Nucor 2015 Annual Report Download - page 32

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30
Earnings before income taxes and noncontrolling interests in the raw materials segment for 2015 decreased significantly from 2014.
DJJ’s brokerage and scrap processing operations had lower sales volumes and average selling prices in 2015 compared to 2014. Falling
scrap and metallic commodity prices throughout 2015 caused margin compression at our scrap processing businesses. The raw
materials segment was also impacted by the decreased performance of our DRI facilities in 2015, in which depressed levels of pricing
for alternative raw materials has had an adverse impact on both facilities’ profitability. Nucor Steel Louisiana’s performance was affected
by the suspension of operations that began in late 2014 due to the equipment failure related to the process gas heater. Though the
facility resumed operations late in the first quarter of 2015, it had to work through higher-cost iron ore that was purchased at the end of
2014 but was unable to be used until the facility resumed operations. Our DRI facility in Trinidad had a planned 20-day outage in the
second quarter of 2015, and our Louisiana DRI facility completed a planned maintenance outage in the fourth quarter of 2015. Due to
market conditions, the Louisiana DRI facility did not resume operations for the remainder of 2015 (the facility did resume operations in
late January 2016). Also negatively impacting the profitability of the raw materials segment in 2015 was the $84.1 million impairment
charge for assets related to a blast furnace project at our St. James Parish site and the net $7.7 million write-down of property, plant and
equipment related to the two remaining iron ore storage domes at Nucor Steel Louisiana (see Note 7 to the Consolidated Financial
Statements). The performance of our natural gas drilling programs decreased significantly in 2015 due to a significant decrease in
natural gas prices.
NONCONTROLLING INTERESTS
Noncontrolling interests represent the income attributable to the minority interest partners of Nucor’s joint ventures, primarily
Nucor-Yamato Steel Company (NYS) of which Nucor owns 51%. The 36% increase in earnings attributable to noncontrolling
interests was primarily due to increased metal margins as a result of lower raw material costs, a more favorable product mix and
the impact of a planned three-week outage associated with a capital project in the second quarter of 2014, partially offset by
decreased volumes. 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.
PROVISION FOR INCOME TAXES
The effective tax rate in 2015 was 30.1% compared with 32.3% in 2014. The decrease in the rate between 2014 and 2015 is primarily
due to the change in the relative proportions of net earnings attributable to noncontrolling interests to total pre-tax earnings between
the periods. The effective tax rate in 2015 also benefited from lower state income taxes caused by state tax credits and the reversal of
previously unrecognized tax benefits. These decreases in the rate are somewhat offset by an increase as a result of the $153.0 million
financial statement impairment of an investment in a foreign joint venture. Nucor has substantially concluded U.S. federal income tax
matters for years through 2012. The 2013 and 2014 tax years remain open to examination by the Internal Revenue Service. The Canada
Revenue Agency is examining the 2012 Canadian returns for Harris Steel Group Inc. and certain related affiliates. The tax years 2009
through 2014 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other
state and local jurisdictions).
NET EARNINGS AND RETURN ON EQUITY
Nucor reported net earnings of $357.7 million, or
$1.11 per diluted share, in 2015, compared to net
earnings of $713.9 million, or $2.22 per diluted
share, in 2014. Net earnings attributable to Nucor
stockholders as a percentage of net sales was
2% and 3% in 2015 and 2014, respectively.
Return on average stockholders’ equity was
5% and 9% in 2015 and 2014, respectively.
year
$0
$.50
$1.00
$1.50
$2.00
$2.50
$3.00
13 14 1510 1211
dollars
DILUTED EARNINGS PER SHARE
RETURN ON AVERAGE STOCKHOLDERS’ EQUITY
0%
4%
6%
2%
8%
10%
12%
percent