[Ferro-Alloys.com]

 

U.S. Steel’s Q2 earnings release

 

U.S. Steel’s Q2 earnings are scheduled to be released Thursday. Although the stock fell to its 52-week low in May, it has bounced back. U.S. Steel’s year-to-date losses have fallen to 13.4%. So far, the earnings season has been mixed for steel investors. Nucor (NUE) and Steel Dynamics (STLD) missed the consensus earnings estimates. AK Steel (AK) posted better-than-expected earnings. However, the company’s top line was lower compared to analysts’ expectations.

 

Earnings estimates

 

U.S. Steel will likely post revenues of $3.45 billion in the second quarter. In comparison, the company posted revenues of $3.49 billion in the first quarter and $3.61 in the second quarter of 2018. The shipments and average selling prices drive U.S. Steel’s revenues. According to the first-quarter earnings call, U.S. Steel expects its second-quarter US flat-rolled shipments to rise on a sequential basis. The flat-rolled segment is U.S. Steel’s biggest segment. The company also alluded to weaker shipments in Europe—its second-biggest segment.

 

Shipments might fall

 

Last month, while releasing its second-quarter earnings guidance, U.S. Steel said that flat-rolled “second quarter shipments are lower than we expected due to flooding in the southern United States, which has limited the availability of barges and our ability to ship finished product to customers over the past few weeks.” In light of the guidance and the sharp fall in steel prices, U.S. Steel’s second-quarter revenue estimates look aggressive. AK Steel also missed its second-quarter revenue estimates.

 

Average selling prices

 

Average selling prices could drag U.S. Steel’s Q2 earnings. US spot steel prices fell sharply in the second quarter. Lower spot steel prices also took a toll on Nucor and Steel Dynamics’ second-quarter average selling prices. However, AK Steel dodged the bullet due to its high exposure to contract sales. Lower average selling prices would also have a negative impact on U.S. Steel’s second-quarter profitability.

 

U.S. Steel’s Q2 earnings guidance

 

Last month, U.S. Steel provided its second-quarter earnings guidance. The company expects to post an adjusted EBITDA of $250 million in the second quarter. U.S. Steel’s second-quarter earnings guidance was lower than analysts’ projections. Nucor and Steel Dynamics also had weaker-than-expected second-quarter guidance. U.S. Steel posted an adjusted EBITDA of $285 million in the first quarter and $451 million in the second quarter. The analysts polled by Thomson Reuters expect U.S. Steel to post an adjusted EBITDA of $263 million in the second quarter.

 

Expectations from U.S. Steel’s Q2 earnings call

 

U.S. Steel’s Q2 earnings call is scheduled for Friday. During U.S. Steel’s second-quarter earnings call, markets will listen for comments on US and Europe steel markets. US steel prices bounced back last month. Prices fell to multi-month lows in June. Falling steel prices prompted U.S. Steel to close two US blast furnaces. The company also announced the closure of one of its Europe blast furnaces. During U.S. Steel’s second-quarter earnings call, management might throw some light on the financial impact. U.S. Steel might face questions about its automotive sales. Nucor and AK Steel are gaining market shares. The gains might impact their peers.(marketrealist.com)