Anyone looking at NUE. Block buster quarter and history yet down huge in the last month.
Saw it on Cramer's Mad money a couple of weeks ago. CEO was on seems like a solid performer...
Nucor puts up record results, stock plummets
09:50 a.m. 07/18/2008 Provided by
Jul 18, 2008 (The Decatur Daily - McClatchy-Tribune Information Services via COMTEX) -- Nucor Corp. recorded its strongest quarter in history, but you couldn't have guessed that from the stock price or the tone of questions at an earnings conference Thursday.
For the second quarter of 2008, Nucor posted net earnings of $580.8 million, a 68 percent increase over its year-ago results. That came to $1.94 per diluted share, compared to $1.14 per diluted share in the second quarter of 2007.
Total tons shipped -- 7.7 million -- were up 38 percent from the year-ago quarter and 20 percent from the first quarter.
Scrap metal costs were high, but increased pricing on finished steel and increased demand more than offset those costs.
Nucor officials declined to detail the Decatur plant's contribution to production, or that of any other single plant.
"Our team was very encouraged by the strong performance in a period of skyrocketing prime scrap costs," said Ladd Hall, head of the sheet mills group that includes the Decatur plant.
Sheet metal shipments increased 12 percent compared to the second quarter of 2007, Hall said, largely because of strong demand in the pipe and tube, energy, agricultural and heavy equipment markets. Exports are strong for the group, and competing imports are low.
Hall said the group kept control of increasing raw material costs with surcharge agreements that permitted Nucor to pass them on to the customers.
Increasing scrap costs -- the main raw material for the Decatur plant -- will pose a challenge for the group in the third quarter, Hall said. Surcharges and the use of direct reduced iron from Nucor's Trinidad plant will help the group overcome those challenges.
Hall mentioned the Decatur galvanizing plant, scheduled to begin production in the fourth quarter, as a project that will "substantially increase future earnings power."
Nucor's first-half earnings set a Nucor record, too, at $12.06 billion, a 52 percent increase over the first half of 2007.
Despite the strong results, shares plummeted through the day. Even as the 1 p.m. earnings conference progressed Tuesday, shares continued sliding. By day's end, Nucor was down more than 11 percent, to $59.81.
The reason for the drop apparently was Nucor's forecast for third quarter earnings. The company predicted earnings per share of $1.80 to $1.85. Analyst forecasts for the third quarter were $1.95.
Nucor Chief Executive Dan DiMicco sounded frustrated at the market's reaction, and his frustration grew as numerous analysts pushed the company to buy back shares at the lower prices. In late May, Nucor issued $2 billion in additional shares at an offering price of $74 per share. Its primary goal in the offering was to raise money for more acquisitions.
The analysts' point was that Nucor could realize an immediate and substantial profit with a buyback.
"It's beyond me," DiMicco said, that the market does not understand Nucor's consistent growth. "Things today are rough across the market. There's a very bearish sentiment all around. I think people are trying to make money through creating panic or taking advantage of it."
DiMicco was firm in his rejection of the idea of a stock buyback in response to the first question, but as more analysts challenged him he softened his stance.
"Companies need to make sure they continue to do the right things for the long-term benefit of the shareholders," DiMicco said. "We don't ... grow our company successfully for the long term by jumping up and down with trends that are not based on fundamentals. That's a bad way to run a business."
DiMicco also said he was surprised at the market's reaction to Nucor's third-quarter forecast, especially given second-quarter results that surpassed both initial and updated forecasts.
"We tend to be conservative in the way we look at things for good reason," he said, especially when both raw material costs and steel pricing are volatile. "We don't take risks and we don't do stupid things with our forecasts. ... We are forecasting a third quarter that will be a record quarter in the history of the company."
He said he does not run the company to placate short-term investors.
"I hope I'm not in the position where I have to apologize for doing extremely well," he said. "Maybe I'll apologize for not being a good fortune teller. If it was up to me, we wouldn't be giving any forecasts, period, to satisfy the whims of short-term investors. We're in this for the long term."