TheChek News Flow

Reports Q4 (Dec) earnings of $0.27 per share, excluding non-recurring items, $0.52 better than the Capital IQ Consensus Estimate of ($0.25); revenues fell 4.9% year/year to $4.27 bln vs the $4.36 bln consensus. Q4 results exclude after-tax non-cash restructuring and other charges primarily related to the shut down of the iron and steelmaking facilities at Hamilton Works of $302 million, or $2.09 per diluted share, and a favorable tax-related item of $142 million, or $0.98 per diluted share.

Reportable Segments and Other Businesses

• Fourth quarter results for co's Flat-rolled segment were comparable to the third quarter. Average spot and market-based contract prices were higher in the fourth quarter; however, a higher percentage of hot rolled shipments resulted in average realized prices that were comparable to the third quarter. A decrease in raw materials and other costs were offset by an increase of approximately $45 million for facility repairs and maintenance costs due primarily to a blast furnace reline at Gary Works and a planned blast furnace maintenance project at Fairfield Works.
• Results for co's European segment improved in the fourth quarter and returned to profitability due to higher shipments and lower facility repairs and maintenance costs as a blast furnace outage was completed in the third quarter. Average realized euro-based prices for the majority of co's products remained relatively unchanged in the fourth quarter; however, overall average realized prices in the fourth quarter declined compared to the third quarter due to a higher level of hot-rolled shipments.
• Fourth quarter results for co's Tubular segment decreased compared to the third quarter due primarily to lower shipments and average realized prices as end users decreased drilling activity in order to operate within their 2013 capital budgets and imports persisted at high levels for which a trade case is pending. Inventory management by co's customers was also a factor as we approached year-end.

Outlook

• Co expects first quarter results for co's Flat-rolled segment to increase primarily due to higher average realized prices and shipments as well as reduced repairs and maintenance costs.
  • Average realized prices and shipments are expected to increase as a result of higher contract and spot market prices and improving end user demand after the fourth quarter holiday down time.
  • Repairs and maintenance costs are projected to decrease as compared to the fourth quarter due to the completion of the projects at Gary Works and Fairfield Works.
  • Co will also have reduced idled facility costs after the shut down of the iron and steelmaking facilities at Hamilton Works.
  • Raw materials costs, primarily for purchased scrap, and energy costs are expected to increase.
• Co expects first quarter results for co's European segment to be comparable to the fourth quarter as the benefits of increased average realized prices are offset by an increase in raw materials costs, primarily for iron ore, and other operating costs.
  • Average realized prices are expected to increase compared to the fourth quarter due to a more favorable product mix and an anticipated gradual recovery in the spot market while shipments are expected to remain comparable.
• First quarter results for co's Tubular segment are expected to decrease as the benefits of reduced operating costs and increased shipments are more than offset by a decrease in average realized prices and an increase in substrate costs.
  • Average realized prices are projected to decrease primarily due to pricing pressures from continuing high import levels and increased domestic supply.
  • Shipments are expected to increase as drilling activity begins to improve.