=U.S. Steel (X) reported earnings on Wed 30 Jan 2019 (a/h)

PITTSBURGH (AP) _ United States Steel Corp. (X) on Wednesday reported fourth-quarter earnings of $592 million.

The Pittsburgh-based company said it had profit of $3.33 per share. Earnings, adjusted for non-recurring gains, came to $1.82 per share.

The results missed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $1.88 per share.

The steel maker posted revenue of $3.69 billion in the period, which also fell short of Street forecasts. Five analysts surveyed by Zacks expected $3.75 billion.

For the year, the company reported profit of $1.12 billion, or $6.25 per share. Revenue was reported as $14.18 billion.

U.S. Steel shares have risen 22 percent since the beginning of the year, while the Standard & Poor's 500 index has risen almost 7 percent. In the final minutes of trading on Wednesday, shares hit $22.23, a fall of 42 percent in the last 12 months.

U.S. Steel: Earnings Preview

US Steel (X), a major steel producer, is set to report Q4 results today after the close with a call tomorrow morning at 8:30am ET. Last quarter, US Steel reported at 16:15 ET, or 15 minutes after the close.

The street is looking for Q4 EPS of $1.83 and revenue of $3.77 bln. X does not provide revenue and EPS guidance, but it does guide for EBITDA and, on November 1, X guided to Q4 EBITDA of $575 mln and full year EBITDA of $1.8 bln. US Steel's business is pretty seasonal with Q4-Q1 being slower due to colder weather, especially for construction. Q2 and Q3 are typically much more robust.

One thing to keep in mind with US Steel is that, unlike most other steelmakers, it has fairly high exposure to the oil & gas tubing market, it's called OCTG. Automotive, construction, appliances are also key markets.

Key Topics:

• With US Steel never guiding for revs/EPS and with their accounting being pretty complex, it's difficult for analysts to get a good sense for revs and EPS (although EBITDA can be compared to guidance). As such, US Steel's earnings can vary pretty wildly relative to consensus. With that said, after a miss in 1Q17, X has reported six EPS beats in a row and most have been in the double-digit range.
• Something to be aware of is that US Steel is undergoing what it calls its asset revitalization plan for tis Flat-Rolled segment. It's a $2 billion investment plan, including about $1.5 bln being spent from 2017 to 2020. The goal is to revitalize its assets in order to increase profitability, productivity and operational stability, and reduce volatility. The program does have some impact on financial results from time to time due to outages. The good news is that X has said the plan in 2019 is to be a series of smaller projects, so it's less disruptive to operations.
• On the Q3 call, X said it experienced a longer-than-expected buyer strike and a faster-than-anticipated drop in selling prices over the last two months (Sep-Oct). X said it views this as just a timing difference as steel demand has remained strong and in November it was seeing higher daily order rates, longer lead times and improved pricing. Any updates on this will be important.
• On the labor front, X announced in mid-November the ratification of new 4-year labor deals with the United Steelworkers (USW). These agreements will cover 14,000 USW-represented employees and they go thru Sep 1, 2022.
• Tariffs have been a key topic in the steel industry generally in recent months, however, US Steel tends not to discuss them as much as some other steelmakers, most notably Nucor (NUE). However, these tariffs have helped US Steel secure some nice price increases last summer. So if they provide any color on this front, it'll be important.
• Finally, US Steel has seen its stock price trend lower in recent months, but it has staged a nice comeback over the past month or so heading into this Q4 report. Other steelmakers (NUE and STLD) have reported good earnings results this cycle. Hopefully, X will follow suit. Other names to watch include steel producers (AKS, CMC, GGB, MT, NUE, PKX, SCHN, STLD) and steel processors (ROCK, RS, RYI, WOR, ZEUS).