Steel Company Nucor Posts Mixed Q2 Results, Projects Lower Q3 Earnings Q/Q

Nucor Corp NUE reported a second-quarter (Q2) FY23 net sales decline of 19% year-over-year to $9.52 billion, missing the consensus of $9.62 billion.

The average sales price per ton decreased by 14% Y/Y and up 7% Q/Q.

More than 6.58 million tons were shipped to outside customers — a decrease of 6% Y/Y.

Total steel mill shipments in the quarter fell 7% Y/Y and 1% Q/Q.

The average scrap and scrap substitute cost per gross ton used was $455, down 15% Y/Y and up 10% Q/Q.

Overall operating rates at steel mills increased to 84%, compared to 85% a year ago.

The Charlotte, North Carolina-based company reported an EBITDA of $2.21 billion for the quarter.

EPS fell to $5.81 from $9.67 a year ago, beating the consensus of $5.53.

Related: Nucor Provides Above-Consensus Q2 Guidance, Expects Q/Q Improvement Across Segments

NUE's cash provided by operating activities totaled $3.13 billion as of Q2 2023.

As of Q2 2023, the company had $5.39 billion in cash and cash equivalents, short-term investments and restricted cash and cash equivalents on hand.

Share Repurchase: In Q2, Nucor repurchased approximately 3.1 million shares at an average price of $147.03 per share. 

The company's board recently approved a new share repurchase program for repurchasing shares up to $4.00 billion and terminated any previously authorized share repurchase programs.

Dividend: Last month, Nucor declared a cash dividend per share of $0.51, payable on Aug. 11 to shareholders of record as of June 30, 2023.

Nucor CEO Leon Topalian said, with $10.26 of earnings per diluted share in the first half of 2023, "this represents the second-strongest start to any fiscal year" in the firm's history.

Through June, Nucor is also "on pace to set another safety record for the fifth consecutive year," Topalian added.

Q3 2023 Outlook: Nucor expects earnings to decrease Q/Q, with earnings for the steel mills segment to reduce Q/Q, mainly due to decreased profitability, with the largest impact at our sheet mills. 

The steel products segment earnings are expected to moderate in Q3 vs Q2 2023. 

Earnings for the raw materials segment are also projected to decline Q/Q on margin compression at its DRI facilities and scrap processing operations. 

Price Action: NUE shares are trading lower by 0.17% at $166.37 premarket on the last check Tuesday.