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Steel Companies’ Third-Quarter Guidance: Key Takeaways


Dec. 4 2020, Updated 10:42 a.m. ET

Steel companies’ third-quarter guidance

In the previous part, we discussed steel companies’ second-quarter earnings. In this part, we’ll see what different steel companies had to say about their third-quarter guidance during their second-quarter earnings call.

As we noted previously, AK Steel (AKS) expects its shipments to rise sequentially in the third quarter. AK Steel’s average selling prices in the third quarter are only expected to be marginally higher. While AK Steel didn’t give a tight earnings guidance, it said that its third-quarter EBITDA margins should expand 0.5% sequentially. The company’s third-quarter guidance disappointed the markets.

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U.S. Steel Corporation

U.S. Steel Corporation’s (X) third-quarter earnings guidance also dampened the market sentiments. During the second-quarter earnings call, U.S. Steel Corporation raised its 2018 EBITDA guidance to $1.85 billion–$1.90 billion. The company expects its third-quarter EBITDA to be $525 million. U.S. Steel Corporation’s third-quarter guidance was lower compared to analysts’ expectations. While U.S. Steel Corporation raised its 2018 guidance, the incremental rise of ~$100 million at the upper end doesn’t look encouraging considering the strength in US steel prices and expectations of higher shipments given the restart of two blast furnaces.

Among other steel companies (CLF), Nucor (NUE) and Steel Dynamics (STLD) usually provide their quantitative earnings guidance 15 days before the quarter ends.

Along with earnings, we also need to keep track of cash flows. Next, we’ll compare steel companies’ free cash flows in the second quarter.


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