Nucor (NUE), a major steel producer, is trading modestly higher today after reporting Q4 results this morning. EPS came in at a robust $2.07, well ahead of above prior guidance of $1.90-1.95.
Nucor typically guides in the middle of the last month of the quarter (so mid-December this time) and they are usually pretty spot-on with their final result. So the large EPS upside was a nice surprise and a bit unusual for Nucor. Revenue rose 23.6% year/year to $6.30 bln, which was generally in-line with expectations. Earnings in Q4 declined vs Q3 due in part to typical seasonality.
In terms of its outlook for 2019, NUE believes that this will be another strong year as earnings should be one of the best in Nucor's history. Entering 2019, the company has a positive outlook on end-use demand and general economic conditions.
Nucor expects another strong quarter in Q1. Although sheet pricing and margins in Q1 are expected to decrease relative to Q4, this will be partially offset by expected increases in profitability of its bar mills and structural mills. The profitability of its steel products segment in Q1 should be similar to Q4. NUE expects 1Q19 earnings to be much stronger than 1Q18.
Overall operating rates at its steel mills decreased to 88% in Q4 as compared to 92% in Q3 but increased compared to 82% in 4Q17. Steel mill operating rates for the full year 2018 increased to 91% as compared to 86% for the full year 2017.
In sum, this was a solid quarter for Nucor and they sound positive about 2019. Its rival STLD reported good results last week, but Nucor's upside EPS was more impressive. US Steel (X) reports tomorrow after the close. This report bodes well for them. The call starts at 2pm ET if you want more data about the quarter. Nucor tends to be refreshingly candid on their calls.