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U.S. Steel Corporation’s Cash Flows in the Second Quarter

Mohit Oberoi, CFA - Author

Aug. 18 2020, Updated 6:27 a.m. ET

Cash flows

Previously in this series, we discussed U.S. Steel Corporation’s (X) second-quarter revenue and profitability estimates. In this part, we’ll see what analysts project for U.S. Steel Corporation’s free cash flows in the second quarter.

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Analysts’ estimates

Analysts polled by Thomson Reuters expect U.S. Steel Corporation to post free cash flows of $8 million in the second quarter. The company posted free cash flows of -$307 million in the first quarter and $304 million in the second quarter of 2017. The sequential comparison might not be prudent in this case for two reasons. First, U.S. Steel Corporation’s first-quarter earnings are seasonally weak in the first quarter, which tends to impact its free cash flow profile. Second, steel companies including ArcelorMittal (MT) and AK Steel (AKS) usually see a working capital build up in the first quarter, which leads to higher cash usage.

Looking at the yearly comparison, analysts expect U.S. Steel Corporation’s free cash flows in the second quarter to fall sharply from the same quarter last year. The expectations could be led by the higher capex that U.S. Steel Corporation is witnessing under its asset revitalization plan.

Peer companies

Looking at other steel companies, Nucor (NUE) and Steel Dynamics (STLD) posted strong free cash flows during the second quarter. Nucor’s free cash flows more than tripled in the second quarter from the same quarter in 2017 to $509 million. Steel Dynamics’ (STLD) free cash flows rose 70% year-over-year in the second quarter to $398 million.

Next, we’ll discuss the key updates that markets might watch in U.S. Steel Corporation’s second-quarter earnings call.


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