interests

 

 

(73,795

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(73,795

)

BALANCES, April 3, 2021

 

$

11,861,723

 

 

 

380,154

 

 

$

152,061

 

 

$

2,160,909

 

 

$

12,163,626

 

 

$

(103,560

)

 

 

80,912

 

 

$

(2,925,796

)

 

$

11,447,240

 

 

$

414,483

 

 

 

Dividends declared per share were $0.50 per share in the first quarter of 2022 ($0.405 per share in the first quarter of 2021).

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On December 2, 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 $4.00 billion of the Company’s common stock and terminated all 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 April 2, 2022, the Company had approximately $2.94 billion available for share repurchases under the program authorized by the Company’s Board of Directors.

 

 

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13. Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive income (loss) by component for the three months ended April 2, 2022 and April 3, 2021 (in thousands):

 

 

 

Three-Month (13-Week) Period Ended

 

 

 

April 2, 2022

 

 

 

Gains and (Losses) on

 

 

Foreign Currency

 

 

Adjustment to Early

 

 

 

 

 

 

 

Hedging Derivatives

 

 

Gains (Losses)

 

 

Retiree Medical Plan

 

 

Total

 

Accumulated other comprehensive

  income (loss) at December 31, 2021

 

$

1,112

 

 

$

(124,868

)

 

$

8,474

 

 

$

(115,282

)

Other comprehensive income (loss)

   before reclassifications

 

 

53,476

 

 

 

22,692

 

 

 

-

 

 

 

76,168

 

Amounts reclassified from accumulated

   other comprehensive income (loss)

   into earnings (1)

 

 

(5,390

)

 

 

-

 

 

 

-

 

 

 

(5,390

)

Net current-period other comprehensive

   income (loss)

 

 

48,086

 

 

 

22,692

 

 

 

-

 

 

 

70,778

 

Accumulated other comprehensive

   income (loss) at April 2, 2022

 

$

49,198

 

 

$

(102,176

)

 

$

8,474

 

 

$

(44,504

)

          

 

 

Three-Month (13-Week) Period Ended

 

 

 

April 3, 2021

 

 

 

Gains and (Losses) on

 

 

Foreign Currency

 

 

Adjustment to Early

 

 

 

 

 

 

 

Hedging Derivatives

 

 

Gains (Losses)

 

 

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

 

 

999

 

 

 

13,801

 

 

 

-

 

 

 

14,800

 

Amounts reclassified from accumulated

   other comprehensive income (loss)

   into earnings (1)

 

 

501

 

 

 

-

 

 

 

-

 

 

 

501

 

Net current-period other comprehensive

   income (loss)

 

 

1,500

 

 

 

13,801

 

 

 

-

 

 

 

15,301

 

Accumulated other comprehensive

   income (loss) at April 3, 2021

 

$

(3,200

)

 

$

(107,026

)

 

$

6,666

 

 

$

(103,560

)

 

 

(1)   Includes $(5,390) and $501 net-of-tax impact of accumulated other comprehensive income (loss) reclassifications into cost of products sold for net (gains) losses on commodity contracts in the first quarter of 2022 and 2021, respectively. The tax impact of those reclassifications was $(1,700) and $100 in the first quarter of 2022 and 2021, 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, steel racking, piling products, 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.

Corporate/eliminations include items such as 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. Corporate assets primarily include cash and cash equivalents, short-term investments, restricted cash and

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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.

Nucor’s results by segment for the first quarter of 2022 and 2021 were as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Net sales to external customers:

 

 

 

 

 

 

 

 

Steel mills

 

$

6,518,609

 

 

$

4,608,777

 

Steel products

 

 

3,323,088

 

 

 

1,810,055

 

Raw materials

 

 

651,585

 

 

 

598,308

 

 

 

$

10,493,282

 

 

$

7,017,140

 

Intercompany sales:

 

 

 

 

 

 

 

 

Steel mills

 

$

1,593,258

 

 

$

1,225,113

 

Steel products

 

 

134,706

 

 

 

71,219

 

Raw materials

 

 

3,546,519

 

 

 

3,646,195

 

Corporate/eliminations

 

 

(5,274,483

)

 

 

(4,942,527

)

 

 

$

-

 

 

$

-

 

Earnings before income taxes and

   noncontrolling interests:

 

 

 

 

 

 

 

 

Steel mills

 

$

2,578,854

 

 

$

1,314,974

 

Steel products

 

 

684,867

 

 

 

211,812

 

Raw materials

 

 

95,853

 

 

 

223,235

 

Corporate/eliminations

 

 

(461,459

)

 

 

(451,775

)

 

 

$

2,898,115

 

 

$

1,298,246

 

 

 

 

April 2, 2022

 

 

Dec. 31, 2021

 

Segment assets:

 

 

 

 

 

 

 

 

Steel mills

 

$

14,458,171

 

 

$

13,235,463

 

Steel products

 

 

8,014,507

 

 

 

7,845,010

 

Raw materials

 

 

3,709,087

 

 

 

3,870,806

 

Corporate/eliminations

 

 

2,451,103

 

 

 

871,793

 

 

 

$

28,632,868

 

 

$

25,823,072

 

 

15. Revenue

The following tables disaggregate our revenue by major source for the first quarter of 2022 and 2021 (in thousands):

 

 

 

Three Months (13 Weeks) Ended April 2, 2022

 

 

 

Steel

Mills

 

 

Steel

Products

 

 

Raw

Materials

 

 

Total

 

Sheet

 

$

3,183,063

 

 

$

-

 

 

$

-

 

 

$

3,183,063

 

Bar

 

 

1,827,731

 

 

 

-

 

 

 

-

 

 

 

1,827,731

 

Structural

 

 

783,271

 

 

 

-

 

 

 

-

 

 

 

783,271

 

Plate

 

 

724,544

 

 

 

-

 

 

 

-

 

 

 

724,544

 

Tubular Products

 

 

-

 

 

 

610,300

 

 

 

-

 

 

 

610,300

 

Rebar Fabrication

 

 

-

 

 

 

445,232

 

 

 

-

 

 

 

445,232

 

Joist

 

 

-

 

 

 

612,235

 

 

 

-

 

 

 

612,235

 

Deck

 

 

-

 

 

 

550,909

 

 

 

-

 

 

 

550,909

 

Other Steel Products

 

 

-

 

 

 

1,104,412

 

 

 

-

 

 

 

1,104,412

 

Raw Materials

 

 

-

 

 

 

-

 

 

 

651,585

 

 

 

651,585

 

 

 

$

6,518,609

 

 

$

3,323,088

 

 

$

651,585

 

 

$

10,493,282

 

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Three Months (13 Weeks) Ended April 3, 2021

 

 

 

Steel

Mills

 

 

Steel

Products

 

 

Raw

Materials

 

 

Total

 

Sheet

 

$

2,351,455

 

 

$

-

 

 

$

-

 

 

$

2,351,455

 

Bar

 

 

1,261,042

 

 

 

-

 

 

 

-

 

 

 

1,261,042

 

Structural

 

 

477,195

 

 

 

-

 

 

 

-

 

 

 

477,195

 

Plate

 

 

519,085

 

 

 

-

 

 

 

-

 

 

 

519,085

 

Tubular Products

 

 

-

 

 

 

374,653

 

 

 

-

 

 

 

374,653

 

Rebar Fabrication

 

 

-

 

 

 

386,557

 

 

 

-

 

 

 

386,557

 

Joist

 

 

-

 

 

 

229,129

 

 

 

-

 

 

 

229,129

 

Deck

 

 

-

 

 

 

193,413

 

 

 

-

 

 

 

193,413

 

Other Steel Products

 

 

-

 

 

 

626,303

 

 

 

-

 

 

 

626,303

 

Raw Materials

 

 

-

 

 

 

-

 

 

 

598,308

 

 

 

598,308

 

 

 

$

4,608,777

 

 

$

1,810,055

 

 

$

598,308

 

 

$

7,017,140

 

 

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 $345.7 million as of April 2, 2022 ($251.9 million as of December 31, 2021) 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 first quarter of 2022 and 2021 are as follows (in thousands, except per share amounts):

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Basic net earnings per share:

 

 

 

 

 

 

 

 

Basic net earnings

 

$

2,095,623

 

 

$

942,432

 

Earnings allocated to participating securities

 

 

(8,420

)

 

 

(5,376

)

Net earnings available to common stockholders

 

$

2,087,203

 

 

$

937,056

 

Basic average shares outstanding

 

 

271,564

 

 

 

301,846

 

Basic net earnings per share

 

$

7.69

 

 

$

3.10

 

Diluted net earnings per share:

 

 

 

 

 

 

 

 

Diluted net earnings

 

$

2,095,623

 

 

$

942,432

 

Earnings allocated to participating securities

 

 

(8,385

)

 

 

(5,363

)

Net earnings available to common stockholders

 

$

2,087,238

 

 

$

937,069

 

Diluted average shares outstanding:

 

 

 

 

 

 

 

 

Basic average shares outstanding

 

 

271,564

 

 

 

301,846

 

Dilutive effect of stock options and other

 

 

530

 

 

 

672

 

 

 

 

272,094

 

 

 

302,518

 

Diluted net earnings per share

 

$

7.67

 

 

$

3.10

 

 

The following stock options were excluded from the computation of diluted net earnings per share for the first quarter of 2022 and 2021 because their effect would have been anti-dilutive (shares in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Anti-dilutive stock options:

 

 

 

 

 

 

 

 

Weighted-average shares

 

 

-

 

 

 

249

 

Weighted-average exercise price

 

$

-

 

 

$

65.80

 

 

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17. Debt and Other Financing Arrangements

On March 11, 2022, Nucor completed the issuance and sale of $550.0 million aggregate principal amount of its 3.125% Notes due 2032 (the “2032 Notes”) and $550.0 million aggregate principal amount of its 3.850% Notes due 2052 (the “2052 Notes” and, together with the 2032 Notes, the “Notes”). We plan to use the net proceeds from the issuance and sale of the Notes to redeem, along with cash on hand if necessary, all of the outstanding $600.0 million aggregate principal amount of our 4.125% Notes due 2022 (the “2022 Notes”) and $500.0 million aggregate principal amount of our 4.000% Notes due 2023 (the “2023 Notes”) pursuant to the terms of the indenture governing the 2022 Notes and the 2023 Notes, with remaining proceeds, if any, to be used for general corporate purposes. Net proceeds from the issuance and sale of the Notes were $1.09 billion. Costs of $15.3 million associated with the issuance and sale of the Notes have been capitalized and will be amortized over the life of the Notes.

 

On April 25, 2022, Nucor redeemed all $500.0 million aggregate principal amount outstanding of the 2023 Notes. The 2023 Notes were redeemed using a portion of the net proceeds from the issuance and sale of the Notes. In September 2022, $600.0 million aggregate principal amount of the 2022 Notes will mature, which we expect to redeem in-full prior to that time using a portion of the net proceeds from the issuance and sale of the Notes, along with cash on hand, if necessary.

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18. Acquisitions

 

On February 1, 2022, Nucor used cash on hand to acquire a 51% controlling ownership position in CSI by purchasing a 50% equity interest from a subsidiary of Vale S.A. (Vale) for a cash purchase price of approximately $400.0 million, adjusted for net debt and working capital at closing, as well as a 1% equity interest from JFE Steel Corporation (JFE). CSI is a flat-rolled steel converter with the capability to produce more than two million tons of finished steel and steel products annually. The company has five product lines, including hot rolled, pickled and oiled, cold rolled, galvanized and electric resistance welded (“ERW”) pipe. Key end-use markets served by CSI include customers in the construction, service center and energy industries. This acquisition gives Nucor a strong presence in the Western region of the United States and grows our ability to produce an even wider range of value-added sheet products. CSI financial results were included as part of the steel mills segment (see Note 14) beginning on February 1, 2022, the date of the acquisition of Nucor’s 51% controlling ownership position.

 

We allocated the purchase price for CSI to its individual assets acquired and liabilities assumed. While the purchase price allocation is substantially complete, it is still preliminary and subject to change, including for the final working capital settlement.

 

The following table summarizes the fair values of 100% of the assets and liabilities of CSI, as well as the fair value of the 49% noncontrolling interest not acquired by Nucor, as of February 1, 2022, the date of the acquisition of Nucor’s 51% controlling ownership position (in thousands):

 

Cash

 

$

98,537

 

Accounts receivable

 

 

159,257

 

Inventory

 

 

354,614

 

Other current assets

 

 

5,298

 

Property, plant and equipment

 

 

561,812

 

Goodwill

 

 

69,097

 

Other intangible assets

 

 

Other assets

 

 

11,973

 

Total assets acquired

 

 

1,260,588

 

Current portion of long-term debt

 

 

9,826

 

Other current liabilities

 

 

162,808

 

Long-term debt due after one year

 

 

67,866

 

Other liabilities

 

 

140,050

 

Total liabilities assumed

 

 

380,550

 

Net assets acquired at 100%

 

 

880,038

 

Less: Fair value of noncontrolling interest

 

 

431,219

 

Net assets acquired at 51%

 

$

448,819

 

 

The determination of the fair value of the noncontrolling interest was calculated using the implied value of 100% of the enterprise value of the business using the purchase price as the purchase price did not include a control premium on a per-share basis and the noncontrolling interest shareholder will participate equally in the economic benefits of CSI after the acquisition.

 

The goodwill of $69.1 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 mills segment (see Note 4). The goodwill is attributable to the assembled workforce acquired, expanding our Western United States presence and CSI’s value-added product capabilities. None of the goodwill is deductible for tax purposes.

 

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

 

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

Certain statements made in this report, 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, inflation and interest rate changes; (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, 2021 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 United States 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, 2021.

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, steel racking, piling products, 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.

 

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On February 1, 2022, Nucor used cash on hand to acquire a 51% controlling ownership position in CSI for a cash purchase price of approximately $400.0 million, adjusted for net debt and working capital at closing. CSI is a flat-rolled steel converter with the capability to produce more than two million tons of finished steel and steel products annually. The company has five product lines, including hot rolled, pickled and oiled, cold rolled, galvanized and ERW pipe. Key end-use markets served by CSI include customers in the construction, service center and energy industries. This acquisition gives Nucor a strong presence in the Western region of the United States and grows our ability to produce an even wider range of value-added sheet products. CSI financial results were included as part of the steel mills segment beginning on February 1, 2022, the date of the acquisition of Nucor’s 51% controlling ownership position.

The average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 77%, 73% and 72%, respectively, in the first quarter of 2022 compared with approximately 95%, 74% and 79%, respectively, in the first quarter of 2021.

Results of Operations

 

Nucor reported consolidated net earnings of $2.10 billion, or $7.67 per diluted share, in the first quarter of 2022, making it the most profitable first quarter in the Company’s history. By comparison, Nucor reported consolidated net earnings of $942.4 million, or $3.10 per diluted share in the first quarter of 2021, which was the Company’s previous record for first quarter earnings. Nucor reported consolidated net earnings of $2.25 billion, or $7.97 per diluted share, in the fourth quarter of 2021, which was the most profitable quarter in the Company’s history.

 

Demand remained robust in the first quarter of 2022 across the key end-use markets we serve, a continuation of the trend that we saw throughout 2021. Average selling prices for our steel mills and steel products segments increased rapidly during 2021, and the Company’s profitability increased during the first quarter of 2022 as compared to the first quarter of 2021.

 

Earnings in the first quarter of 2022 decreased from the fourth quarter of 2021 primarily due to the decreased earnings of the steel mills segment, which was impacted by some demand softening at our sheet mills. This softening demand, combined with increased imports and higher customer inventory levels, led to decreased average selling prices for sheet products in the first quarter of 2022. However, overall selling prices in the steel mills segment increased later in the first quarter due in part to the supply chain disruptions caused by the conflict in Ukraine. The steel products segment had a record quarter for profitability in the first quarter of 2022 as demand in nonresidential construction markets continued to be strong. Earnings in the raw materials segment increased in the first quarter of 2022 as compared to the fourth quarter of 2021 due to volatility and market conditions.  

 

The following discussion provides a greater quantitative and qualitative analysis of Nucor’s performance in the first quarter of 2022 as compared to the first quarter of 2021.

Net Sales

 

Net sales to external customers by segment for the first quarter of 2022 and 2021 were as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

April 2, 2022

 

April 3, 2021

 

% Change

Steel mills

 

$6,518,609

 

$4,608,777

 

41%

Steel products

 

3,323,088

 

1,810,055

 

84%

Raw materials

 

651,585

 

598,308

 

9%

Total net sales to external customers

 

$10,493,282

 

$7,017,140

 

50%

 

Net sales for the first quarter of 2022 increased 50% from the first quarter of 2021. Average sales price per ton increased 68% from $978 in the first quarter of 2021 to $1,641 in the first quarter of 2022. Total tons shipped to outside customers in the first quarter of 2022 were 6,394,000 tons, an 11% decrease from the first quarter of 2021.

 

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In the steel mills segment, sales tons for the first quarter of 2022 and 2021 were as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

April 2, 2022

 

April 3, 2021

 

% Change

Outside steel shipments

 

4,539

 

5,190

 

-13%

Inside steel shipments

 

1,275

 

1,354

 

-6%

Total steel shipments

 

5,814

 

6,544

 

-11%

 

Net sales for the steel mills segment increased 41% in the first quarter of 2022 from the first quarter of 2021, due primarily to a 61% increase in the average sales price per ton, from $891 to $1,436, partially offset by a 13% decrease in tons sold to outside customers. Average selling prices increased across all product groups within the steel mills segment in the first quarter of 2022 as compared to the first quarter of 2021.

Outside sales tonnage for the steel products segment for the first quarter of 2022 and 2021 was as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

April 2, 2022

 

April 3, 2021

 

% Change

Joist sales

 

179

 

172

 

4%

Deck sales

 

136

 

135

 

1%

Cold finished sales

 

133

 

132

 

1%

Rebar fabrication sales

 

291

 

282

 

3%

Piling products sales

 

111

 

136

 

-18%

Tubular products sales

 

255

 

250

 

2%

Other steel products sales

 

130

 

100

 

30%

Total steel products sales

 

1,235

 

1,207

 

2%

 

Net sales for the steel products segment increased 84% in the first quarter of 2022 compared to the first quarter of 2021, due to a 79% increase in the average sales price per ton from $1,499 to $2,689 and a 2% increase in tons sold to outside customers. Average selling prices increased across all businesses within the steel products segment in the first quarter of 2022 as compared to the first quarter of 2021.

Net sales for the raw materials segment increased 9% in the first quarter of 2022 compared to the first quarter of 2021. The increase in net sales was due primarily to increased average selling prices, which were partially offset by a decrease in volumes at DJJ’s brokerage and scrap processing operations. In the first quarter of 2022, 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 (88% and 9%, respectively, in the first quarter of 2021).

Gross Margins

Nucor recorded gross margins of $3.46 billion (33%) in the first quarter of 2022, which was a significant increase compared with $1.62 billion (23%) in the first quarter of 2021.

 

The primary driver for the increase in gross margins in the first quarter of 2022 as compared to the first quarter of 2021 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 first quarter of 2022 was $495, a 22% increase compared to $405 in the first quarter of 2021. 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.

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 been volatile as the conflict in Ukraine has disrupted global supply chains. We believe that scrap markets will continue to be volatile in the second quarter of 2022.

 

Pre-operating and start-up costs of new facilities were approximately $62 million in the first quarter of 2022 and approximately $19 million in the first quarter of 2021. Pre-operating and start-up costs in the first quarter of 2022 included costs related to the sheet mill expansion in Kentucky, the plate mill being built in Kentucky and the galvanizing line at our sheet mill expansion in Arkansas. Pre-operating and start-up costs in the first quarter of 2021 included costs related to the plate mill being built in Kentucky, the sheet mill expansion in Kentucky, the

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merchant bar quality mill expansion at our bar mill in Illinois and the galvanizing line at our 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 first quarter of 2022 as compared to the first quarter of 2021. The largest increase in gross margins was at our joist and deck businesses. Demand in nonresidential construction markets continues to be strong. As we enter the second quarter of 2022, backlogs for the steel products segment are strong.

 

Gross margins in the raw materials segment decreased in the first quarter of 2022 as compared to the first quarter of 2021, primarily due to decreased margins at our DRI facilities, which had strong profitability in the first quarter of 2021.

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 $157.1 million in the first quarter of 2022 as compared to the first quarter of 2021. This increase was due to Nucor’s increased profitability in the first quarter of 2022 as compared to the prior year period, which resulted in significantly increased accruals related to profit sharing.

Equity in Earnings of Unconsolidated Affiliates

 

Equity in earnings of unconsolidated affiliates was $7.7 million and $13.2 million in the first quarter of 2022 and 2021, respectively. The decrease in equity method investment earnings was primarily due to decreased earnings at Nucor-JFE.

 

Interest Expense (Income)

 

Net interest expense for the first quarter of 2022 and 2021 was as follows (in thousands):

 

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Interest expense

 

$

44,076

 

 

$

40,970

 

Interest income

 

 

(941

)

 

 

(1,326

)

Interest expense, net

 

$

43,135

 

 

$

39,644

 

 

Interest expense increased in the first quarter of 2022 compared to the first quarter of 2021 due primarily to an increase in average debt outstanding. Interest income decreased in the first quarter of 2022 compared to the first quarter of 2021 due to a decrease in average interest rates on investments.

Earnings Before Income Taxes and Noncontrolling Interests

 

The table below presents earnings before income taxes and noncontrolling interests by segment for the first quarter of 2022 and 2021 (in thousands). The changes between periods were driven by the quantitative and qualitative factors previously discussed.

 

 

 

 

 

 

 

Three Months (13 Weeks) Ended

 

 

 

April 2, 2022

 

 

April 3, 2021

 

Steel mills

 

$

2,578,854

 

 

$

1,314,974

 

Steel products

 

 

684,867

 

 

 

211,812

 

Raw materials

 

 

95,853

 

 

 

223,235

 

Corporate/eliminations

 

 

(461,459

)

 

 

(451,775

)

 

 

$

2,898,115

 

 

$

1,298,246

 

 

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Noncontrolling Interests

Noncontrolling interests represent the income attributable to the holders of noncontrolling interests in Nucor’s joint ventures, NYS and CSI, in both of which Nucor owns 51% controlling interests. The increase in earnings attributable to noncontrolling interests in the first quarter of 2022 as compared to the first quarter of 2021 was due to the increased earnings of NYS, which was a result of the increased metal margins, as well as the earnings of CSI, for which results were consolidated beginning on February 1, 2022, the date of the acquisition of Nucor’s 51% controlling ownership position.

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 quarter of 2022 and 2021, 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 first quarter of 2022 was 23.2% compared to 23.9% for the first quarter of 2021. The expected effective rate for the full year of 2022 is approximately 23.5%.

We estimate that in the next 12 months our gross unrecognized tax benefits, which totaled $118.0 million at April 2, 2022, exclusive of interest, could decrease by as much as $10.4 million as a result of the expiration of the statute of limitations and the 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 and 2018 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 2015 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 $2.10 billion, or $7.67 per diluted share, in the first quarter of 2022 as compared to consolidated net earnings of $942.4 million, or $3.10 per diluted share, in the first quarter of 2021. Net earnings attributable to Nucor stockholders as a percentage of net sales were 20.0% and 13.4% in the first quarter of 2022 and 2021, respectively. Annualized return on average stockholders’ equity was 57.4% and 33.9% in the first quarter of 2022 and 2021, respectively.

 

Outlook

End-use market demand remains strong for steel and steel products, and we remain confident that 2022 will be another year of strong earnings and cash flow for Nucor.

We expect that the second quarter of 2022 will be the most profitable quarter in Nucor's history, surpassing the previous record set in the fourth quarter of 2021.

We expect that second quarter earnings will be driven by increased profitability in the steel products segment, which continues to benefit from robust demand in nonresidential construction markets. In addition, the steel mills segment earnings are expected to strengthen due primarily to increased profitability at our sheet and plate mills. Similarly, Nucor's raw materials segment is expected to generate increased profits in the second quarter due to relatively higher selling prices for raw materials.

Nucor’s largest exposure to market risk is in our steel mills and steel products segments. Our largest single customer in the first quarter of 2022 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.

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Liquidity and Capital Resources

We believe our financial strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. We carry the highest credit ratings of any steel producer headquartered in North America, with an A- long-term rating from Standard & Poor’s and a Baa1 long-term rating from Moody’s. Our credit ratings are dependent, however, upon a number of factors, both 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 liquidity position as of April 2, 2022 remained strong, consisting of total cash and cash equivalents, short-term investments and restricted cash and cash equivalents of $4.26 billion as of such date compared to $2.76 billion as of December 31, 2021. Of these totals, the amount of restricted cash and cash equivalents was $88.2 million at April 2, 2022 and $143.8 million at December 31, 2021. Approximately $504.6 million of the cash and cash equivalents position at April 2, 2022, was held by our majority-owned and controlled subsidiaries, including CSI which was acquired on February 1, 2022, as compared to $540.3 million at December 31, 2021.

Cash provided by operating activities was $2.47 billion in the first quarter of 2022 as compared to $530.4 million in the first quarter of 2021. The $1.94 billion increase was primarily driven by net earnings of $2.23 billion for the first quarter of 2022, an increase of $1.24 billion over net earnings in the prior year period of $987.5 million. In addition, changes in operating assets and operating liabilities (exclusive of acquisitions) provided cash of $6.7 million in the first quarter of 2022 as compared to using cash of $734.2 million in the first quarter of 2021.

The funding of our working capital in the first quarter of 2022 decreased over the first quarter of 2021 mainly due to accounts receivable and inventories only increasing by 7% and 4%, respectively, as compared to 23% and 22%, respectively, in the first quarter of 2021. As a result, the change in accounts receivable only used cash of $92.4 million in the first quarter of 2022 as compared to $524.6 million in the first quarter of 2021. The change in inventories provided cash of $124.2 million in the first quarter of 2022 as compared to using cash of $795.9 million in the same period of 2021. The increase in accrued federal income taxes provided cash of $672.1 million compared to the change in federal income taxes providing cash of $200.9 million in the first quarter of 2021. These changes were offset primarily by the following: (i) the change in salaries, wages and related accruals using cash of $658.3 million in the first quarter of 2022 as 2021 incentive compensation was paid versus providing cash of $69.8 million in the first quarter of 2021; and (ii) the change in accounts payable using cash of $165.5 million in the first quarter of 2022 as compared to providing cash of $225.3 million in the same period of 2021.

The current ratio was 2.9 at the end of the first quarter of 2022 and 2.5 at year-end 2021. The current ratio increased primarily due to the following increases in current assets: a 58%, or $1.36 billion, increase in cash and cash equivalents, a 77%, or $193.9 million, increase in short-term investments, a 7%, or $257.5 million, increase in accounts receivable, and a 4%, or $234.5 million, increase in inventories. Additionally, salaries, wages and related accruals decreased by 44%, or $662.2 million, as 2021 incentive compensation accrued as of year-end 2021 was paid in the first quarter of 2022.

Cash used in investing activities during the first quarter of 2022 was $981.7 million as compared to $302.0 million in the prior year period. Cash used for acquisitions (net of cash acquired) increased by $347.5 million due to the acquisition of CSI on February 1, 2022. Additionally, cash used to purchase investments increased by $59.8 million and cash proceeds from the sale of investments decreased by $139.4 million over the same period of 2021. Finally, cash used for capital expenditures of $447.7 million in the first quarter of 2022 increased by $134.2 million over the same period of 2021 primarily due to the plate mill under construction in Kentucky, the sheet mill expansion in Kentucky and the sheet mill in West Virginia. Capital expenditures for 2022 are estimated to be around $2.35 billion as compared to $1.62 billion in 2021. The projects that we anticipate will have the largest capital expenditures in 2022 are the plate mill under construction in Brandenburg, Kentucky and the sheet mill in West Virginia.

Cash used in financing activities during the first quarter of 2022 was $189.3 million as compared to $410.7 million in the prior year period. Stock repurchases were $905.3 million in the first quarter of 2022 as compared to $301.9 million in the first quarter of 2021 and distributions to noncontrolling interests were $211.6 million in the first quarter of 2022 as compared to $73.8 million in the first quarter of 2021. Offsetting these uses of cash was cash provided from the issuance and sale of the Notes, net of the discount, of $1.09 billion in the first quarter of 2022 (none in the same period of 2021). In the first quarter of 2022, Nucor issued $550.0 million of the 2032 Notes and $550.0 million of the 2052 Notes. In April 2022, we redeemed all $500.0 million aggregate principal of the 2023 Notes.

Nucor’s $1.75 billion revolving credit facility matures on November 5, 2026. The revolving credit facility includes only one financial covenant, which is a limit of 60% on the ratio of funded debt to total capital. In addition, the revolving credit

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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 April 2, 2022, the funded debt to total capital ratio was 29.7% and we were in compliance with all non-financial covenants under the revolving credit facility. No borrowings were outstanding under the revolving credit facility as of April 2, 2022.

In February 2022, Nucor’s Board of Directors declared a quarterly cash dividend on Nucor’s common stock of $0.50 per share payable on May 11, 2022 to stockholders of record on March 31, 2022. This dividend is Nucor’s 196th 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 expenditure and working capital requirements for existing operations for at least the next 24 months. We also believe we have adequate access to capital markets for liquidity purposes. In September 2022, $600.0 million aggregate principal amount of the 2022 Notes will mature, which we expect to redeem in-full prior to that time using a portion of the net proceeds from the sale of the Notes, along with cash on hand, if necessary.

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, 2021. There were no interest rate swaps outstanding at April 2, 2022.

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 raw materials requirements and 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 partially 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 April 2, 2022, accumulated other comprehensive loss, net of income taxes included $49.2 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.

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The following table presents the negative effect on pre-tax earnings of a hypothetical change in the fair value of the derivative instruments outstanding at April 2, 2022, due to an assumed 10% and 25% change in the market price of each of the indicated commodities (in thousands):

 

Commodity Derivative

 

10% Change

 

 

25% Change

 

Natural gas

 

$

23,216

 

 

$

58,041

 

Aluminum

 

$

7,430

 

 

$

18,574

 

Copper

 

$

4,257

 

 

$

10,668

 

 

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 April 2, 2022 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 April 2, 2022 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, 2021.

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 April 2, 2022 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)

 

January 1, 2022 - January 29, 2022

 

 

-

 

 

$

-

 

 

 

-

 

 

$

3,849,489

 

January 30, 2022 - February 26, 2022

 

 

4,298

 

 

$

115.62

 

 

 

4,298

 

 

$

3,352,566

 

February 27, 2022 - April 2, 2022

 

 

2,750

 

 

$

148.51

 

 

 

2,750

 

 

$

2,944,165

 

For the Quarter Ended April 2, 2022

 

 

7,048

 

 

 

 

 

 

 

7,048

 

 

 

 

 

 

(1)

Includes commissions of $0.17 per share.

(2)

On December 2, 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 $4.00 billion of the Company’s common stock and terminated all previously authorized share repurchase programs. The share repurchase authorization is discretionary and has no expiration date.

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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))

 

4

  

Indenture, dated as of August 19, 2014, between Nucor Corporation and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-3 filed August 20, 2014 (File No. 333-198263))

 

4.1

  

Fourth Supplemental Indenture, dated as of March 11, 2022, between Nucor Corporation and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed March 11, 2022 (File No. 001-04119))

 

4.2

  

Form of 3.125% Notes due 2032 (included in Exhibit 4.1 above) (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed March 11, 2022 (File No. 001-04119))

 

4.3

  

Form of 3.850% Notes due 2052 (included in Exhibit 4.1 above) (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed March 11, 2022 (File No. 001-04119))

 

10*

 

2014 Omnibus Incentive Compensation Plan, as amended and restated effective February 21, 2022 (#)

 

10.1*

 

Senior Officers Annual Incentive Plan, as amended and restated effective February 21, 2022 (included in Exhibit 10 above) (#)

 

10.2*

 

Senior Officers Long-Term Incentive Plan, as amended and restated effective February 21, 2022 (included in Exhibit 10 above) (#)

 

 

 

10.3*

 

Form of Restricted Share Unit Award Agreement used for awards granted after February 21, 2022 – time-vested awards (#)

 

 

 

10.4*

 

Form of Award Agreement for Annual Stock Option Grants used for awards granted after February 21, 2022 (#)

 

 

 

10.5

 

Executive Employment Agreement of Stephen D. Laxton (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A filed March 4, 2022 (File No. 001-04119)) (#)  

 

 

 

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 April 2, 2022, filed May 11, 2022, 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 April 2, 2022, filed May 11, 2022, formatted in Inline XBRL (included in Exhibit 101 above).

 

*

Filed herewith.

**

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

(#)

Indicates a management contract or compensatory plan or arrangement.

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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/ Stephen D. Laxton

 

 

 

Stephen D. Laxton

 

 

 

Chief Financial Officer, Treasurer and Executive

 

 

 

Vice President

 

Dated: May 11, 2022

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