Variable Cost Structure

Report
MARCH 2014
NUCOR TODAY
NORTH AMERICA’S MOST DIVERSIFIED
STEEL & STEEL PRODUCTS COMPANY
FACILITIES
2013 NET SALES
Over 200 locations
$19.1 Billion
2013 NET EARNINGS
$488.0 Million
FORTUNE 500 RANK
146
EMPLOYEES
2013 SALES PER EMPLOYEE
22,300
$859,000
164 CONSECUTIVE QUARTERS OF CASH DIVIDENDS (THRU MAY 2014)
2
STEEL MILL
PRODUCTION CAPACITY
ANNUAL TONS
3
STEEL MILL SHIPMENTS 2003-2013
(millions of tons)
28
24
20.65
20
16
12
8
4
0
2003
4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
STEEL PRODUCTS
PRODUCTION CAPACITY
ANNUAL TONS
5
STEEL PRODUCTS SALES TONS 2003-2013
(millions of tons)
5
4
3
2.62
2
1
0
2003
6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
RAW MATERIALS (IRON UNITS)
PRODUCTION CAPACITY
ANNUAL TONS
7
Direct Reduced Iron (DRI)
4.5 Million
Ferrous Scrap Processing
5.2 Million
NUCOR’S GROWTH DRIVEN BY
OUR POSITION OF STRENGTH
8
COMPETITIVE ADVANTAGES
9

Financial Strength

Low / Variable Cost Structure

Flexible Capacity

Product Diversification

Market Leadership

Nucor’s People and Our Culture
FINANCIAL STRENGTH
Strong cash flow generation
through the cycle
 Only North American steel producer
with extremely important
competitive advantage of
investment grade credit rating
 Conservative Financial Practices


10
No Material Legacy Liabilities
Financial Strength
Cash From Operations 2000-2013 (millions of dollars)
Cyclical Trough To Cyclical Trough
More than 2X
$2,400
Average ’09-’13
$1.1 Billion
$1,800
Average ’01-’03
$495 million
$1,200
$600
$0
2000
11
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
LOW COST STRUCTURE =
INDUSTRY LEADING RETURNS
Average ROIC 2004-2013
18
15.5%
16
13.6%
14
12
10
ArcelorMittal
8
6
U.S. Steel
7.1%
Steel Dynamics
5.9%
Nucor
4
2
0
ArcelorMittal
12
U.S. Steel
Steel Dynamics
Nucor
NUCOR’S ROIC PERFORMANCE
2004-2013 AVG = 15.5%
ROIC = EBIT X (1-.35) / (NET PP&E + WORKING CAPITAL)
37.0%
32.0%
UP-CYCLE
27.0%
22.0%
17.0%
“GREAT RECESSION”
12.0%
7.0%
2.0%
-3.0%
13
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
FLEXIBLE CAPACITY
 Electric arc
furnaces
 High productivity
 No lay-off practice
14
BEST-IN-CLASS
MARKET RESPONSIVENESS!!!
DIVERSIFIED PRODUCT MIX
2013 Sales Tons
Sheet - 32%
Bars - 22%
Structural - 11%
Plate - 10%
Products - 11%
Scrap - 14%
15
NUCOR =
MOST DIVERSIFIED
STEEL AND STEEL PRODUCTS PRODUCER IN NORTH AMERICA
Highway Products
Building Systems
Joist & Decking
Fasteners
Grating
Wire Products
Rebar Fabrication
Cold Finished Bar
Plate
Sheet
Structural/Piling
SBQ
Bar
NUCOR
16
Arcelor
Mittal
Steel
Dynamics
Gerdau Commercial Republic
Metals
Company
Timken
US Steel
Severstal
Thyssen
Krupp
MARKET LEADERSHIP
BY SIZE IN NORTH AMERICA
Structural Steel
#1
North American
Market Leader
Bar Steel
Rebar Steel
Cold Finished Bar Steel
Steel Joist
Steel Deck
Rebar Fabrication, Distribution, & Placement
Steel Piling Distribution
Metal Buildings
#2
North American
Market Leader
17
Plate Steel
#3
North American
Market Leader
Sheet Steel
NUCOR’S PEOPLE –
OUR BIGGEST COMPETITIVE ADVANTAGE
18
NUCOR’S CULTURE
Commitment to Employees
 SAFETY Is Our First Priority
 Teamwork
 Pay For Performance
 Continual Improvement
 Decentralized Structure = Nucor
Employees Are Empowered To
Take Care Of Our Customers

19
GREAT CHALLENGES PRESENT
GREAT OPPORTUNITIES TO THE
RIGHT PEOPLE – THE NUCOR TEAM
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20
20
20
GROWING EARNINGS POWER:
MULTI-PRONGED GROWTH STRATEGY
21
NUCOR’S FOCUS:
PROFITABLE GROWTH!!!
NUCOR’S 5 PRONGED
GROWTH STRATEGY
Nucor’s
Position
of
STRENGTH
1. OPTIMIZE EXISTING
OPERATIONS
2. RAW MATERIALS STRATEGY
3. GREENFIELD GROWTH
(technology & market niches)
4. INTERNATIONAL GROWTH
via joint ventures
5. STRATEGIC ACQUISITIONS
22
2008-2013 CAPITAL INVESTED
$8 BILLION OF CAPITAL INVESTED
Capital Spending of $4.4 billion & Acquisitions of $3.6 billion
CAPITAL SPENDING = 55%
ACQUISITIONS = 45%
23
2008-2013 CAPITAL INVESTED
($ MILLIONS)
STEEL MILLS
BARS
MEMPHIS SBQ MILL (2008-13)
$350
DARLINGTON ROD MILL (2012-13)
$99
CONNECTICUT REHEAT FURNACE (2012-13)
$23
NEBRASKA SBQ ROLLING MILL UPGRADE (2012-13)
$16
AMOUNTS NOT NECESSARILY PROJECT TOTALS – ONLY
INCLUDES $s INVESTED OVER 2008-2013 PERIOD
24
2008-2013 CAPITAL INVESTED
($ MILLIONS)
STEEL MILLS
BEAMS & PILING
SKYLINE ACQUISITION (2012)
$675
NUCOR-YAMATO SHEET PILING PRODUCT RANGE
EXPANSION (2012-13)
$92
AMOUNTS NOT NECESSARILY PROJECT TOTALS – ONLY
INCLUDES $s INVESTED OVER 2008-2013 PERIOD
25
2008-2013 CAPITAL INVESTED
($ MILLIONS)
STEEL MILLS
PLATE
HERTFORD COUNTY HEAT TREAT FACILITY (2009-10)
$70
HERTFORD COUNTY NORMALIZING LINE (2012-13)
$38
HERTFORD COUNTY DRI HANDLING (2012-13)
$21
HERTFORD COUNTY VACUUM TANK DEGASSER
$17
(2011-12)
TUSCALOOSA 2nd LMF (2011-12)
AMOUNTS NOT NECESSARILY PROJECT TOTALS – ONLY
INCLUDES $s INVESTED OVER 2008-2013 PERIOD
26
$12
2008-2013 CAPITAL INVESTED
($ MILLIONS)
STEEL MILLS
SHEET
NUMIT SHEET STEEL PROCESSING J.V. ACQ. (2010)
$221
DECATUR GALVANIZING FACILITY (2008-09)
$126
BERKELEY COUNTY WIDE-LIGHT (2012-13)
$86
HICKMAN VACUUM TANK DEGASSER (2012-13)
$33
CRAWFORDSVILLE DRI HANDLING (2012-13)
$22
BERKELEY COUNTY DRI HANDLING (2012-13)
$18
AMOUNTS NOT NECESSARILY PROJECT TOTALS – ONLY
INCLUDES $s INVESTED OVER 2008-2013 PERIOD
27
2008-2013 CAPITAL INVESTED
($ MILLIONS)
STEEL MILLS
INTERNATIONAL
DUFERDOFIN J.V. IN ITALY (BEAMS & BARS) (2008)
28
$671
2008-2013 CAPITAL INVESTED
($ MILLIONS)
DOWNSTREAM PRODUCTS
HARRIS STEEL REBAR FABRICATION BOLT-ON
ACQUISITIONS (2008-12)
29
$211
2008-2013 CAPITAL INVESTED
($ MILLIONS)
RAW MATERIALS & ENERGY
DAVID J. JOSEPH ACQUISITION (2008)
$1,440
LOUISIANA DRI FACILITY (2009-13)
$739
NATURAL GAS DRILLING & MIDSTREAM ASSETS
$616
(2009-13)
DAVID J. JOSEPH BOLT-ON ACQUISITIONS (2008-12)
$300
TRINIDAD DRI FACILITY EXPANSION (2011)
$15
AMOUNTS NOT NECESSARILY PROJECT TOTALS – ONLY
INCLUDES $s INVESTED OVER 2008-2013 PERIOD
30
RAW MATERIALS STRATEGY
DRI Plant - Louisiana
Game changer for Nucor’s
cost of high quality iron
units required to produce
higher value-added sheet,
SBQ, & plate
Production of DRI began
on December 24, 2013
Output quality matching
the best-in-class levels
routinely achieved at our
DRI plant in Trinidad.
Together with Trinidad
plant, Nucor has total
annual DRI capacity of
4.5 million metric tons.
DRI = Direct Reduced Iron
31
Natural Gas Working
Interest Investment
Long-term & low cost supply
of energy source required to
produce DRI
Provides hedge against any
future increases in natural gas
prices – critical risk factor in
DRI production
Approximately 20 year
supply of natural gas to
cover usage of 2 DRI plants
+ current steel mill
consumption
Cost structure of drilled wells such that
they delivered modest positive return in
2013’s low natural gas pricing environment
DRI VERSUS PIG IRON COST COMPARISON
(using estimated long-term prices)
32
$/ton
Blast Furnace DRI
Iron Ore (62% FE, FOB Brazil)
Pellet Premium
Iron Premium (BF = 65% Fe & DRI = 68% Fe) X $2.20
Freight
Iron Ore Consumption (BF = 1.6 ton & DRI = 1.5 ton)
$125
$40
$7
$25
$315
$125
$40
$13
$15
$290
Cash Conversion Costs
BF Reductant (100% coke)
DRI Reductant (11 mmbtus @ $4)
$70
$107
$35
Iron Unit Cost
BF with sinter plant cost savings
BF Cost Savings By Substituting 40% of coke
usage with PCI & natural gas
BF Higher “Value-In-Use” Benefit
“Adjusted” BF Iron Unit Cost
$492
$30
$44
$11
$15
$436
Coke cost assumes 0.5 ton of coke using 1.5 tons of metallurgical
coal costing $125/ton
$369
NUCOR’S FOCUS =
GENERATE ATTRACTIVE RETURNS
33
BUILDING EARNINGS POWER FOR THE
NEXT CYCLICAL PEAK & BEYOND
(Millions of dollars)
$2,200
2008 RECORD EPS
$5.98
$1,700
$1,200
$700
$200
2000
-$300
34
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
CASH DIVIDENDS PAID 2004 – 2013
Base & Supplemental Dividends (dollars per share)
41 CONSECUTIVE YEARS OF
INCREASED CASH DIVIDENDS
UP-CYCLE
$2.50
$2.00
Approx. $5/share in total
supplemental dividends from
2005 to 2008
“GREAT RECESSION”
$1.50
$1.00
$0.50
$0.00
2004
2005
2006
2007
Base
35
2008
2009
2010
Supplemental
2011
2012
2013

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