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OFFON

NUCOR CORPORATION

(NUE)
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NUCOR : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/11/2021 | 04:44pm EDT
Certain statements made in this Quarterly Report on Form 10-Q, or in other
public filings, press releases, or other written or oral communications made by
Nucor, which are not historical facts are forward-looking statements subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements involve risks and uncertainties which we
expect will or may occur in the future and may impact our business, financial
condition and results of operations. The words "anticipate," "believe,"
"expect," "intend," "project," "may," "will," "should," "could" and similar
expressions are intended to identify those forward-looking statements. These
forward-looking statements reflect the Company's best judgment based on current
information, and, although we base these statements on circumstances that we
believe to be reasonable when made, there can be no assurance that future events
will not affect the accuracy of such forward-looking information. As such, the
forward-looking statements are not guarantees of future performance, and actual
results may vary materially from the projected results and expectations
discussed in this report. Factors that might cause the Company's actual results
to differ materially from those anticipated in forward-looking statements
include, but are not limited to: (1) competitive pressure on sales and pricing,
including pressure from imports and substitute materials; (2) U.S. and foreign
trade policies affecting steel imports or exports; (3) the sensitivity of the
results of our operations to prevailing market steel prices and changes in the
supply and cost of raw materials, including pig iron, iron ore and scrap steel;
(4) the availability and cost of electricity and natural gas, which could
negatively affect our cost of steel production or result in a delay or
cancellation of existing or future drilling within our natural gas drilling
programs; (5) critical equipment failures and business interruptions; (6) market
demand for steel products, which, in the case of many of our products, is driven
by the level of nonresidential construction activity in the United States; (7)
impairment in the recorded value of inventory, equity investments, fixed assets,
goodwill or other long-lived assets; (8) uncertainties surrounding the global
economy, including excess world capacity for steel production; (9) fluctuations
in currency conversion rates; (10) significant changes in laws or government
regulations affecting environmental compliance, including legislation and
regulations that result in greater regulation of greenhouse gas emissions that
could increase our energy costs, capital expenditures and operating costs or
cause one or more of our permits to be revoked or make it more difficult to
obtain permit modifications; (11) the cyclical nature of the steel industry;
(12) capital investments and their impact on our performance; (13) our safety
performance; (14) the impact of the COVID-19 pandemic and any variants of the
virus; and (15) the risks discussed in "Item 1A. Risk Factors" of the Company's
Annual Report on Form 10-K for the year ended December 31, 2020 and elsewhere in
this report.

Caution should be taken not to place undue reliance on the forward-looking
statements included in this report. We assume no obligation to update any
forward-looking statements except as may be required by law. In evaluating
forward-looking statements, these risks and uncertainties should be considered,
together with the other risks described from time to time in our reports and
other filings with the Securities and Exchange Commission.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the unaudited condensed
consolidated financial statements and the notes thereto included elsewhere in
this report, as well as the audited consolidated financial statements and the
notes thereto, "Item 1A. Risk Factors" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in Nucor's
Annual Report on Form 10-K for the year ended December 31, 2020.

Overview


Nucor and its affiliates manufacture steel and steel products. Nucor also
produces DRI for use in its steel mills. Through DJJ, the Company also processes
ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig
iron, hot briquetted iron and DRI. Most of Nucor's operating facilities and
customers are located in North America. Nucor's operations include international
trading and sales companies that buy and sell steel and steel products
manufactured by the Company and others. Nucor is North America's largest
recycler, using scrap steel as the primary raw material in producing steel and
steel products.

Nucor reports its results in the following segments: steel mills, steel products
and raw materials. The steel mills segment includes carbon and alloy steel in
sheet, bars, structural and plate; steel trading businesses; rebar distribution
businesses; and Nucor's equity method investments in NuMit and Nucor-JFE. The
steel products segment includes steel joists and joist girders, steel deck,
fabricated concrete reinforcing steel, cold finished steel, precision castings,
steel fasteners, metal building systems, steel grating, tubular products
businesses, piling products business, and wire and wire mesh. The raw materials
segment includes DJJ, primarily a scrap broker and processor; Nu-Iron Unlimited
and Nucor Steel Louisiana, two facilities that produce DRI used by the steel
mills; and our natural gas related assets.



On August 9, 2021, Nucor acquired Cornerstone Building Brands, Inc.'s IMP
business for a cash purchase price of approximately $1 billion, subject to
customary adjustments. The Company believes this acquisition is strategically
compelling and will broaden the value-added solutions that Nucor Buildings Group
provides to targeted end markets such as warehousing, distribution and data
centers. We expect these end-use markets to continue to grow in the coming years

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and that the use of IMP products within them will also increase. IMPs facilitate
cost-effective climate control in the built environment and reduce energy usage
and overall operations-related greenhouse gas emissions for owners and lessees.
The IMP business Nucor is acquiring is comprised of two industry leading brands,
CENTRIA and Metl-Span, and has seven manufacturing facilities located throughout
North America, complementing the Company's existing IMP business, Truecore.



In addition, Nucor announced during July 2021 that it had entered into an
agreement to purchase Hannibal Industries, Inc. for a cash purchase price of
approximately $370 million. Hannibal Industries is a leading national provider
of steel racking solutions to warehouses. We expect that Hannibal Industries'
business, serving customers in the e-commerce, industrial, food storage and
retail segments, will also continue to grow in the coming years. Hannibal
Industries has manufacturing facilities in Los Angeles and Houston, as well as
three distribution centers. We expect this transaction to close in August of
2021.


Together, the Cornerstone Building Brands and Hannibal Industries acquisitions reflect Nucor's strategy to target the fastest growing segments of steel intensive construction markets.


The average utilization rates of all operating facilities in the steel mills,
steel products and raw materials segments were approximately 96%, 76% and 77%,
respectively, in the first six months of 2021 compared with approximately 79%,
69% and 62%, respectively, in the first six months of 2020.

Results of Operations




For the second quarter in a row, Nucor reported the most profitable quarter in
the Company's history. The Company reported record consolidated net earnings of
$1.51 billion, or $5.04 per diluted share, in the second quarter of 2021. This
surpassed the previous quarterly record for consolidated net earnings of $942.4
million, or $3.10 per diluted share, that was set in the first quarter of 2021.



All three operating segments continued to generate robust profitability in the
second quarter of 2021. The steel mills segment and the steel products segment
set new records for profitability in the second quarter of 2021, surpassing the
previous record that was set in the first quarter of 2021. Overall strong demand
across most of the end markets we serve is supporting higher average selling
prices. In the steel mills segment, the greatest improvement in profitability in
the second quarter of 2021 as compared to the first quarter of 2021 came from
our sheet and plate mills. Our steel products segment continues to benefit from
strong demand in nonresidential construction markets. Backlogs for our steel
mills and steel products segments remain strong, which we believe indicates that
these strong market conditions will continue into the third quarter of 2021. We
expect the Company to set a new record for quarterly earnings in the third
quarter of 2021.



Nucor reported consolidated net earnings of $108.9 million, or $0.36 per diluted
share, in the second quarter of 2020, which were the lowest quarterly earnings
that the Company reported in 2020. The onset of the COVID-19 pandemic late in
the first quarter of 2020 had a major negative impact on the markets that we
serve in the second quarter of 2020, causing customer production disruptions and
generally lower shipment activity. However, nonresidential construction markets
remained resilient, and conditions in the other markets we serve recovered over
the remainder of 2020. The strong demand generated by the recovery combined with
lean inventory levels across supply chains contributed to the dramatic increase
in average selling prices in the second quarter of 2021 as compared to the
second quarter of 2020.



The following discussion will provide greater quantitative and qualitative analysis of Nucor's performance in the second quarter and first six months of 2021 as compared to the second quarter and first six months of 2020.

Net Sales

Net sales to external customers by segment for the second quarter and first six months of 2021 and 2020 were as follows (in thousands):




                               Three Months (13 Weeks) Ended             

Six Months (26 Weeks) Ended

                           July 3, 2021   July 4, 2020   % Change   July 3, 2021   July 4, 2020   % Change
Steel mills                  $5,909,909$2,513,961       135%    $10,518,686$6,033,231        74%
Steel products                2,241,107      1,523,168        47%      4,051,162      3,250,022        25%
Raw materials                   638,148        290,177       120%      1,236,456        668,390        85%
Total net sales              $8,789,164$4,327,306       103%    $15,806,304$9,951,643        59%




Net sales for the second quarter of 2021 increased 103% from the second quarter
of 2020. Average sales price per ton increased 49% from $790 in the second
quarter of 2020 to $1,175 in the second quarter of 2021. Total tons shipped to
outside customers in the second quarter of 2021 were 7,482,000 tons, a 37%
increase from the second quarter of 2020.

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Net sales for the first six months of 2021 increased 59% from the first six
months of 2020. Average sales price per ton increased 37% from $786 in the first
six months of 2020 to $1,078 in the first six months of 2021. Total tons shipped
to outside customers in the first six months of 2021 were 14,658,000, a 16%
increase from the first six months of 2020.

In the steel mills segment, sales tons for the second quarter and first six months of 2021 and 2020 were as follows (in thousands):




                               Three Months (13 Weeks) Ended             

Six Months (26 Weeks) Ended

                           July 3, 2021   July 4, 2020   % Change   July 3, 2021   July 4, 2020   % Change
Outside steel shipments           5,356          3,758        43%         10,546          8,940        18%
Inside steel shipments            1,378          1,011        36%          2,732          2,327        17%
Total steel shipments             6,734          4,769        41%         13,278         11,267        18%




Net sales for the steel mills segment increased 135% in the second quarter of
2021 from the second quarter of 2020, due primarily to a 65% increase in the
average sales price per ton from $672 to $1,107 as well as a 43% increase in
tons sold to outside customers. Average selling prices increased across all
product groups within the steel mills segment in the second quarter of 2021 as
compared to the second quarter of 2020.



Net sales for the steel mills segment increased 74% in the first six months of
2021 from the first six months of 2020, due to a 48% increase in the average
sales price per ton from $677 to $1,001 and an 18% increase in tons sold to
outside customers.

Outside sales tonnage for the steel products segment for the second quarter and first six months of 2021 and 2020 was as follows (in thousands):




                                 Three Months (13 Weeks) Ended             

Six Months (26 Weeks) Ended

                             July 3, 2021   July 4, 2020   % Change   July 3, 2021   July 4, 2020   % Change
Joist sales                           167            122        37%            339            253        34%
Deck sales                            130            111        17%            265            236        12%
Cold finished sales                   128             75        71%            260            201        29%
Rebar fabrication sales               338            309         9%            620            620          -
Piling products sales                 171            156        10%            307            336        -9%
Tubular products sales                269            249         8%            519            536        -3%
Other steel products sales            109             87        25%            209            186        12%
Total steel products sales          1,312          1,109        18%          2,519          2,368         6%




Net sales for the steel products segment increased 47% in the second quarter of
2021 compared to the second quarter of 2020, due to a 24% increase in the
average sales price per ton from $1,372 to $1,708 and an 18% increase in tons
sold to outside customers. Average selling prices increased across all
businesses within the steel products segment in the second quarter of 2021 as
compared to the second quarter of 2020, most notably at our tubular products
businesses.



Net sales for the steel products segment increased 25% in the first six months
of 2021 compared to the first six months of 2020, due to a 17% increase in the
average sales price per ton from $1,372 to $1,608 and a 6% increase in tons sold
to outside customers. Average selling prices increased across all businesses
within the steel products segment in the first six months of 2021 as compared to
the first six months of 2020, most notably at our tubular products businesses.

Net sales for the raw materials segment increased 120% and 85% in the second
quarter and first six months of 2021, respectively, from the same prior year
periods. The increases were due to increased average selling prices and volumes
at DJJ's brokerage and scrap processing operations. In the second quarter of
2021, approximately 90% of outside sales for the raw materials segment were from
the brokerage operations of DJJ, and approximately 9% of outside sales were from
the scrap processing operations of DJJ (89% and 8%, respectively, in the second
quarter of 2020). In the first six months of 2021, approximately 89% of outside
sales for the raw materials segment were from the brokerage operations of DJJ,
and approximately 9% of outside sales were from the scrap processing operations
of DJJ (88% and 8%, respectively, in the first six months of 2020).




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Gross Margins

Nucor recorded gross margins of $2.47 billion (28%) in the second quarter of
2021, which was a significant increase compared with $378.0 million (9%) in the
second quarter of 2020.

• The primary driver for the increase in gross margins in the second quarter

of 2021 as compared to the second quarter of 2020 was increased metal

margins in the steel mills segment. Metal margin is the difference between

the selling price of steel and the cost of scrap and scrap substitutes.





Scrap and scrap substitutes are the most significant element in the total cost
of steel production. The average scrap and scrap substitute cost per gross ton
used in the second quarter of 2021 was $457, a 61% increase compared to $284 in
the second quarter of 2020. The increase in the average scrap and scrap
substitute cost per gross ton used was more than offset by the previously
mentioned increases in average selling prices and volumes.

Scrap prices are driven by the global supply and demand for scrap and other iron-based raw materials used to make steel. Scrap prices have increased dramatically since the beginning of 2021 and we expect continued strong demand for scrap and volatility in scrap prices as we begin the third quarter.

• Pre-operating and start-up costs of new facilities were approximately $22

million in the second quarter of both 2021 and 2020. Pre-operating and

start-up costs in the second quarter of 2021 included costs related to the

plate mill being built in Kentucky, the sheet mill expansion in Kentucky,

the merchant bar quality mill expansion at our bar mill in Illinois and the

sheet mill expansion in Arkansas. Nucor defines pre-operating and start-up

costs, all of which are expensed, as the losses attributable to facilities

or major projects that are either under construction or in the early stages

of operation. Once these facilities or projects have attained a utilization

rate that is consistent with our similar operating facilities, they are no

longer considered by Nucor to be in start-up.

• Gross margins in the steel products segment increased in the second quarter

of 2021 as compared to the second quarter of 2020. The primary driver was

the increased margins at our tubular products, joist and cold finish

businesses that were partially offset by the decreased margins at our deck,

building systems and piling businesses. The largest increase in gross

margins was at our tubular products businesses. Led by large commercial,

warehouse and data center projects, demand in nonresidential construction

markets continues to be healthy. As we enter the third quarter of 2021,

backlogs for the steel products segment are strong.

• Gross margins in the raw materials segment significantly increased in the

second quarter of 2021 as compared to the second quarter of 2020, primarily

due to rising raw materials selling prices and margin expansion. The largest

improvement in gross margins in the second quarter of 2021 as compared to

the second quarter of 2020 was at our DRI facilities. The profitability of

DJJ's brokerage and scrap processing operations also significantly increased

in the second quarter of 2021 as compared to the second quarter of 2020.



Nucor recorded gross margins of $4.10 billion (26%) in the first six months of
2021, which was a significant increase compared with $1.01 billion (10%) in the
first six months of 2020.

• The primary driver for the increase in gross margins in the first six months

of 2021 as compared to the first six months of 2020 was increased metal

margins in the steel mills segment. The average scrap and scrap substitute

cost per gross ton used in the first six months of 2021 was $431, a 49%

increase compared to $289 in the first six months of 2020. The increase in

the average scrap and scrap substitute cost per gross ton used was more than

offset by the previously mentioned increases in average selling prices and

      volumes.


   •  Pre-operating and start-up costs of new facilities decreased to

approximately $41 million in the first six months of 2021 from approximately

$51 million in the first six months of 2020. The decrease in pre-operating

and start-up costs was primarily due to the completion of the bar mills in

      Missouri and Florida. Pre-operating and start-up costs in the first six
      months of 2021 included costs related to the plate mill being built in

Kentucky, the sheet mill expansion in Kentucky, the merchant bar quality

mill expansion at our bar mill in Illinois and the sheet mill expansion in

Arkansas.

• Gross margins in the steel products segment increased in the first six

months of 2021 as compared to the first six months of 2020. The primary

driver was the increased margins at our tubular products, rebar, joist and

cold finish businesses.

• Gross margins in the raw materials segment significantly increased in the

first six months of 2021 as compared to the first six months of 2020,

primarily due to rising raw materials selling prices and margin expansion.

The largest improvement in gross margins in the first six months of 2021 as

compared to the first six months of 2020 was at our DRI facilities. The

profitability of DJJ's brokerage and scrap processing operations also

significantly increased in the first six months of 2021 as compared to the

      first six months of 2020.






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Marketing, Administrative and Other Expenses


A major component of marketing, administrative and other expenses is profit
sharing and other incentive compensation costs. These costs, which are based
upon and fluctuate with Nucor's financial performance, increased by
$215.5 million in the second quarter of 2021 as compared to the second quarter
of 2020, and increased by $351.5 million in the first six months of 2021 as
compared to the first six months of 2020. These increases were due to Nucor's
increased profitability in the second quarter and first six months of 2021 as
compared to the respective prior year periods, which resulted in significantly
increased accruals related to profit sharing.

Equity in (Earnings) Losses of Unconsolidated Affiliates




Equity in (earnings) losses of unconsolidated affiliates was $(19.4) million and
$14.1 million in the second quarter of 2021 and 2020, respectively, and
$(32.6) million and $14.9 million in the first six months of 2021 and 2020,
respectively. The increase in equity method investment earnings were primarily
due to increased earnings at NuMit and decreased losses at Nucor-JFE.



Losses on Assets



Included in the first six months of 2021 earnings was a non-cash loss on assets
of $42.0 million related to our leasehold interest in unproved oil and natural
gas properties in the raw materials segment. Also included in the first six
months of 2021 earnings were losses on assets of $9.0 million in the steel
products segment.



Included in the first six months of 2020 earnings were losses on assets of
$292.8 million related to our equity method investment in Duferdofin Nucor
S.r.l. ("Duferdofin Nucor") that we have since exited. Nucor determined that a
triggering event occurred in the first quarter of 2020 due to adverse
developments in the joint venture's commercial outlook, which were exacerbated
by the COVID­19 pandemic, all of which negatively impacted the joint venture's
strategic direction.

Interest Expense (Income)

Net interest expense for the second quarter and first six months of 2021 and 2020 was as follows (in thousands):




                                              Three Months (13 Weeks) Ended            Six Months (26 Weeks) Ended
                                            July 3, 2021         July 4, 2020       July 3, 2021         July 4, 2020
Interest expense                           $       37,661$       38,849$       78,631$       86,445
Interest income                                    (1,881 )             (3,042 )           (3,207 )             (9,728 )
Interest expense, net                      $       35,780$       35,807$       75,424$       76,717




Interest expense decreased in the second quarter and first six months of 2021
compared to the second quarter and first six months of 2020 due primarily to the
lower average interest rates on debt and an increase in capitalized interest in
the first six months of 2021.



Interest income decreased in the second quarter and first six months of 2021
compared to the second quarter and first six months of 2020 due to a decrease in
average interest rates on investments.

Earnings (Loss) Before Income Taxes and Noncontrolling Interests




Earnings (loss) before income taxes and noncontrolling interests by segment for
the second quarter and first six months of 2021 and 2020 were as follows (in
thousands). The changes between periods were driven by the quantitative and
qualitative factors previously discussed.



                                     Three Months                           Six Months
                                   (13 Weeks) Ended                      (26 Weeks) Ended
                            July 3, 2021       July 4, 2020       July 3, 2021       July 4, 2020
Steel mills                $    2,174,807$      150,424$    3,489,781$      306,930
Steel products                    259,330            152,874            471,142            315,433
Raw materials                     120,143             (1,389 )          343,378             (9,300 )
Corporate/eliminations           (528,532 )         (120,852 )         (980,307 )         (285,709 )
                           $    2,025,748$      181,057$    3,323,994$      327,354


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Noncontrolling Interests

Noncontrolling interests represent the income attributable to the noncontrolling
partners of Nucor's joint ventures, primarily NYS of which Nucor owns 51%. The
increase in earnings attributable to noncontrolling interests in the second
quarter and first six months of 2021 as compared to the second quarter and first
six months of 2020 was primarily due to the increased earnings of NYS, which was
a result of the increased metal margins. Under the NYS limited partnership
agreement, the minimum amount of cash to be distributed each year to the
partners is the amount needed by each partner to pay applicable U.S. federal and
state income taxes. In the first six months of 2020, the amount of cash
distributed to noncontrolling interest holders exceeded the earnings
attributable to noncontrolling interests based on mutual agreement of the
general partners.

Provision for Income Taxes


The effective tax rate for the second quarter of 2021 was 22.4% compared to
26.5% for the second quarter of 2020. The effective tax rate for the second
quarter of 2020 was elevated, relative to the second quarter of 2021, primarily
due to a $5.3 million unfavorable non-cash, out-of-period adjustment to deferred
tax balances. The out-of-period adjustment was not material to any previously
reported period. The expected effective tax rate for the full year of 2021 is
approximately 23.1%.

We estimate that in the next 12 months our gross unrecognized tax benefits,
which totaled $59.5 million at July 3, 2021, exclusive of interest, could
decrease by as much as $5.4 million as a result of the expiration of the statute
of limitations and closures of examinations, substantially all of which would
impact the effective tax rate.

Nucor has concluded U.S. federal income tax matters for tax years through 2014
and for tax year 2016. The tax years 2015 and 2017 through 2019 remain open to
examination by the Internal Revenue Service. The 2015 Canadian income tax
returns for Harris Steel Group Inc. and certain related affiliates are currently
under examination by the Canada Revenue Agency. The tax years 2014 through 2020
remain open to examination by other major taxing jurisdictions to which Nucor is
subject (primarily Canada and other state and local jurisdictions).

Net Earnings Attributable to Nucor Stockholders and Return on Equity


Nucor reported consolidated net earnings of $1.51 billion, or $5.04 per diluted
share, in the second quarter of 2021 as compared to consolidated net earnings of
$108.9 million, or $0.36 per diluted share, in the second quarter of 2020. Net
earnings attributable to Nucor stockholders as a percentage of net sales were
17.1% and 2.5% in the second quarter of 2021 and 2020, respectively.

Nucor reported consolidated net earnings of $2.45 billion, or $8.13 per diluted
share, in the first six months of 2021 as compared to consolidated net earnings
of $129.2 million, or $0.42 per diluted share, in the first six months of 2020.
Net earnings attributable to Nucor stockholders as a percentage of net sales
were 15.5% and 1.3% in the first six months of 2021 and 2020, respectively.
Annualized return on average stockholders' equity was 42.5% and 2.5% in the
first six months of 2021 and 2020, respectively.



Outlook


We expect earnings in the third quarter of 2021 to be the highest quarterly
earnings in Nucor history, surpassing the record set in the second quarter of
2021. The primary drivers for the expected increase in earnings in the third
quarter of 2021 are improved pricing and margins in the steel mills segment. We
expect increased profitability across the steel mills segment, with the largest
increase at our sheet mills. The steel products segment and the raw materials
segment are also expected to have increased earnings in the third quarter of
2021 compared to the second quarter of 2021.

Nucor's largest exposure to market risk is via our steel mills and steel
products segments. Our largest single customer in the second quarter of 2021
represented approximately 5% of sales and has consistently paid within terms. In
the raw materials segment, we are exposed to price fluctuations related to the
purchase of scrap and scrap substitutes, pig iron and iron ore. Our exposure to
market risk is mitigated by the fact that our steel mills use a significant
portion of the products of the raw materials segment.

Liquidity and Capital Resources


Nucor operates a capital-intensive business in highly cyclical markets. We
therefore attempt to utilize conservative financial practices that maximize our
financial strength during economic downturns like the one we experienced as a
result of the COVID-19 pandemic. Our liquidity position, consisting of cash and
cash equivalents, short-term investments and

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restricted cash and cash equivalents, remained strong at $3.21 billion as of July 3, 2021. Additionally, Nucor has no significant debt maturities until September 2022.


We believe that our conservative financial practices have served us well in the
past and are serving us well today. Nucor's financial strength allows for a
consistent, balanced approach to capital allocation throughout the business
cycle. Nucor's highest capital allocation priority is to reinvest in our
business to ensure our continued profitable growth over the long term. We have
historically done this by investing to optimize our existing operations,
initiate greenfield expansions and make acquisitions. Our second priority is to
return capital to our stockholders through cash dividends and share repurchases.
We intend to return a minimum of 40% of our net earnings to our stockholders,
while maintaining a debt-to-capital ratio that supports a strong investment
grade credit rating. In May 2021, Nucor's Board of Directors approved a share
repurchase program under which the Company is authorized to repurchase up to
$3.00 billion of its common stock and contemporaneously terminated any
previously authorized share repurchase programs. As of July 3, 2021, the Company
had approximately $2.80 billion remaining for share repurchases under the new
program.

Cash provided by operating activities was $1.88 billion in the first six months
of 2021 as compared to $1.35 billion in the prior year period. Net earnings in
the first six months of 2021 improved by $2.37 billion over the prior year
period. Included in the first six months of 2021 earnings was a non-cash loss on
assets of $42.0 million related to our leasehold interest in unproved oil and
natural gas properties in the raw materials segment. Included in the first six
months of 2020 was a non-cash loss on assets of $292.8 million related to our
previously held equity method investment in Duferdofin Nucor. Changes in
operating assets and operating liabilities (exclusive of acquisitions) resulted
in a cash reduction of $1.27 billion in the first six months of 2021 compared
with a cash increase of $331.2 million in the first six months of 2020. The
funding of our working capital in the first six months of 2021 increased as
compared to the first six months of 2020 mainly due to larger increases in
inventories and accounts receivable, partially offset by changes in accounts
payables and accruals. Inventories increased almost one million tons, or 15%, at
the end of the second quarter of 2021 compared to year-end 2020, and the cost of
scrap and scrap substitutes in our inventory increased 48% from year-end 2020.
Inventories at the end of the second quarter of 2020 decreased by over one
million tons, or 15%, compared to year-end 2019 due to working capital reduction
initiatives focused on maintaining inventory levels at our anticipated near-term
production requirements in response to the COVID-19 pandemic. Accounts
receivable increased in the first six months of 2021 from year-end 2020 due to a
14% increase in tons shipped to outside customers and a 45% increase in
composite sales price in the second quarter of 2021 compared to the fourth
quarter of 2020. Accounts receivable at the end of the second quarter of 2020
decreased from year-end 2019 due to a 16% decrease in tons shipped to outside
customers.

The current ratio was 3.1 at the end of the second quarter of 2021 and 3.6 at
year-end 2020. The current ratio decreased due to the following: a 49% decrease
in other current assets, most notably, the federal income tax receivable; a 54%
increase in accounts payable driven by the previously discussed increased
inventory costs; and an 84% increase in salaries, wages and related accruals due
to increased profit sharing accruals resulting from the increased earnings of
the Company. Partially offsetting these items were a 48% and 47% increase in
accounts receivable and inventories, respectively, due to the previously
discussed increases in inventory costs and selling prices. In the first six
months of both 2021 and 2020, accounts receivable turned approximately every
five weeks and inventories turned approximately every 10 weeks.

Cash used in investing activities during the first six months of 2021 of $681.4
million decreased compared to the prior year period of $714.9 million. Cash used
for capital expenditures in the first six months of 2021 decreased by 10%, or
$74.9 million, from the same period in 2020. The projects that had the largest
capital expenditures through the first six months of 2021 were associated with
the plate mill under construction in Brandenburg, Kentucky, the sheet mill
expansion at Nucor Steel Gallatin, and the hot band galvanizing line at Nucor
Steel Arkansas. The reduction in capital spending was partially offset by the
net increase in purchases of investments (purchases less sales of investments)
in the first six months of 2021 of $43.0 million, as compared to the prior year
period.

Cash used in financing activities for the first six months of 2021 was $1.16
billion as compared to cash provided by financing activities of $623.8 million
in the prior year period. A significant component of this change was the
issuance of $500.0 million of 2.000% Notes due 2025 and $500.0 million of 2.700%
Notes due 2030 in the first six months of 2020. In addition, there were
approximately $916.1 million of stock repurchases in the first six months of
2021 as compared to $39.5 million in the prior year period. Offsetting the
increase in cash used for acquisition of stock in the first six months of 2021
was $128.8 million of proceeds from the exercise of stock options.

Nucor's$1.50 billion revolving credit facility is undrawn and was amended and
restated in April 2018 to extend the maturity date to April 2023. We believe our
financial strength is a key strategic advantage among domestic steel producers,
particularly during recessionary business cycles. Nucor continues to have the
strongest credit rating in the North American steel sector (Baa1/A-) with stable
outlooks at both Moody's and Standard & Poor's. Our credit ratings are
dependent, however, upon a number of factors, both qualitative and quantitative,
and are subject to change at any time. The disclosure

                                       24

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Table of Contents




of our credit ratings is made in order to enhance investors' understanding of
our sources of liquidity and the impact of our credit ratings on our cost of
funds.

Our credit facility includes only one financial covenant, which is a limit of
60% on the ratio of funded debt to total capitalization. In addition, the credit
facility contains customary non-financial covenants, including a limit on
Nucor's ability to pledge the Company's assets and a limit on consolidations,
mergers and sales of assets. As of July 3, 2021, our funded debt to total
capital ratio was 29.8% and we were in compliance with all non-financial
covenants under our credit facility. No borrowings were outstanding under the
credit facility as of July 3, 2021.

Our financial strength allows a number of capital preservation options. Nucor's
robust capital investment and maintenance practices give us the flexibility to
reduce spending by prioritizing our capital projects, potentially rescheduling
certain projects and selectively allocating capital to investments with the
greatest impact on our long-term earnings power. Nucor currently estimates its
2021 capital expenditures to be $1.80 billion. The projects that we anticipate
will have the largest capital expenditures in 2021 are the plate mill under
construction in Brandenburg, Kentucky, the sheet mill expansion at Nucor Steel
Gallatin, and the hot band galvanizing line at Nucor Steel Arkansas.

In June 2021, Nucor's Board of Directors declared a quarterly cash dividend on Nucor's common stock of $0.405 per share payable on August 11, 2021, to stockholders of record on June 30, 2021. This dividend is Nucor's 193rd consecutive quarterly cash dividend.


Funds provided from operations, cash and cash equivalents, short-term
investments, restricted cash and cash equivalents and new borrowings under our
existing credit facilities are expected to be adequate to meet future capital
expenditures, acquisitions and working capital requirements for existing
operations for at least the next 24 months.

© Edgar Online, source Glimpses

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