US Steel provides guidance for first quarter 2020
by David Fleschen
United States Steel Corporation (NYSE: X) today provided first quarter 2020 guidance. First quarter 2020 adjusted EBITDA is expected to be approximately $30 million. The Company expects first quarter 2020 adjusted diluted loss per share to be approximately ($0.80).
“Through the quarter, our Flat-rolled operations have performed well, and we are recognizing the operational and financial benefits of the investments in our assets that we have made over the past several years. Strong performance on reliability, quality, and productivity, combined with a continued focus on driving sustainable cost improvements across the footprint, have contributed to a better than expected first quarter to date,” commented President and Chief Executive Officer David B. Burritt. “The Tubular market continues to be challenging and conditions in Europe remain volatile. We are focused on preserving cash and liquidity in the current market environment.”
Burritt continued, “At U. S. Steel, safety is our top priority and we are continuing to set records related to safety performance, another indication that our facilities are running efficiently and reliably. We continue to monitor the impacts of the Coronavirus and are following policies and procedures recommended by health and government officials to ensure our employees are working in a safe and healthy environment. We understand the situation remains fluid and we are preparing our operations to be flexible as circumstances may warrant. Our regional supply chain minimizes the risk of significant supply-chain related production disruptions and we continue to work with our customers to provide value-added steel solutions as we execute our world-competitive, ‘best of both’ strategy.”
Adjusted EBITDA Commentary
Our Flat-rolled segment results are expected to be better than anticipated as strong operating performance across our footprint, continued cost improvement, and seasonally strong shipment volumes more than offset the typical seasonality of mining. Additionally, the domestic flat-rolled steel market has remained healthy throughout the first quarter to date. Extended lead times are supported by robust construction end-market demand and an end to destocking that negatively impacted order rates throughout 2019. In April, we will commence the safe and structured indefinite idling of our iron and steelmaking operations at Great Lakes Works outside of Detroit, Mich. This decision was previously announced in December 2019 as part of our world-competitive, “best of both” strategy. We continue to expect to indefinitely idle the Great Lakes Works hot strip mill before the end of 2020. Separately, we currently expect to begin a scheduled 48-day outage at our Gary Works blast furnace #4 in April.
In Europe, steel selling prices have steadily increased throughout the quarter resulting in better than anticipated first quarter performance for our USSE segment to date. Still, the flow through of lower prices on our monthly and quarterly contracts and elevated raw material costs are limiting near-term financial performance.
Our Tubular segment remains challenged as oil prices remain under significant pressure and rig counts continue to be low. We are continuing to monitor the recent change in market conditions with respect to our Tubular business and will evaluate the impact on the carrying value of the net assets of this business.
Source: US Steel, Photo: Fotolia