Nucor (NUE) Guides Q3 EPS Ahead of Expectations

Nucor (NYSE: NUE) raised guidance for its third quarter ending October 4, 2014. Nucor expects third quarter results to be in the range of $0.70 to $0.75 per diluted share. This range represents an increase from both the third quarter of 2013 and second quarter of 2014 earnings of $0.46 per diluted share. This performance is consistent with our expectations supporting the qualitative guidance presented in our second quarter of 2014 earnings release and conference call which stated, "We currently expect to see a stronger improvement in earnings for the third quarter of 2014." Projected third quarter of 2014 results include an estimated LIFO credit of $14.5 million ($0.03 per diluted share), compared to no charge or credit recorded in the second quarter of 2014 and a credit of $18.0 million ($0.03 per diluted share) recorded in the third quarter of 2013.

*** The Street sees Q3 EPS of $0.61 with revenue of $5.3 billion.

Included in the projected third quarter results is an estimated $12.0 million charge ($0.02 per diluted share) related to the partial write down of assets within the steel mills segment. Earnings in the third quarter of 2013 included a net $14.0 million ($0.03 per diluted share) partial write down of inventory and fixed asset balances associated with the collapse of a storage dome at Nucor Steel Louisiana.

Overall operating performance at our steel mills segment for the third quarter is expected to be much improved compared to the second quarter of 2014, as we expect increased profitability in sheet, structural, bar and plate steel. Structural steel had no major outages in the third quarter, as compared to the planned three week outage at Nucor-Yamato Steel in the second quarter associated with our $115 million sheet piling capital project. The strongest markets for the steel mills continue to be manufactured goods, including energy and automotive. Though third quarter results are expected to be much improved from the second quarter, imports remain at high levels, applying downward pressure on pricing.

The performance of our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) is expected to improve compared to the second quarter of 2014, reflecting improving conditions in the nonresidential construction markets. Although nonresidential construction markets are at historically low levels, they are improving.

The performance of our raw materials segment includes an anticipated operating loss of $27 million ($0.05 per diluted share) at our new direct reduced iron (DRI) plant in St. James Parish, Louisiana. The Louisiana DRI facility has continued to achieve excellent quality and volume levels. Outages in June and July were necessary to implement changes intended to improve process yield performance. An additional factor affecting the performance of Nucor Steel Louisiana is the impact of consuming higher cost iron ore purchased early in the year under a quarterly lag pricing mechanism. As a result of the process improvements and lower iron ore costs, combined with a steady run-rate, we continue to anticipate profitable performance at the Louisiana DRI facility by the end of the year.

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