The following discussion provides a greater quantitative and qualitative analysis of Nucor's performance in the second quarter and first six months of 2022 as compared to the second quarter and first six months of 2021.
Net sales to external customers by segment for the second quarter and first six months of 2022 and 2021 were as follows (in thousands):
In the steel mills segment, sales tons for the second quarter and first six months of 2022 and 2021 were as follows (in thousands):
Outside sales tonnage for the steel products segment for the second quarter and first six months of 2022 and 2021 was as follows (in thousands):
• The primary driver for the increase in gross margins in the second quarter
of 2022 as compared to the second quarter of 2021 was the increased gross
margins in the steel products segment. The largest increases in gross
margins in the steel products segment were at our joist, deck and building
systems businesses. Demand in nonresidential construction markets continues
to be strong. As we enter the third quarter of 2022, backlogs for the steel
• Gross margins in the steel mills segment increased in the second quarter of
2022 as compared to the second quarter of 2021 due to increased metal
margins. Metal margin is the difference between the selling price of steel
and the cost of scrap and scrap substitutes.
• Pre-operating and start-up costs of new facilities were approximately $60
million in the second quarter of 2022 and approximately $22 million in the
second quarter of 2021. Pre-operating and start-up costs in the second
quarter of 2022 and 2021 primarily included costs related to the sheet mill
expansion in Kentucky, the plate mill being built in Kentucky and the
galvanizing line at our 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
• Gross margins in the raw materials segment increased in the second quarter
of 2022 as compared to the second quarter of 2021, primarily due to
increased margins at our DRI facilities and DJJ's scrap processing
operations, which had strong profitability in the second quarter of 2022.
• The primary driver for the increase in gross margins in the first six months
of 2022 as compared to the first six months of 2021 was the 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 2022 was $516, a 20%
increase compared to $431 in the first six months of 2021. 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.
• Pre-operating and start-up costs of new facilities increased to
approximately $122 million in the first six months of 2022 from
approximately $41 million in the first six months of 2021. Pre-operating and
start-up costs in the first six months of 2022 and 2021 primarily included
costs related to the sheet mill expansion in Kentucky, the plate mill being
built in Kentucky and the galvanizing line at our sheet mill expansion in
• Gross margins in the steel products segment increased in the first six
months of 2022 as compared to the first six months of 2021. The primary
driver was the increased gross margins at our joist, deck and building
• Gross margins in the raw materials segment decreased in the first six
months of 2022 as compared to the first six months of 2021, primarily due to
decreased gross margins at our DRI facilities in the first quarter of 2022,
which improved in the second quarter of 2022.
Marketing, Administrative and Other Expenses
Equity in Earnings of Unconsolidated Affiliates
Net interest expense for the second quarter and first six months of 2022 and 2021 was as follows (in thousands):
Earnings Before Income Taxes and Noncontrolling Interests
the earnings of CSI, for which results were consolidated beginning on February 1, 2022, the date Nucor acquired its 51% controlling ownership position.
The effective tax rate for the second quarter of 2022 was 21.9% compared to 22.4% for the second quarter of 2021. The expected effective tax rate for the full year of 2022 is approximately 22.8%.
We estimate that in the next 12 months our gross unrecognized tax benefits, which totaled $124.0 million at July 2, 2022, exclusive of interest, could decrease by as much as $10.5 million as a result of the expiration of the statute of limitations and the closures of examinations, substantially all of which would impact the effective tax rate.
Net Earnings Attributable to Nucor Stockholders and Return on Equity
The current ratio was 2.6 at the end of the second quarter of 2022, which was in-line with the current ratio of 2.5 at year-end 2021.
In June 2022, Nucor's Board of Directors declared a quarterly cash dividend on Nucor's common stock of $0.50 per share payable on August 11, 2022 to stockholders of record on June 30, 2022. This dividend is Nucor's 197th consecutive quarterly cash dividend.
© Edgar Online, source Glimpses