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U.S. Steel (X) Beats Q2 Earnings Estimates, Raises '18 View

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United States Steel Corporation (X - Free Report) reported net earnings of $214 million or $1.20 per share in the second quarter, down from $261 million or $1.48 in the year-ago quarter. Barring one-time items, adjusted earnings came in at $1.46, beating the Zacks Consensus Estimate of $1.15.

Revenues rose roughly 14.8% year over year to $3,609 million in the quarter. The figure also surpassed the Zacks Consensus Estimate of $3,389.8 million.

Segment Highlights

Flat-Rolled: Profit in the Flat-Rolled segment was $224 million in the quarter, up from $220 million in the year-ago quarter.

Total steel shipments in the segment rose roughly 3.5% year over year to 2,584,000 tons and average realized price per ton in the unit was $819, up roughly 10.4%.

U. S. Steel Europe (USSE): The USSE segment delivered a profit of $115 million, a more than two-fold jump year over year from $55 million. Total shipments in the segment fell modestly to 1,156,000 tons from 1,157,000 tons in the year-ago quarter and average realized price per ton for the unit was $707, up roughly 14% year over year.

Tubular: U.S. Steel’s Tubular segment incurred a loss of $35 million, wider than a loss of $29 million in the year-ago quarter.

Total steel shipments for the segment rose roughly 11.7% year over year to 201,000 tons and average realized price per ton for the unit was $1,449, up roughly 17.4%.

Financials

As of Jun 30, 2018, U.S. Steel had cash and cash equivalents of $1,231 million, down 19.1% from the prior-year quarter.

Long-term debt fell roughly 7.7% year over year to $2,541 million.  

Outlook

U.S. Steel expects adjusted EBITDA for the third quarter of 2018 at roughly $525 million. The company has raised 2018 adjusted EBITDA guidance to roughly $1.85-$1.90 billion, based on its developments to date and including the success of its $2-billion asset revitalization program.

Flat-rolled segment results are expected to witness consistent improvement as more of its adjustable contract and spot shipments realize the benefit of improvement in the second quarter in index prices. However, these will be partly offset by higher planned outage costs.

The company expects positive results in the Tubular division as selling price hikes catch up the rising substrate costs. Results in the European segment are likely to decline in the third quarter due to planned outages and normal seasonal customer demand patterns.

Price Performance

Shares of U.S. Steel have gained 8.8% in the past three months against the industry’s 3.4% decline.



Zacks Rank & Other Stocks to Consider

U. S. Steel currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are KMG Chemicals, Inc (KMG - Free Report) , Ingevity Corp. (NGVT - Free Report) and Celanese Corp. (CE - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have returned 43.7% in a year.

Ingevity has an expected long-term earnings growth rate of 12%. Its shares have rallied 66.6% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 21.1% in a year.

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