Nucor (NUE)

Q4 2011 Earnings Call

January 26, 2012 2:00 pm ET

Executives

James D. Frias - Chief Financial Officer, Executive Vice President and Treasurer

Daniel R. DiMicco - Chairman and Chief Executive Officer

John J. Ferriola - President, Chief Operating Officer and Director

Analysts

Michelle Applebaum

Sam Dubinsky - Wells Fargo Securities, LLC, Research Division

Aldo J. Mazzaferro - Macquarie Research

Michael F. Gambardella - JP Morgan Chase & Co, Research Division

Richard Garchitorena - Crédit Suisse AG, Research Division

Sohail Tharani - Goldman Sachs Group Inc., Research Division

Luke Folta - Jefferies & Company, Inc., Research Division

Mark L. Parr - KeyBanc Capital Markets Inc., Research Division

Timna Tanners - BofA Merrill Lynch, Research Division

David S. MacGregor - Longbow Research LLC

David S. Martin - Deutsche Bank AG, Research Division

Shneur Z. Gershuni - UBS Investment Bank, Research Division

Presentation

Operator

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Good day, everyone, and welcome to the Nucor Corporation Fourth Quarter and Year End 2011 Earnings Conference Call. As a reminder, today's conference is being recorded. [Operator Instructions]

Certain statements made during this conference call will be forward-looking statements that involve risks and uncertainties. Although Nucor believes they are based on reasonable assumptions, there can be no assurance that future events will not affect their accuracy. More information about the risks and uncertainties relating to these forward-looking statements may be found in Nucor's latest 10-K and subsequently filed 10-Q, which are available on the SEC's and Nucor's websites. The forward-looking statements made in the conference call speak only as of this date, and Nucor does not assume any obligation to update them, either as a result of new information, future events or otherwise.

Now for opening remarks and introductions, I'd like to turn the call over to Mr. Dan DiMicco, Chairman and Chief Executive Officer of Nucor Corporation. Please go ahead, sir.

Daniel R. DiMicco

Thank you, Marissa. Good afternoon. This is Dan DiMicco, Nucor's Chairman and Chief Executive Officer. Thank you for joining us for our conference call today. And as always, we appreciate your interest in Nucor. With me for today's call are the other members of Nucor's senior management team: Our President and Chief Operating Officer, John Ferriola; Chief Financial Officer, Jim Frias; and our other Executive Vice Presidents, Jim Darsey of our Long Products group; Keith Grass of our Scrap and Raw Materials group; Ladd Hall of our Flat-Rolled and DRI group; Ham Lott of our Downstream Fabricated Products; and Joe Stratman, heading up Business Development and our Plate & Beam business.

First, and most importantly, I want to thank everyone in Nucor, Harris Steel, David J. Joseph, Berkeley, and Steel Technologies teams for their excellent work in an economic environment that remained extremely challenging in 2011. Together, we are continuing to deliver on our goal of taking care of our customers. We define our customers as our fellow teammates, the people who buy and use our products, and our shareholders who trust us to provide attractive returns on their capital invested in Nucor. Thank you, all.

Earnings increased almost sixfold in 2011 to $778 million from 2010's net income of $134 million. This improvement was achieved despite severely the severely depressed nonresidential construction markets which, in 2011, remained more than 60% below the peak level reached in 2007. How did our team accomplish this performance? Nucor's superior competitive position with our unrivaled financial strength, product diversification and operational flexibility, which allows us to grow during the periods -- to grow stronger during the periods of economic distress. In 2011, we were able to expand our participation in markets, enjoying more robust demand which we'll give more about later. Throughout our company, the more than 20,000 men and women of Nucor are enjoying outstanding success developing new products, reducing costs and improving quality across Nucor's entire product portfolio. What do I mean when I say that our team is building a stronger Nucor? By a stronger Nucor, I'm describing one position to deliver higher-highs and higher-lows in earnings power throughout successful economic cycles. That type of performance has a long tradition at Nucor and one we plan on continuing, the most recent example being the investments we made last year that were major contributors to a sixfold increase in cyclical peak earnings from $311 million in 2011, to more than $1.8 billion in 2008.

At Nucor, teams working of growing long-term earnings power and shareholder value is ongoing. Over the 2008 to 2012 period, Nucor went and invested more than $6 billion of capital, with the disciplined execution of our 5-pronged growth strategy. The bottom line is that Nucor is primed and ready for new higher-highs and earnings once the sustainable economic recovery inevitably arrives.

In 2012, we expect to see continued growth in sales and earnings for Nucor, albeit in a slow growth in this economy, burdened by a challenging regulatory and overall business environment. Uncertainties in Europe's financial sector will weigh on both global and U.S. growth in 2012. In short, we are cautiously optimistic for the year coming up. Fortunately, there are solutions to the serious problems threatening our nation's economic well-being, a move back to creating, making and building things is a major driver of our economy's growth, and growth of the American middle-class is long overdue. The idea that the service-dominated economy alone can provide substantial wealth creation is a usually failed business model that's proven over and over again in the last 20 years. It has given us ill-advised government policies, to financial sector business practices that created one economic bubble after another, culminating with a great financial collapse and panic in 2008 that is still with us today. The U.S.-based manufacturing holds the key to reinvigorated growth for our country in the years and decades to come. The time is right, the opportunity is here for us to seize and the path forward is clear, and the naysayers should go back into their closets. New opportunities in energy infrastructure and rebuilding our infrastructure, revitalizing our manufacturing sector, are shouting out to us as the path forward for future generation of Americans that have the opportunity earn a rising standard of living. This is the path that will create 30 million net jobs we need over the next 5 to 7 years, while rebuilding our economy, our tax base, our middle class and our global competitiveness. We at Nucor, working together with our partners in the domestic and multinational manufacturing community, are applying our can-do attitude, manage level to shine a bright light on this exciting path forward.

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