Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
Certain statements made in this quarterly report are forward-looking statements that involve risks
and uncertainties. The words believe, expect, project, will, should, could and similar expressions are intended to identify those forward-looking statements. These
forward-looking statements reflect the Companys 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 Companys 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 steel prices and changes in the supply and cost of raw materials,
including pig iron, iron ore and scrap steel; (4) availability and cost of electricity and natural gas which could negatively affect our cost of steel production or could result in a delay or cancelation 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 and our 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; and (13) our safety performance.
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. Managements Discussion and Analysis of Financial Condition and Results of Operations contained in Nucors
Annual Report on Form
10-K
for the year ended December 31, 2017.
Overview
Nucor and its affiliates manufacture steel and steel products. Nucor also produces direct reduced iron (DRI) for use in its
steel mills. Through The David J. Joseph Company and its affiliates (DJJ), the Company also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron and DRI. Most of Nucors
operating facilities and customers are located in North America. Nucors operations include international trading and sales companies that buy and sell steel and steel products manufactured by the Company and others. Nucor is North
Americas 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
Nucors equity method investments in Duferdofin Nucor S.r.l. (Duferdofin Nucor), NuMit LLC (NuMit) and
Nucor-JFE
Steel Mexico, S. de R.L. de C.V.
(Nucor-JFE).
The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, 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 production operations.
Previously,
Nucors tubular products and piling products businesses were reported in the steel mills segment. Beginning in the first quarter of 2018, these businesses were reclassified to the steel products segment as part of a realignment of Nucors
reportable segments to reflect the way in which they are now viewed by management and how segment performance assessments will be made by the chief operating decision maker beginning in such period. The segment data for the comparable periods in the
following discussion and analysis has also been reclassified into the steel products segment to reflect this change.
23