PITTSBURGH - United States Steel Corporation (NYSE: NYSE:X) anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fourth quarter of 2024 to be around $150 million, with adjusted net earnings per diluted share expected to range between a loss of $0.29 and $0.25. This guidance reflects a downward revision from the company's previous outlook for the quarter. According to InvestingPro data, three analysts have recently revised their earnings estimates downward for the upcoming period, while the stock's RSI suggests oversold territory.
The fourth quarter has been pivotal for U.S. Steel, marking the culmination of over $4 billion in growth capital investments. The company achieved its first coil production at its Big River 2 (BR2) facility on October 31, 2024, and began shipping to customers in December. Despite this milestone, U.S. Steel President and CEO David B. Burritt acknowledged that the quarter's adjusted EBITDA guidance fell short of initial expectations due to persistently low steel prices and costs associated with the BR2 ramp-up. The company's financial position shows some strain, with InvestingPro analysis indicating rapid cash burn, as evidenced by negative free cash flow of $1.32 billion in the last twelve months.
The North American Flat-Rolled (NAFR) segment is projected to experience a decline in adjusted EBITDA compared to the third quarter, attributed to reduced selling prices, volumes, and increased maintenance activity. However, the segment's diverse commercial portfolio has provided some resilience against the weak demand environment.
For the Mini Mill segment, the fourth quarter adjusted EBITDA is also expected to be lower than the previous quarter. The forecast includes approximately $30 million in start-up and one-time construction costs, as well as a $20 million impact from BR2 ramp-up activities. U.S. Steel aims to reach full capacity at BR2 by 2025.
The European segment's adjusted EBITDA is anticipated to decrease from the third quarter, mainly due to weak demand that has led to lower volumes, average selling prices, and volume inefficiencies. This segment had benefited from a favorable adjustment related to CO2 emissions reserves in the third quarter, which is not expected to recur in the fourth quarter. Despite current challenges, InvestingPro data shows U.S. Steel maintains strong fundamentals with a price-to-book ratio of 0.62 and has remarkably maintained dividend payments for 34 consecutive years. For deeper insights into U.S. Steel's financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Conversely, the Tubular segment is expected to report higher adjusted EBITDA than in the third quarter, primarily due to increased volume and reduced costs from the absence of outage activities.
These projections are based on a press release statement from United States Steel Corporation and include various financial reconciliations, such as adjusted net earnings and adjusted EBITDA, to provide a clearer picture of the company's operating performance. U.S. Steel, established in 1901, is a prominent steel producer serving several key industries and maintains a strong presence in the United States and Central Europe.
In other recent news, the proposed acquisition of United States Steel Corp (BVMF:USSX34). by Nippon Steel Corp. has been met with mixed reactions. A group of US lawmakers has urged President Joe Biden to reject the deal, citing potential threats to American steel manufacturing. However, three prominent Black House Democrats have expressed support for the deal, highlighting Nippon Steel's commitment to invest in the steel industry and stimulate job creation.
In the midst of these developments, GLJ Research has revised its price target for US Steel, suggesting a 50% chance of the acquisition being approved. This follows Nippon’s commitment to invest $1 billion in U.S. Steel’s facilities and create 5,000 jobs, which has led to a more optimistic outlook.
Despite this, BMO Capital Markets has lowered its price target for US Steel, citing ongoing weakness in demand and pricing in the steel industry. However, the firm remains optimistic about the long-term prospects for US Steel, suggesting that the company's current investments are expected to lead to enhanced profitability and free cash flow generation over time.
On the financial front, US Steel exceeded Q3 expectations, posting an adjusted EBITDA of $319 million and revenue of $3.85 billion. For the upcoming fourth quarter, the company expects adjusted EBITDA to range between $225 million and $275 million. Lastly, US Steel continues to work towards finalizing its transaction with Nippon Steel Corporation by the end of the year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.