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Nucor reports record annual earnings for 2022

  • Nucor reports the safest and most profitable year in Company history, eclipsing prior records set in 2021
  • Fourth quarter and full year 2022 earnings per diluted share of $4.89 and $28.79, respectively
  • Returned $3.3 billion of capital to stockholders through dividends and share repurchases
  • Announced increased dividend for 5oth consecutive year since initial NYSE listing in 1972

Nucor Corporation has announced consolidated net earnings of $1.26 billion, or $4.89 per diluted share, for the fourth quarter of 2022. By comparison, Nucor reported consolidated net earnings of $1.69 billion, or $6.50 per diluted share, for the third quarter of 2022 and $2.25 billion, or $7.97 per diluted share, for the fourth quarter of 2021.

For the full year 2022, Nucor reported record consolidated net earnings of $7.61 billion, or $28.79 per diluted share, surpassing the previous record of consolidated net earnings of $6.83 billion, or $23.16 per diluted share, in 2021.

Included in the fourth quarter of 2022 results was an after-tax net benefit of $60.4 million, or $0.24 per diluted share, related to state tax credits and an after-tax net benefit of $88.0 million, or $0.34 per diluted share, related to a change in the valuation allowance of a state deferred tax asset. Also included in the fourth quarter of 2022 results was a pre-tax $96.0 million, or $0.29 per diluted share, write-off of the remaining carrying value of the Company’s leasehold interest in unproved oil and gas properties that is included in the raw materials segment. Of these three items, only the state tax credits were known at the time and considered as part of our quantitative guidance in mid-December 2022.

“I am proud to report that 2022 was both the safest and most profitable year in Nucor’s history. This is the fourth consecutive year the Nucor team has exhibited record-breaking safety performance, as we strive to become the world’s safest steel company,” said Leon Topalian, Nucor’s Chair, President, and Chief Executive Officer.

“In terms of profitability for the year, Nucor generated consolidated net earnings of $7.61 billion, or $28.79 per diluted share, which exceeds our previous record of $23.16 per diluted share, set in 2021, by 24%. These records are a testament to the world-class performance of the 31,000 Nucor teammates that live our culture every single day.  Looking ahead to 2023, while we recognize there is uncertainty about the near-term U.S. economic outlook, we’re starting to see a number of demand drivers gathering momentum, including the reshoring of manufacturing, large infrastructure investments, and grid modernization. We believe Nucor’s steel and steel products with lower greenhouse gas intensity will be essential building blocks to our nation’s clean energy future, security, and productivity for years to come.”

Selected Segment Data
Earnings (loss) before income taxes and noncontrolling interests by segment for the fourth quarter and full year 2022 and 2021 were as follows (in thousands):

Three Months (13 Weeks) Ended Twelve Months (52 Weeks) Ended
Dec. 31, 2022 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2021
Steel mills $ 516,655 $ 3,128,700 $ 7,199,087 $ 9,735,020
Steel products 1,081,461 451,713 4,093,105 1,291,450
Raw materials (141,817) 44,708 496,823 549,956
Corporate/eliminations 77,106 (617,364) (1,544,171) (2,375,568)
$ 1,533,405 $ 3,007,757 $ 10,244,844 $ 9,200,858

Financial Review
Nucor’s consolidated net sales decreased 17% to $8.72 billion in the fourth quarter of 2022 compared with $10.50 billion in the third quarter of 2022 and decreased 16% compared with $10.36 billion in the fourth quarter of 2021. Average sales price per ton in the fourth quarter of 2022 decreased by 7% compared with the third quarter of 2022 and decreased by 6% compared with the fourth quarter of 2021. Approximately 5,738,000 tons were shipped to outside customers in the fourth quarter of 2022, an 11% decrease from both the third quarter of 2022 and the fourth quarter of 2021. Total steel mill shipments in the fourth quarter of 2022 decreased 13% as compared to both the third quarter of 2022 and the fourth quarter of 2021. Steel mill shipments to internal customers represented 20% of total steel mill shipments in the fourth quarter of 2022, a decrease compared to 22% in both the third quarter of 2022 and the fourth quarter of 2021. Downstream steel product shipments to outside customers in the fourth quarter of 2022 decreased by 9% from the third quarter of 2022 and increased by 2% compared to the fourth quarter of 2021.

For the full year 2022, Nucor’s consolidated net sales of $41.51 billion increased by 14% compared with consolidated net sales of $36.48 billion reported in the full year 2021. Total tons shipped to outside customers in 2022 were approximately 25,524,000 tons, a decrease of 10% from 2021, while the average sales price per ton in 2022 increased by 26% from 2021.

The average scrap and scrap substitute cost per gross ton used in the fourth quarter of 2022 was $427, a 15% decrease compared to $502 in the third quarter of 2022 and a 16% decrease compared to $508 in the fourth quarter of 2021. The average scrap and scrap substitute cost per gross ton used in the full year 2022 was $492, a 5% increase compared to $469 in the full year 2021.

Pre-tax pre-operating and start-up costs related to the Company’s growth projects were approximately $73 million, or $0.22 per diluted share, in the fourth quarter of 2022, compared with approximately $52 million, or $0.15 per diluted share, in the third quarter of 2022 and approximately $54 million, or $0.15 per diluted share, in the fourth quarter of 2021.

In the full year 2022, pre-tax pre-operating and start-up costs related to the Company’s growth projects were approximately $247 million, or $0.71 per diluted share, compared with approximately $130 million, or $0.34 per diluted share, in the full year 2021.

Overall operating rates at the Company’s steel mills decreased to 70% in the fourth quarter of 2022 as compared to 77% in the third quarter of 2022 and 89% in the fourth quarter of 2021. Operating rates for the full year 2022 decreased to 77% as compared to 94% for the full year 2021.

Financial Strength
At the end of the fourth quarter of 2022, Nucor had $4.94 billion in cash and cash equivalents, short-term investments, and restricted cash and cash equivalents on hand. The Company’s $1.75 billion revolving credit facility remains undrawn and does not expire until November 2026.  Nucor continues to have the strongest credit rating in the North American steel sector with unchanged long-term senior unsecured ratings from Moody’s (Baa1) and Standard & Poor’s (A-). On January 24, 2023, Fitch Ratings initiated coverage of Nucor and established new long-term and short-term credit ratings of A- and F1, respectively.  Nucor’s credit rating outlook from all three rating agencies is stable.

Commitment to Returning Capital to Stockholders
On December 14, 2022, Nucor’s Board of Directors declared a cash dividend of $0.51 per share. This cash dividend is payable on February 10, 2023, to stockholders of record as of December 30, 2022, and is Nucor’s 199th consecutive quarterly cash dividend. Nucor has increased its regular, or base, the dividend for 50 consecutive years – every year since it first began paying dividends in 1973.

During the fourth quarter of 2022, Nucor repurchased approximately 3.1 million shares of its common stock at an average price of $130.30 per share (approximately 20.6 million shares in the full year 2022 at an average price of $134.29 per share). As of December 31, 2022, Nucor had approximately 253.0 million shares outstanding and approximately $1.10 billion remaining available for repurchases under its share repurchase program. This share repurchase authorization is discretionary and has no scheduled expiration date.

For the full year 2022, Nucor returned approximately $3.3 billion to stockholders in the form of share repurchases and dividend payments, consistent with the Company’s capital allocation strategy of returning at least 40% of earnings to stockholders.

Fourth Quarter of 2022 Analysis
Steel mills segment earnings in the fourth quarter of 2022 decreased compared to the third quarter of 2022 due to lower average selling prices, margin compression, and lower volumes, with the largest decrease in profitability at our sheet mills. The modest decrease in the steel products segment earnings in the fourth quarter of 2022 as compared to the third quarter of 2022 was due to lower volumes and selling prices. Raw materials segment earnings decreased significantly in the fourth quarter of 2022 as compared to the third quarter of 2022 primarily due to decreased profitability at our direct reduced iron, or DRI, facilities, both of which experienced planned outages during the fourth quarter, decreased selling prices for raw materials, and the previously mentioned write-off of the leasehold interest in unproved oil and gas properties.

First Quarter of 2023 Outlook
The profitability of the steel mills segment is expected to increase in the first quarter of 2023 as compared to the fourth quarter of 2022 due to higher margins and volumes, with the largest improvement expected to occur at our sheet mills.

Within the steel products segment, we expect continued strong profitability in the first quarter of 2023, with some decrease expected from the fourth quarter of 2022 due to seasonally slower construction activity and some reductions in realized pricing. Overall, we expect the first quarter of 2023 steel products segment earnings to be higher than the first quarter of 2022.

In the raw materials segment, excluding the impact of the impairment charge recorded in the fourth quarter of 2022, we expect increased profitability compared to the fourth quarter of 2022 due to higher volumes at our DRI facilities and scrap recycling and brokerage operations.

On a combined basis, the operating income during the first quarter of 2023 from our three business segments is expected to exceed that of the fourth quarter of 2022. However, we expect consolidated net earnings to decrease compared to the fourth quarter of 2022 due to intercompany eliminations in the first quarter of 2023 and the absence of state tax benefits that were recorded in the fourth quarter of 2022.