United States Steel Corporation (NYSE: X) on March 17 provided first quarter 2022 guidance. First quarter 2022 adjusted EBITDA is expected to be approximately $1.3 billion, a new all-time record for the first quarter. First quarter 2022 adjusted diluted earnings per share is expected to be in the range of $2.96 to $3.00.
“We expect to deliver another strong quarter of safety, adjusted EBITDA, free cash flow, and operational performance in the first quarter,” commented U. S. Steel President and Chief Executive Officer David B. Burritt. “At the beginning of the year, we communicated expected market softness for the first quarter, along with the normal seasonal impacts related to our mining operations. We are exiting the first quarter with spot business accelerating, steel prices rising, and the longest backlog at our Big River Steel operations since October. Additionally, as a result of continued execution of our differentiated commercial strategy, we are realizing significant upside on our fixed price contracts. We expect improving market conditions to continue into the second quarter as seasonal demand picks up and buyers begin to shift their attention to a more reliable, regional steel supply given the geopolitical risks and cost volatility which has increased in recent weeks.”
Burritt continued, “The conflict in Ukraine is a human tragedy. Safety remains our number one priority. Our employees in Slovakia remain safe and we are demonstrating our culture of caring by assisting our Ukrainian neighbors through various charitable activities. The workforce in Slovakia has been quick to address refugee needs by supplying over 7,840 meals for refugees in Slovakia, working with Ukrainian suppliers to send 17 tons of food to Ukraine, and providing 800 beds for refugees arriving in Kosice. Over 220,000 refugees have crossed into Slovakia from Ukraine. In addition, we are demonstrating our S.T.E.E.L. Principles and culture of caring by announcing donation match programs through UNICEF and the Red Cross.”
Burritt concluded, “We are actively monitoring the conflict in Ukraine for impacts and risks to our people and business. Today’s market dynamics reinforce what makes U. S. Steel’s business model unique. Our low-cost, captive iron ore assets in Minnesota are a sustainable competitive advantage that cannot be replicated by the competition. We are increasingly translating this competitive advantage to our growing fleet of electric arc furnaces. We are building a pig iron machine at Gary Works to supply Big River Steel with up to 50% of its ore-based metallics needs by the first half of 2023 and will continue to identify additional opportunities to broaden our metallics strategy. These actions build upon the regionally-sourced, low-cost iron ore advantage our U.S. blast furnaces have and the strategy in place with Big River Steel to supplement a portion of their prime scrap needs with home scrap from our integrated operations. We remain bullish for 2022 and another strong year of financial performance.”
Quarter to date, the Company has repurchased approximately $100 million of common stock. As of March 17, 2022, there is approximately $550 million remaining under the Company’s cumulative $800 million stock buyback authorization.
First Quarter Adjusted EBITDA Commentary
The Flat-rolled segment’s adjusted EBITDA is expected to be impacted by approximately $150 million related to the seasonal mining headwinds that occur each year in the first quarter, as well as increased raw material costs, and a larger than expected headwind from cautious spot market activity. These headwinds are expected to be partially offset by increased revenue from our fixed price contracts.
The Mini Mill segment is expected to continue delivering adjusted EBITDA margins similar to 2021 levels, reflecting the high-quality earnings of the Mini Mill segment. Cautious spot market activity throughout much of the quarter is expected to be partially offset by lower cost metallics consumed in the quarter. The recent geopolitical events are increasing spot steel demand, particularly at our Big River Steel operations, resulting in a growing backlog of orders. Considering the conflict in Ukraine and its impact on the global metallics supply, our raw material inventories remain well-positioned to continue meeting customer demand and contingency plans are in place to ensure raw materials are available from alternate sources.
The European segment is expected to deliver adjusted EBITDA approaching fourth quarter levels and is expected to be the third best quarterly adjusted EBITDA. Steel prices and demand were stable throughout January and February and our European segment benefited from having its third blast furnace back on-line in February after a 60-day planned outage. Demand remains healthy from our facility in Slovakia in March, in light of the conflict in Ukraine, and our risk mitigation plans are working as we currently have inventory on site or in-transit to continue meeting customer demand. Alternate sources of supply are underway to continue meeting demand as we closely monitor the rapidly changing geopolitical situation.
The Tubular segment’s adjusted EBITDA is expected to nearly double fourth quarter 2021’s performance. Selling prices continue to accelerate resulting in expanded margin performance for the segment. Our Tubular business is well-positioned to serve the U.S. energy market with value-add seamless pipe and a full suite of proprietary connections to meet customers’ on-shore drilling needs.
The downtown area has reopened after three years of street construction.
City Hall has put local tourism promotion up for bid.
Clear to partly cloudy. Low 19F. Winds light and variable..
Clear to partly cloudy. Low 19F. Winds light and variable.
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