CHARLOTTE, N.C., Oct. 18, 2018 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) today announced third quarter of 2018 consolidated net earnings of $676.7 million, or $2.13 per diluted share. Included in the third quarter of 2018 earnings is a non-cash impairment charge of $110.0 million, or $0.26 per diluted share, related to our proved producing natural gas well assets. This impairment charge was not included in our quantitative guidance range provided on September 14, 2018. By comparison, Nucor reported consolidated net earnings of $683.2 million, or $2.13 per diluted share, for the second quarter of 2018 and $254.9 million, or $0.79 per diluted share, for the third quarter of 2017.

In the first nine months of 2018, Nucor reported consolidated net earnings of $1.71 billion, or $5.35 per diluted share, compared with consolidated net earnings of $934.8 million, or $2.90 per diluted share, in the first nine months of last year.

"The strong financial performance we have had this year continued into the third quarter, and we are on pace for 2018 to be a record year for earnings," said John Ferriola, Nucor's Chairman, Chief Executive Officer and President. "Our financial results are evidence that Nucor was primed and ready for this long-awaited upturn in the steel market. Our strategic initiatives, including capital projects, acquisitions and enhanced customer engagement, as well as our active participation in industry trade actions, have solidified our industry leading performance. Our extensive investments have grown our peak earnings power and enhanced our many competitive strengths."

Selected Segment DataIn the first quarter of 2018, the Company began reporting its tubular products and piling businesses as part of the steel products segment. These businesses were previously included in the steel mills segment. All prior period segment data presented in this news release has been recast to reflect this change. Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the third quarter and first nine months of 2018 and 2017 (in thousands, unaudited):

Financial ReviewIncluded in the third quarter of 2018 results were the previously mentioned non-cash impairment charge of $110.0 million, or $0.26 per diluted share, as well as a benefit of $24.8 million, or $0.06 per diluted share, related to insurance recoveries. Included in the second quarter of 2018 results was a benefit of $23.3 million, or $0.06 per diluted share, related to insurance recoveries. Included in the third quarter of 2017 results was a net benefit of $13.2 million, or $0.04 per diluted share, related to tax return true-ups and state tax credits. Also included in the third quarter of 2017 results was an expense of $22.5 million, or $0.05 per diluted share, related to certain legal matters.

In our Form 10-Q for the second quarter of 2018 we stated the following related to the proved producing natural gas well assets impairment assessment we performed in the fourth quarter of 2017: "Changes in the natural gas industry or a continuation of the low-price environment beyond what had already been assumed in the analysis could cause management to revise the natural gas price assumptions, the estimated reserves or the estimated drilling production costs. Unfavorable revisions to these assumptions or estimates could possibly result in an impairment of some or all of the groups of proved well assets." Based on the continued deterioration in the outlook for pricing for our natural gas wells, we determined that a triggering event occurred related to the proved producing natural gas well assets requiring assessment for impairment in the third quarter. As a result of that assessment, we recorded a $110.0 million, or $0.26 per diluted share, non-cash impairment charge to the proved producing natural gas well assets.

Nucor's consolidated net sales increased 4% to $6.74 billion in the third quarter of 2018 compared with $6.46 billion in the second quarter of 2018 and increased 30% compared with $5.17 billion in the third quarter of 2017. Average sales price per ton in the third quarter of 2018 increased 7% compared with the second quarter of 2018 and increased 23% compared with the third quarter of 2017. Total tons shipped to outside customers were 7,048,000 tons in the third quarter of 2018, a 2% decrease from the second quarter of 2018 and a 6% increase from the third quarter of 2017. Total steel mill shipments in the third quarter of 2018 decreased 2% from the second quarter of 2018 and increased 7% from the third quarter of 2017. Downstream steel products shipments to outside customers in the third quarter of 2018 decreased 1% from the second quarter of 2018 and increased 6% from the third quarter of 2017.

In the first nine months of 2018, Nucor's consolidated net sales increased 24% to $18.77 billion, compared with $15.16 billion in last year's first nine months. Total tons shipped to outside customers in the first nine months of 2018 were 21,212,000, an increase of 6% from the first nine months of 2017, while average sales price per ton increased 16%.

The average scrap and scrap substitute cost per gross ton used during the third quarter of 2018 was $374, a slight increase compared to $373 in the second quarter of 2018 and an increase of 18% compared to $317 in the third quarter of 2017. The average scrap and scrap substitute cost per ton used in the first nine months of 2018 was $361, an increase of 19% from $304 in the first nine months of 2017.

The overall operating rate at our steel mills was 92% in the third quarter of 2018, which decreased compared to 95% in the second quarter of 2018 and increased compared to 84% in the third quarter of 2017. The operating rate for the first nine months of 2018 increased to 93% as compared with 87% for the first nine months of 2017.

Total steel mill energy costs in the third quarter of 2018 were similar to the second quarter of 2018 and decreased approximately $3 per ton compared to the third quarter of 2017 primarily due to lower natural gas unit costs and higher productivity resulting from increased steel production. Total steel mill energy costs for the first nine months of 2018 decreased approximately $1 per ton compared to the first nine months of 2017.

Our liquidity position remains strong with $1.9 billion in cash and cash equivalents as of September 29, 2018 and an untapped $1.5 billion revolving credit facility that does not expire until April 2023.

Recent DevelopmentsIn September 2018, Nucor's board of directors approved an investment of $650 million to expand the production capability of Nucor Steel Gallatin, the Company's flat-rolled sheet steel mill located in Ghent, Kentucky. This investment will increase the production capability from 1,600,000 tons to approximately 3,000,000 tons annually and will increase the maximum coil width to approximately 73 inches. This expansion complements the $176 million investment currently underway to construct a hot band continuous pickle galvanizing line at Nucor Steel Gallatin, which is expected to be operational in the first half of 2019 and will produce approximately 500,000 tons per year of galvanized hot band steel.

Also in September 2018, Nucor's board of directors declared a cash dividend of $0.38 per share payable on November 9, 2018 to stockholders of record on September 28, 2018. This dividend is Nucor's 182nd consecutive quarterly cash dividend, a record we expect to continue.

Additionally, in September 2018, the board of directors approved the repurchase of up to $2 billion of the Company's common stock. Share repurchases will be made from time to time in the open market at prevailing market prices, 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. The board of directors also terminated any previously authorized repurchase programs.

Third Quarter of 2018 AnalysisAs expected, earnings in the third quarter of 2018 continued the trend of strong 2018 performance. The performance of our steel mills segment in the third quarter of 2018 increased compared to the second quarter of 2018 due primarily to higher earnings at our sheet mills and plate mills, despite the impact of both planned and weather-related outages at certain mills that occurred during the third quarter. The earnings of the steel products segment decreased in the third quarter of 2018 as compared to the second quarter of 2018. Our raw materials segment's earnings in the third quarter of 2018 decreased compared to the second quarter of 2018 due to the previously mentioned impairment charge to our natural gas well assets, decreased performance of our scrap brokerage and processing operations and the decreased performance of our DRI facilities as our Louisiana DRI facility experienced planned and unplanned outages in the third quarter.

Fourth Quarter of 2018 OutlookEarnings in the fourth quarter of 2018 are expected to decrease across all three operating segments compared to the third quarter of 2018 (excluding the third quarter of 2018 impairment charge) due primarily to typical seasonality experienced in our fourth quarter. However, we expect the fourth quarter of 2018 to be another strong quarter as we believe earnings will be noticeably higher than those generated in the fourth quarter of 2017. We continue to believe there is sustainable strength in steel end use markets.

About NucorNucor and its affiliates are manufacturers of steel and steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; hollow structural section tubing; electrical conduit; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and hot briquetted iron / direct reduced iron; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.

Forward-Looking StatementsCertain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. The words "believe," "expect," "project," "will," "should," "could" and similar expressions are intended to identify those forward-looking statements. 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 competition 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 steel prices and the changes in the supply and cost of raw materials, including scrap steel; (4) market demand for steel products; and (5) energy costs and availability. These and other factors are discussed in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's fiscal 2017 Annual Report on Form 10-K, Item 1A. Risk Factors. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

Broadcast of Conference CallYou are invited to listen to the live broadcast of Nucor's conference call in which management will discuss Nucor's third quarter results on October 18, 2018 at 2:00 p.m. Eastern time. The conference call will be available over the Internet at www.nucor.com, under Investor Relations.

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SOURCE Nucor Corporation