U.S. Steel’s Q2 guidance

Yesterday, U.S. Steel (X) released its second-quarter earnings guidance. Until last year, U.S. Steel used to provide annual earnings guidance during its quarterly earnings release. However, the company changed its guidance methodology earlier this year and moved to quarterly guidance. Like peers Nucor (NUE) and Steel Dynamics (STLD), U.S. Steel provided its quarterly earnings guidance roughly two weeks before the quarter ended.

After Nucor and STLD, U.S. Steel Also Gives Weak Q2 Guidance

U.S. Steel’s guidance fell short of what analysts were expecting, just like Nucor and Steel Dynamics. U.S. Steel said that it expects to post adjusted EBITDA of $250 million in the second quarter. Analysts polled by Thomson Reuters expected the company to post EBITDA of $288 million in the second quarter. U.S. Steel posted adjusted EBITDA of $285 million in the first quarter and $451 million in the second quarter of 2018.

Flat-Rolled segment

U.S. Steel expects its Flat-Rolled segment to post sequentially higher EBITDA in the second quarter. However, its Europe and Tubular segments are expected to post sequentially lower EBITDA. Europe has been a particularly weak spot for the steel industry. Last month, ArcelorMittal (MT), which gets almost half of its revenues from Europe, announced production cuts in Europe amid weak demand and higher imports.

Weak steel prices

While U.S. Steel’s Flat-Rolled segment is expected to post sequentially higher EBITDA, it is worth noting that the segment’s earnings were quite weak in the first quarter due to seasonal impacts. U.S. Steel cited falling steel prices and weak end-user demand as headwinds for the segment. It also noted that the Flat-Rolled segment’s “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.”

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