U.S. Steel (X) Third Quarter EPS Guidance Tops Consensus

September 18, 2023 4:18 PM EDT

United States Steel Corporation (NYSE: X) today provided third quarter 2023 adjusted net earnings per diluted share guidance of $1.10 to $1.15. Third quarter 2023 adjusted EBITDA is expected to be approximately $550 million.

(Consensus sees Q3 EPS of $1.01)

Commenting on third quarter guidance, President and Chief Executive Officer David B. Burritt said, “We are on track to safely deliver a strong third quarter, with each of our operating segments outperforming earlier estimates and contributing to a healthy adjusted EBITDA for the company. A more resilient commercial portfolio and management actions driving higher cost benefits are resulting in better-than-expected performance this quarter. Today’s guidance also reflects the expected impact on third quarter financial results from the United Autoworkers union strike announced earlier this month. Consistent with actions taken in 2022 to balance our melt capacity with our order book, we will temporarily idle blast furnace ‘B’ at Granite City Works and are reallocating volumes to other domestic facilities to efficiently meet customer demand.”

Burritt concluded, “We are executing our Best for All strategy as we advance our portfolio of in-flight capital projects on-time and on-budget. The start-up this quarter of the non-grain oriented electrical steel line at Big River Steel continues as planned with first coil expected by the end of the month. Meanwhile, our recently completed pig iron machine at Gary Works is consistently delivering low-cost pig iron to our electric arc furnaces at Big River Steel. Notably, our balance sheet remains strong, as we fund these strategic initiatives while generating cash flow from operations. We expect to end the third quarter with cash on hand of approximately $3 billion. Total liquidity is expected to exceed $5 billion for the seventh consecutive quarter.”

Third Quarter Adjusted EBITDA Commentary

The Flat-Rolled segment’s adjusted EBITDA is expected to be broadly in-line with the second quarter. While spot prices declined sequentially, average selling prices are expected to be slightly higher than previously anticipated on our July earnings call, which is a key driver to the better-than-expected performance in this segment. Additionally, the segment’s diverse customer base has kept its order book resilient.

The Mini Mill segment's adjusted EBITDA is expected to be lower than the second quarter. While selling prices moderated during the quarter, segment results are expected to reflect better customer volume performance than previously anticipated and benefit from lower raw material costs. EBITDA margins are expected to remain resilient in the low-to-mid teens.

The European segment’s adjusted EBITDA is expected to be lower than the second quarter. Economic headwinds in the region and typical seasonal slowdowns are expected to result in lower average selling prices and a decline in shipment volumes. These headwinds are expected to be partially offset by lower raw material costs in the quarter.

The Tubular segment’s adjusted EBITDA is expected to be lower than the second quarter, although remain well above historical levels. Softer market prices and demand as distributor inventory rebalances are expected to be the primary drivers of sequentially weaker EBITDA.

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