NUE
#Thanks, <UNK>
Nucor reported first quarter of 2017 earnings of $1.11 per diluted share
These results were in line with our guidance range given in mid-March of $1.10 to $1.15 per diluted share
They represent significant improvement compared to the fourth quarter 2016 earnings of $0.50 per diluted share and first quarter of 2016 earnings of $0.27 per diluted share
It is also Nucor's highest quarterly earnings since the third quarter of 2008. Earnings for the most recent quarter were highlighted by significantly improved performance for our steel mills segment, led by our sheet, bar and plate mills
This segment also benefited from attractive profit contributions from our recent tubular products acquisitions
Our raw materials segment also delivered very strong improvement on both a year-over-year and linked quarter basis
That was despite the burden of a 5-week unplanned outage during the quarter at the Louisiana direct reduced iron facility
More than offsetting that drag were performance improvements from our David J
Joseph Company scrap business and our direct reduced iron facility in Trinidad
The David Joseph team has done excellent work reducing the cost structure of their operations and working more closely with Nucor steel mills that benefit profitability across the enterprise
In addition to their solid profit contribution, the new iron team at the DRI facility in Trinidad set a production record in the just-completed quarter
A quick comment about our tax rate as it can be confusing due to the impact of profits from noncontrolling interests
Excluding profits belonging to our business partners, the effective tax rate was 32.4% for the first quarter
Nucor's financial position remains strong
With total debt outstanding of $4.4 billion, our gross debt-to-capital ratio was 34% at the end of the first quarter
Cash and short term investments total approximately $1.7 billion
Nucor's strong liquidity position also includes our $1.5 billion unsecured revolving credit facility which remains undrawn
The facility does not mature until April of 2021. For 2017, we estimate capital spending of approximately $550 million and depreciation and amortization of about $730 million
While recent trade case decisions have begun to reduce the flood of dumped and subsidized products from foreign producers, imports continue to negatively impact the U.S
steel industry overall
Through the first quarter this year, imports remain at a stubbornly high 25% share of U.S
Certain countries continue to brazenly break and circumvent our nation's trade laws
While significant progress is being made, there is a tremendous amount of work still to be done
Nucor will continue to be proactive and aggressive in pursuing effective and timely enforcement of U.S
At the same time, we will also work to call attention to the issue of global steel production overcapacity
That overcapacity is the result of the trade-distorting practices of some governments
Earnings in the second quarter 2017 are expected to increase compared to the first quarter
This further supports our previously expressed view that full year 2017 profitability could significantly exceed the level achieved for 2016. In the second quarter, our sheet mills should experience further gains in price realizations as a portion of their contract sales are priced on a lagging quarterly basis
We expect our plate mills to benefit from recent trade actions that provide a more level playing field
Our fabricated construction products order books indicate that the nonresidential construction markets have regained momentum in 2017. That, along with seasonal trends, will benefit the second quarter performance of our steel products segment
We're also encouraged by the emergence of improving demand in other end-use markets, including energy and heavy equipment
With stronger demand for iron units, our raw materials business should be solidly profitable over the balance of this year
We also expect intercompany profit eliminations to have a smaller impact on earnings in the second quarter
We're confident that Nucor's significant competitive advantages, highly adaptable business model and proven strategies will allow our team to continue to deliver profitable long term growth and attractive returns to Nucor's shareholders
Thank you for your interest in our company
<UNK>?
That's a good question, <UNK>
And we think about the dividend not on a quarterly basis, but on an annual basis
So let's see how the rest of 2017 plays out and we'll think more about whether it's appropriate to increase the dividend or do something with other dividends or do other things to return cash to shareholders by the end of the year
It's not a tremendous amount, but we're pricing – we're in March
But if you think about it, we started the quarter, meaning the first quarter, in January, with much lower pricing than we finished the quarter
So on average, we think the pricing will be higher
We don't think it's raising dynamically from where it was at the end of March
We think it's more of the average across the quarter will be better in the second quarter
Look, Phil, of course, when we're in an inflationary period with the pricing with raw materials which we certainly saw from the beginning of the first quarter to the end of the first quarter, we're benefited in our cost side as we start the quarter with lower-cost inventories
But by the end of the quarter, we were using much more extensive scrap and had our highest costs of the quarter
And our highest profits were in March of the 3 months in the quarter
So pricing moved up more than cost moved up
And so although we will start the second quarter with higher cost, we're going to start the second quarter with higher prices as well by a larger amount
So again, that's why we have comfort in the guidance that we expect improvement compared to the first quarter overall
And it's going to be a little different by product
But overall, that's our perspective
And <UNK>, you mentioned hot band, but of course, also, it benefits our bar business as well with the seamless business
Yes
We also supply cold finish to a lot of energy applications as well
