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Sep 14 2010 Nucor released the following on its
earnings projection. Stock falls over 3%.
Nucor Announces Guidance for Its
Third Quarter Earnings
(prnews)
CHARLOTTE, N.C.,
Sept. 14 /PRNewswire-FirstCall/ -- Nucor
Corporation (NYSE: NUE) announced today guidance for
its third quarter ending
October 2, 2010. Nucor expects third
quarter results to be in the range of
$0.05 to $0.10 per diluted share,
compared to earnings of
$0.29
per diluted share in the second quarter of 2010,
$0.10
per diluted share in the first quarter of 2010 and a
loss of $0.10
per diluted share in the third quarter of 2009.
Excluding LIFO, third quarter performance is an
improvement over the first quarter but down
significantly from the second quarter due to lower
margins caused by higher scrap costs and the
inability to pass along these price increases.
Projected third quarter results include an
estimated LIFO charge of
$67 million compared to charges of
$24 million and
$67 million in the first and second
quarters of 2010, respectively, and a credit of
$120 million in the third quarter of
2009. The estimated quarterly LIFO charge is higher
than the charge of $45.5
million anticipated at the time we gave
our qualitative guidance.
We stated in our qualitative guidance
given in late July that ?the continuation of the
upward trend experienced through the first half of
the year is by no means clear at present. There is
a general slowdown taking place across all product
lines as the overall economy has entered into a new
period of uncertainty.? Our third quarter results
will unfortunately confirm these concerns, and a
general slowdown has indeed occurred from second
quarter, particularly in our flat rolled business.
As expected, the most challenging
markets for our products continue to be those
associated with residential and non-residential
construction, which continue to show little, if any,
strength. This is particularly true for our
downstream businesses.
Nucor and affiliates are
manufacturers of steel products, with operating
facilities primarily in the U.S. and
Canada. Products produced include:
carbon and alloy steel -- in bars, beams, sheet and
plate; steel joists and joist girders; steel deck;
fabricated concrete reinforcing steel; cold finished
steel; steel fasteners; metal building systems;
light gauge steel framing; steel grating and
expanded metal; and wire and wire mesh. Nucor,
through The David J. Joseph Company, also brokers
ferrous and nonferrous metals, pig iron and HBI/DRI;
supplies ferro-alloys; and processes ferrous and
nonferrous scrap. Nucor is
North America's largest recycler.
Certain
statements contained in this news release are
?forward-looking statements? that involve risks and
uncertainties. The words ?believe,? ?expect,?
?project,? ?will,? ?should? and similar expressions
are intended to identify those forward-looking
statements. 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) the sensitivity of the
results of our operations to prevailing steel prices
and the changes in the supply and cost of raw
materials, including scrap steel; (2) market demand
for steel products; (3) energy costs and
availability; and (4) competitive pressure on sales
and pricing, including pressure from imports and
substitute materials. These and other factors are
outlined in Nucor?s regulatory filings with the
Securities and Exchange Commission, including those
in Nucor?s December 31,
2009 Annual Report on Form 10-K. The
forward-looking statements contained in this news
release speak only as of this date, and Nucor does
not assume any obligation to update them.
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MY
COMMENTS: Nucor has traded in a range since January
2009. Only once did it break lower out of the range,
during the panic of March 2009. Aside from that it
has had a great trading range, which has allowed me
to easily sell naked puts. The last move to the low
end of the trading range did not see a move higher.
This could signal the start of a new trading range
or a challenge to the low end and a pullback to the
$36.00 range. The news today from Nucor pushed the
stock down more than 3% and has given me an
opportunity to garner some great premiums. I have
increased my capital for this stock from roughly
28,000 to 34,500 allowing me to sell 10 contracts in
total. Yet my break even in the stock has only moved
from 27.05 to 28.00 due to the significant gains of
the put premiums. This has allowed me to set up my
naked put in the event that the trading range
changes to 30.00 to 36.00 which might occur. However
I believe there will be no "double dip" recession
and as such I believe Nucor by January will be back
up to the low end of the more dominant trading range
- 39.00 to 48.00.
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