NUCOR CORP 10-Q Summary: Quarter Ended April 4, 1998
Business Context and Reporting Period
This Form 10-Q covers the 13-week period ended April 4, 1998. Nucor Corporation, a steel manufacturer, reported 88,054,216 shares of common stock outstanding as of the period end. The financial statements are unaudited and reflect all adjustments necessary for a fair statement of interim results.
Key Financial Metrics
| Metric | Q1 1998 | Q1 1997 |
|---|---|---|
| Net Sales | $1,138,862,155 | $1,010,489,815 |
| Net Earnings | $65,137,513 | $65,011,514 |
| Earnings Per Share (Basic) | $0.74 | $0.74 |
| Operating Cash Flow | $135,467,334 | $99,312,609 |
| Capital Expenditures | $91,344,604 | $63,514,082 |
| Cash and Short-term Investments | $269,336,676 | $283,381,137 |
| Long-term Debt | $167,950,000 | $167,950,000 |
| Net Profit Margin | ~12% | ~13% |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased by over 10% year-over-year, driven primarily by higher sales volume rather than price increases. Average sales prices decreased slightly.
- Cost Pressures: Raw material costs, the major component of cost of products sold, increased by more than 5%. Conversely, unit freight costs decreased by approximately 1%.
- Profitability: Despite higher sales volume, net earnings remained substantially flat compared to Q1 1997 due to rising input costs and increased profit-sharing expenses (up ~2%).
- Cash Flow: Cash provided by operating activities increased significantly to $135.5 million from $99.3 million. However, capital expenditures rose nearly 45% to $91.3 million.
- Liquidity: The current ratio remained stable at approximately 2.1. Long-term debt as a percentage of total capital remained at about 7%.
Outlook, Risks, and Management Commentary
- Capital Expenditure Guidance: Management projects total capital expenditures for the full year 1998 to be in the range of $400 million.
- Liquidity Position: Funds from operations, existing credit facilities, and potential new borrowings are expected to be adequate to meet future capital and working capital needs.
- Dividends: Dividends declared per share increased to $0.12 from $0.10 in the prior year quarter.
- Risks: The filing notes that results are subject to year-end adjustments and highlights the volatility of raw material costs and profit-sharing expenses tied to pre-tax earnings.
Investor Verification Checklist
- Verify the sustainability of the >10% sales volume increase given the slight decrease in average sales prices.
- Monitor raw material cost trends, which rose >5% and compressed margins from 13% to 12%.
- Confirm the execution of the projected $400 million capital expenditure plan for 1998.
- Review the impact of increased profit-sharing costs on future net earnings as pre-tax earnings fluctuate.
- Assess the reduction in cash and short-term investments ($14 million decrease) against the high capital expenditure rate.