US Steel Q1 earnings decline year over year

He says the company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $414 million reflect its diverse order book and efficiently run operations, partly offset by an unfavorable inventory impact in its North American Flat-Rolled segment.

“Both our North American Flat-Rolled and Mini Mill segments generated sizeable sequential increases in EBITDA, capturing higher steel prices and optimizing product mix for improved profitability," he says. "Our European segment successfully navigated a dynamic steel market backdrop to deliver better-than-expected performance. Meanwhile, our Tubular segment continued to deliver historically strong performance despite a softer market environment.”

Burritt adds that U.S. Steel expects a stronger second quarter, with adjusted EBITDA in the range of $425 million to $475 million, citing the expected positive effects of abating first-quarter seasonal mining headwinds.

“This should drive sequentially stronger EBITDA for our Flat-Rolled segment, while our Mini Mill segment is expected to be negatively impacted by lower average selling prices," he says. "Our U. S. Steel Europe segment results are expected to remain challenged, reflecting mounting commercial headwinds. As a result, we extended a planned outage on blast furnace No. 2 to balance our production with demand. We expect results in our Tubular segment to moderate as selling prices decline.”

Regarding its strategic initiatives, Burritt says U.S. Steel was moving closer to completing its capital projects and the incremental earnings they are expected to generate. “We recently commissioned our new dual Galvalume^®/galvanized coating line at Big River Steel,” he says. “This state-of-the-art finishing line will enhance our product mix while meeting the demand of customers. Meanwhile, we’re another quarter closer to the startup of Big River 2, our new mini mill in Osceola, Arkansas. Big River 2 remains on-track for startup in the second half of 2024.”

Nippon Steel Transaction

U.S. Steel stockholders approved its merger with Nippon Steel Corp. of Japan with approximately 99 percent approval of shares voted, satisfying a significant condition to closing. The company and Nippon Steel received and are working to respond to a request for additional information and documentary materials (commonly referred to as a “second request”) from the U.S. Department of Justice in connection with antitrust review of the merger under the Hart-Scott-Rodino Antitrust Improvements (HSR) Act of 1976, as amended.

The company expects the merger will be completed in the second half of 2024, subject to the fulfillment of the remaining, customary closing conditions, including the expiration or termination of the waiting period under the HSR Act and receipt of other required regulatory approvals.

U.S. Steel says Nippon has committed to investing an additional $1.4 billion in capital expenditures into its facilities covered by the current basic labor agreement (BLA) with the United Steelworkers (USW), saying this is “above and beyond what is required.”

Segment performance

U.S. Steel says its North American Flat-Rolled Segment received higher spot prices and benefited from higher automotive fixed-priced contracts, while well-balanced, diverse end-market exposure kept the order book robust in the first quarter.

The segment shipped 2.05 million net tons in the quarter, which was an increase from the 2.03 million net tons shipped in Q4 2023 and a decrease from the 2.28 million net tons shipped in Q1 2023. Its average selling price for the recently completed quarter was $1,054 per ton, more than $978 in Q4 2023 and $1,012 in Q1 of last year.

The company’s Mini Mill Segment, which comprises its Big River Steel electric arc furnace steel mill, captured higher spot prices, while ramp-up of the nongrain-oriented (NGO) electrical steel line is ongoing and improving the segment's value-added product mix. Excluding the $20 million impact of construction and related startup costs, U.S. Steel’s Mini Mill adjusted EBITDA margin for Q1 2024 was 23 percent. This segment shipped 569,000 net tons in Q1 2024 compared with 617,000 tons in the previous quarter and 659,000 tons in the prior year’s first quarter. It’s average selling price was $977 per ton, up from $807 in Q4 2023 and $794 in Q1 2023.

U.S. Steel Europe realized better-than-anticipated commercial tailwinds among a dynamic steel market, and lower energy costs drove a positive EBITDA result. It shipped 1.07 million net tons for the quarter, which was more than in Q4 2023 and Q1 2023. The average selling price for the quarter was $830 per net ton compared with $770 in Q4 2023 and $909 in Q1 of that year.  

Its Tubular Segment delivered a historically strong EBITDA performance despite a softening market environment, the company adds, with 114,000 tons of net sales for the quarter compared with 132,000 in Q4 2023 and 131,000 in Q1 of that year.