US Steel today provided second quarter 2020 guidance and an update on its latest liquidity requirements for the remainder of the year. Second quarter 2020 adjusted EBITDA is expected to be a loss of approximately $315 million, which excludes approximately $100 million of estimated restructuring and other charges. The company expects second quarter 2020 adjusted diluted loss per share to be approximately $3.06.
“As expected, the second quarter is being significantly impacted by the effects of COVID-19 and the expected nonrecurring costs associated with a significant portion of our steelmaking operations being idled in the quarter. As we mentioned on our first quarter earnings call, we expect the second quarter to mark the trough for the year,” commented US Steel President and Chief Executive Officer David B. Burritt. “At the onset of the pandemic, we took swift and meaningful action in response to stay-at-home orders, original equipment manufacturer (OEM) closures and reduced customer demand. While the second quarter has been challenging, our optimism continues to grow as OEM restarts are progressing well and customer demand has started to return.”
In a press release, the company said its flat-rolled segment results are expected to be significantly lower than the first quarter as the impacts from COVID-19 negatively impacted customer activity, particularly in the automotive and energy end-markets. US Steel said second quarter customer activity is expected to mark the trough for the year as demand is beginning to improve in June.
In the tubular division, the company said market conditions remain challenged. Rig counts continue to decline, and oil prices remain at historically low levels. As a result, demand for welded and seamless pipe has significantly declined. The company said it is “focused on what it can control” and has indefinitely idled the Lone Star and Lorain facilities and consolidated tubular production to the Fairfield seamless mill. The company said it is continuing to identify ways to cut costs within the segment, including the cost reduction expected by in-sourcing rounds production to a new electric arc furnace, which is scheduled to begin production in the second half of 2020.