Impressive Performance by U.S. Steel in Q2

United States Steel Corporation X recorded a profit of $183 million or 72 cents per share for the
second quarter of 2024, lower than the profit of $477 million or $1.89 per share in the previous year.

Excluding one-time items, adjusted earnings per share were 84 cents, a decrease from $1.92 a year earlier.
Nonetheless, the figure exceeded the Zacks Consensus Estimate of 76 cents.

Revenues saw an 18% decline year over year to $4,118 million in the quarter. Despite this, the figure surpassed
the Zacks Consensus Estimate of $3,998.2 million.

The company reported total shipments of 3,591,000 tons in the quarter, marking a 9% decrease from the previous
year. Shipments fell below the estimated 3,744,000 tons, with pricing challenges affecting all segments.

Segment Performance

Flat-Rolled Segment: The segment reported a profit of $183 million, reflecting a 21% decline
from the previous year.

Steel shipments decreased by approximately 9% year over year to 2,045,000 tons, with the average realized price
per ton at $1,051, down about 3% year over year.

Mini Mill Segment: Profits were $28 million for the quarter, a decrease of around 79% year over
year. Shipments totaled 562,000 tons, marking a 4% decrease, with the average realized price per ton at $869,
down about 14% year over year.

U.S. Steel Europe Segment: The segment experienced a $10 million loss, compared to a $72 million
profit in the previous year. Shipments fell around 15% year over year to 875,000 tons, with the average
realized price per ton at $821, down approximately 15% year over year.

Tubular Segment: The segment reported a profit of $29 million in the quarter, marking an 82%
decrease year over year. Shipments declined by around 2% to 109,000 tons, with the average realized price per
ton at $2,108, down nearly 40% year over year.

Financial Overview

By the end of the quarter, the company’s cash and cash equivalents stood at $2,031 million, down around 9%
from the previous quarter. Long-term debt remained flat sequentially at $4,078 million.

Future Expectations

Looking ahead, X anticipates adjusted EBITDA for the third quarter within the range of $275-$325 million, taking
into account recent pricing trends that are impacting its operations. The company foresees softened results in
the North American Flat-Rolled segment, offsetting continued strength in contract orders with reduced spot
prices. The Mini Mill segment is expected to reflect lower spot prices and $30 million in associated start-up
costs, ahead of the planned debut of Big River 2 in the fourth quarter.

Results in the Europe unit are projected to remain consistent with the second quarter, as lower selling prices
are balanced by reduced raw material expenses. Lower results are expected in the Tubular segment in the third
quarter due to decreased selling prices.

Furthermore, U.S. Steel is making progress towards finalizing the deal with Nippon Steel Corporation later this
year.

Stock Performance

The company’s shares have surged by 67.6% in the last year, outpacing the industry’s decline of 12.6%.

Image Source: Zacks Investment Research

Zacks Rank & Key Picks

X currently holds a Zacks Rank #5 (Strong Sell).

Some top stocks in the Basic Materials sector include Kronos Worldwide, Inc. KRO, Ashland
Inc. ASH
and Hecla Mining Company HL, each holding a Zacks Rank #1 (Strong Buy).

Kronos is set to announce its second-quarter results on August 7, with a Zacks Consensus Estimate of 21 cents
for earnings. The company’s shares have appreciated by roughly 33% in the past year.

Ashland is expected to report its fiscal third-quarter results on August 6, with a Zacks Consensus Estimate of
$1.47 for earnings. The company’s shares have gained about 7% in the last year.

Hecla is scheduled to announce its second-quarter results on August 6, with a Zacks Consensus Estimate of a penny
per share for earnings. The stock has witnessed a nearly 2% increase in the past year.

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