U.S. Steel sees Q3 EPS 44c-48c, consensus 39c

Sees Q3 adjusted EBITDA $300M. The Flat-Rolled segment’s adjusted EBITDA is expected to be lower than the second quarter as a result of softer selling prices. The Mini Mill segment’s adjusted EBITDA is expected to be lower than the second quarter. Average selling prices are expected to be sequentially lower, reflecting the segment’s market-based monthly contract and spot price exposure. Pricing headwinds are expected to be partially offset by lower metallics costs. Separately, as mentioned above, approximately $40M of anticipated start-up and one-time construction costs are included in the segment’s adjusted results. These costs largely reflect the new Big River 2 mini mill, expected to start-up in the fourth quarter of 2024. The European segment’s adjusted EBITDA is expected to be higher than the second quarter, despite the challenging market environment, largely due to a favorable adjustment for CO2 allowances. The Tubular segment’s adjusted EBITDA is expected to be lower than the second quarter, primarily due to lower selling prices. Commenting on third quarter guidance, President and Chief Executive Officer David B. Burritt said, “Adjusted EBITDA guidance of $300 million is in-line with our prior third quarter outlook and reflects resilient domestic flat-rolled steel demand amid a bottoming steel pricing environment. Challenging pricing dynamics are being offset in part by the benefits of our balanced and diverse order books in the North American Flat-Rolled segment. In Europe, we are experiencing a softening demand environment, resulting in Blast Furnace #1 remaining temporarily idled following a planned 30-day outage as customer demand continues to be tepid. The Tubular segment continues to face pressure from a weak pricing environment. We are approaching the planned start-up of Big River 2 in the fourth quarter of 2024. For the third quarter result, we expect approximately $40 million of related start-up and one-time construction costs, which are included in our third quarter adjusted EBITDA guidance for the Mini Mill segment. Meanwhile, we are steadily advancing the ramp-up and delivery of products from our non-grain oriented (NGO) electrical steel line and the new dual Galvalume(R) / Galvanized (CGL2) coating line. We look forward to the completion of approximately $4 billion of capital investments designed to generate stakeholder value by providing the sustainable steels our customers demand, and the beginning of a more resilient and higher free cash flow generative future at U. S. Steel. We continue to progress through the U.S. regulatory reviews of the pending transaction with Nippon Steel, and are confident in our ability to achieve these approvals. We continue to work towards closing the transaction by the end of the year. Earlier this quarter, Nippon Steel disclosed further information about its intended post-closing governance structure and additional investment commitments of at least $1 billion to modernize the hot strip mill and other facilities at Mon Valley Works and approximately $300 million to revamp Blast Furnace #14 at Gary Works. We are heartened by the outpouring of support from our employees and communities who see their futures benefitting from the transaction and maintain the view that this deal is the BEST deal for American steel, and steel communities.”