U.S. Steel's Earnings and Revenues Surpass Estimates in Q2

United States Steel Corporation X logged a profit of $183 million or 72 cents per share for second-quarter 2024, down from a profit of $477 million or $1.89 per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 84 cents, down from $1.92 a year ago. The figure, however, topped the Zacks Consensus Estimate of 76 cents.

Revenues fell around 18% year over year to $4,118 million in the reported quarter. The figure, however, surpassed the Zacks Consensus Estimate of $3,998.2 million.

The company reported a total shipment of 3,591,000 tons for the reported quarter, down around 9% year over year. It was below our estimate of 3,744,000 tons. The company faced pricing headwinds across its segments during the reported quarter.

Segment Highlights

Flat-Rolled: The segment recorded a profit of $183 million in the reported quarter, down around 21% from the year-ago quarter.

Steel shipments in the segment went down roughly 9% year over year to 2,045,000 tons. The average realized price per ton in the unit was $1,051, down around 3% year over year. It was below our estimate of $1,056.

Mini Mill: The segment recorded a profit of $28 million in the quarter, down around 79% year over year. Shipments were 562,000 tons, down around 4% year over year. The average realized price per ton was $869, down around 14% year over year. It was above our estimate of $798.

U.S. Steel Europe: The segment posted a loss of $10 million in the reported quarter. This compares to a profit of $72 million a year ago. Shipments fell roughly 15% year over year to 875,000 tons. The average realized price per ton for the unit was $821, down around 15% year over year. It was below our estimate of $829.

Tubular:  The segment posted a profit of $29 million in the reported quarter, down roughly 82% year over year. Shipments fell roughly 2% to 109,000 tons. The average realized price per ton for the unit was $2,108, down nearly 40% year over year. It was above our estimate of $2,004.

Financials

At the end of the quarter, the company's cash and cash equivalents were $2,031 million, down around 9% from the previous quarter's levels. Long-term debt was $4,078 million, flat sequentially.

Outlook

Moving ahead, X expects adjusted EBITDA for the third quarter in the band of $275-$325 million factoring in recent pricing dynamics, which continues to impact its business. It expects the results in the North American Flat-Rolled segment to soften modestly as reduced spot prices more than offset continued strength in contract order book and lower spending. In the Mini Mill segment, X sees results to reflect lower spot prices and $30 million of associated start-up and one-time construction costs ahead of the planned start-up of Big River 2 in the fourth quarter.

The results in the Europe unit are forecast to be consistent with the second quarter as lower selling prices are largely offset by reduced raw material costs. The company expects lower results in the Tubular segment in the third quarter due to reduced selling prices.

Moreover, U.S. Steel continues to progress toward completing the transaction with Nippon Steel Corporation later this year.

Price Performance

The company's shares have rallied 67.6% in the past year compared with the industry's 12.6% decline.

Image Source: Zacks Investment Research

Zacks Rank & Key Picks

X currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Basic Materials space are Kronos Worldwide, Inc. KRO, Ashland Inc. ASH and Hecla Mining Company HL, each sporting a Zacks Rank #1 (Strong Buy).

Kronos is expected to report second-quarter results on Aug 7. The Zacks Consensus Estimate for KRO's second-quarter earnings is pegged at 21 cents. The company's shares have rallied roughly 33% in the past year. 

Ashland is slated to report fiscal third-quarter results on Aug 6. The Zacks Consensus Estimate for ASH's third-quarter earnings is pegged at $1.47. The company's shares have gained roughly 7% in the past year. 

Hecla is slated to report second-quarter results on Aug 6. The Zacks Consensus Estimate for Hecla's second-quarter earnings is pegged at a penny per share. The stock has gained nearly 2% in the past year.

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