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UNITED STATES STEEL CORP (X)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered $4.118B net sales, $0.72 diluted EPS, and $443M adjusted EBITDA, improving sequentially from Q1 despite pricing headwinds; adjusted EPS was $0.84 and margins were 10.8% adjusted EBITDA margin and 4.4% net margin .
  • North American Flat-Rolled outperformed forecasts on product mix and cost management; Mini Mill achieved a 17% EBITDA margin excluding $30M start-up costs, while USSE and Tubular tracked expectations .
  • Management guided Q3 2024 adjusted EBITDA to $275–$325M, citing lower spot prices across segments; Tubular expected lower results on declining selling prices .
  • Strategic milestones: BR2 targeted start-up in Q4 2024; the dual galvalume/galvanized coating line ramped as expected; progress continued toward Nippon Steel (NSC) transaction closing later in 2024 .
  • The Board declared a $0.05 dividend payable Sept 11, 2024; estimated liquidity stood at ~$4.259B including ~$2.031B cash at quarter-end, supporting near-term catalysts (BR2 start-up, NSC process) .

What Went Well and What Went Wrong

  • What Went Well

    • “Adjusted EBITDA of $443 million improved sequentially in spite of pricing headwinds,” driven by enhanced product mix and cost management in North American Flat-Rolled .
    • Mini Mill margin strength: 17% EBITDA margin when excluding ~$30M one-time start-up costs; NGO electrical steel and dual coating line ramp enhance product mix going forward .
    • Operational progress: BR2 construction hit key milestones; CGL2 delivering galvanized coils and targeting galvalume coils later in the summer .

  • What Went Wrong

    • Year-over-year compression: net sales fell from $5.008B to $4.118B; adjusted EBITDA declined from $804M to $443M amid broader pricing pressure .
    • Tubular pricing headwinds reduced EBITDA to $42M from $169M in Q2 2023; management expects further price-driven softness in Q3 .
    • USSE (Europe) EBIT of -$10M and EBITDA of $21M reflect weaker prices/volumes; management plans a 30-day BF #1 outage at USSE and may keep a BF offline until demand improves .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Net Sales ($USD Billions)$5.008B $4.160B $4.118B
Diluted EPS ($)$1.89 $0.68 $0.72
Adjusted EPS ($)$1.92 $0.82 $0.84
Adjusted EBITDA ($USD Millions)$804 $414 $443
Net Earnings Margin (%)9.5% 4.1% 4.4%
Adjusted EBITDA Margin (%)16.1% 10.0% 10.8%

Segment EBITDA and EBIT

SegmentQ2 2023 EBITDA ($MM)Q1 2024 EBITDA ($MM)Q2 2024 EBITDA ($MM)Q2 2023 EBIT ($MM)Q1 2024 EBIT ($MM)Q2 2024 EBIT ($MM)
Flat-Rolled377156310231 34 183
Mini Mill17314574132 99 28
USSE (Europe)97462172 16 -10
Tubular1696942157 57 29

Operating KPIs

KPIQ2 2023Q1 2024Q2 2024
Avg Realized Price – Flat-Rolled ($/nt)$1,088 $1,054 $1,051
Avg Realized Price – Mini Mill ($/nt)$1,011 $977 $869
Avg Realized Price – USSE ($/nt)$965 $830 $821
Avg Realized Price – Tubular ($/nt)$3,493 $2,267 $2,108
Shipments – Flat-Rolled (000 nt)2,235 2,049 2,045
Shipments – Mini Mill (000 nt)587 568 562
Shipments – USSE (000 nt)1,034 1,072 875
Shipments – Tubular (000 nt)111 114 109

Balance Sheet & Liquidity Highlights

MetricFY 2023Q2 2024
Cash & Cash Equivalents ($MM)$2,948 $2,031
Total Estimated Liquidity ($MM)$5,174 $4,259
Net Debt ($MM)$1,274 $2,209

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($MM)Q3 2024N/A$275–$325 New (sequentially lower vs Q2 actual)
Adjusted EPS ($)Q2 2024$0.76–$0.80 midpoint $0.78 Actual: $0.84 Beat vs guidance
Adjusted EBITDA ($MM)Q2 2024~$425 Actual: $443 Beat vs guidance
Dividend ($/share)Q3 2024 payable 9/11/24$0.05 (ongoing) $0.05 declared Maintained

Earnings Call Themes & Trends

Note: U. S. Steel did not hold an earnings call due to the pending NSC transaction; themes below are drawn from the earnings release and investor presentation .

TopicPrevious Mentions (Q4 2023 and Q1 2024)Current Period (Q2 2024)Trend
NSC Transaction ProgressShareholder approval; regulatory reviews underway; expected closing in 2H 2024 Continued progress toward U.S. regulatory approvals; expected closing later in 2024 Steady progress
BR2 Start-upOn-track for 2H 2024 start-up; capex revised to ~$3.2B On-track for Q4 2024 start-up; updated total BR2 capex $3.35B; 2024 enterprise capex forecast $1.85B Advancing; higher capex
Dual Coating Line (CGL2)Hot commissioned in April; expected $10–$15M 2024, ~$60M run-rate by 2026 Ramping; galvanized coils delivered; galvalume targeted later summer Ramping to plan
Pricing DynamicsBroad demand with extended lead times into 2024 Lower spot prices impacting Q3 outlook across segments Softening
Europe (USSE) OperationsBF #2 temporary idling extended due to market conditions Results consistent with Q2; 30-day BF #1 outage planned; potential BF offline until demand improvesCautious capacity management
Tubular MarketHistorically strong despite softening in Q4/Q1 Lower selling prices pressuring segment; expected further decline in Q3 Downtrend

Management Commentary

  • “We were pleased with our performance during the second quarter, as adjusted EBITDA of $443 million improved sequentially in spite of pricing headwinds… enhanced product mix and cost management kept earnings resilient.” — CEO David B. Burritt .
  • “We expect third quarter adjusted EBITDA in the range of $275 million and $325 million… lower spot prices more than offset strength in the contract order book.” — CEO David B. Burritt .
  • “Construction on BR2 is achieving key milestones as we target start-up in the fourth quarter… dual galvalume/galvanized coating line is ramping as expected.” — CEO David B. Burritt .
  • “We continue to make progress on the U.S. regulatory processes ahead of the anticipated closing of our transaction with Nippon Steel Corporation later this year.” — CEO David B. Burritt .

Q&A Highlights

  • No earnings call or Q&A was held due to the pending NSC transaction; materials were released concurrently (press release, presentation, segment and operational data) .
  • Management’s outlook clarifications by segment: lower average selling prices across segments; $30M construction/start-up costs continue for Mini Mill; favorable raw material costs in Europe; Tubular pressured by pricing .

Estimates Context

  • S&P Global Wall Street consensus estimates were unavailable for ticker X via our SPGI data connector during this review; comparisons to consensus cannot be provided. Note: We attempted to retrieve Q2 2024 EPS, revenue, and EBITDA consensus, but SPGI mapping for X was unavailable at the time of query.

Key Takeaways for Investors

  • Sequential improvement: Q2 adjusted EBITDA rose to $443M from $414M in Q1, with resilient Flat-Rolled performance despite pricing headwinds .
  • Near-term caution: Q3 adjusted EBITDA guided to $275–$325M on weaker spot pricing; expect earnings softness across segments, notably Tubular .
  • Execution catalysts: BR2 slated for Q4 2024 start-up; CGL2 ramp enhances coated product mix and margin profile into 2025–2026 .
  • Balance sheet support: ~$2.031B cash and ~$4.259B estimated liquidity provide flexibility through start-up costs and regulatory timeline; dividend maintained at $0.05/share .
  • Europe managed for demand: outages and potential BF curtailment to balance supply amid lower prices; watch energy/CO2 accrual relief tailwinds .
  • Strategy into NSC closing: technology transfer and capex commitments (including USW facilities) position for long-term value creation post-transaction .
  • Trading setup: monitor spot price trajectory, Q3 margin compression, and BR2 start-up timing as primary narrative drivers; absence of a call limits real-time tone signals, so focus on release/presentation updates .