US Steel Reports First-Quarter Loss, Moves Closer to Nippon Deal

The steel giant provided an optimistic outlook for second-quarter earnings, largely due to facility sales and higher prices.

U.S. Steel's Mon Valley Works Clairton Plant in Clairton, Pa., on Feb. 26, 2024. Gene J. Puskar/AP Photo

Shares in U.S. Steel Corp. were up slightly in after-hours trading on May 1 as the iconic Pittsburgh-based steel producer moved closer to its $14.9 billion acquisition by Japan’s Nippon Steel.

After posting a net loss of $116 million for the first quarter, U.S. Steel did not hold a quarterly conference call with Wall Street analysts, citing its “pending transaction” with Nippon after renewed backing from the Trump administration for the blockbuster cross-Atlantic deal, first announced in late 2023.

“As previously announced, on Dec. 18, 2023, the company entered into a definitive merger agreement to be acquired by Nippon Steel Corp. In light of the pending transaction, the company will not hold an earnings conference call,” the company said in a statement.

In early January, former President Joe Biden issued an executive order blocking the Nippon deal, stating that it posed a threat to U.S. national security. In response, Nippon and U.S. Steel filed a joint federal lawsuit in the U.S. Court of Appeals for the District of Columbia, arguing that the Biden administration had violated due process and failed to properly review the deal.

But on March 14, the Department of Justice, with backing from President Donald Trump, filed a motion in the D.C. Circuit Court  to extend the briefing deadlines in litigation before the Committee on Foreign Investment in the United States (CFIUS), a Securities and Exchange Commission (SEC) filing shows.

Last week, the Pittsburgh steel maker released a proxy letter from its board of directors, acknowledging a new review of the deal from CFIUS. That April 22 filing also disclosed that the company had warded off an attempt by Cleveland wealth manager Ankora Holdings Group to abandon the Nippon deal and overhaul the company’s leadership and board.

That letter also reiterated the U.S. Steel leadership’s earlier stance in response to the Ankora proxy fight, stating that Nippon’s $55 per share cash offer represented the company’s best chance to remain competitive, deliver value to shareholders, and keep the U.S. Steel brand alive.

“We remain confident that our partnership with Nippon Steel is the best deal for American steel, American jobs, American communities and American supply chains,” the U.S. Steel board stated.

“With Nippon Steel, U. S. Steel remains an American company and its headquarters will stay in Pittsburgh, its iconic name will not change, and its products will remain mined, melted and made in America.”

According to the acquisition agreement, if regulators block the deal or Nippon withdraws, it must pay the American steel producer a $565 million break-up fee.

J.P. Morgan analyst Bill Peterson told The Epoch Times that Wall Street can’t get a good read on the company’s operations and first-quarter results because of its communications blackout.

“We’ll want to see progress on Big River 2 ramp-up, albeit commentary will be limited with a [news] release only given the pending Nippon deal,” said Peterson, who reiterated a “neutral” rating and lowered U.S. Steel’s yearly price target from $43 to $38 on April 16.

In its earnings report released after market close on May 1, U.S. Steel reported losses of $116 million, or 52 cents per share, compared with earnings of $171 million, or 68 cents per share, in the first quarter of 2024.  Revenues were down 9.7 percent to $3.7 billion, compared with $4.1 billion a year ago. According to FactSet’s consensus estimates, the Pennsylvania steel giant was expected to report a loss per share  of 35 cents on revenue of $3.54 billion for the quarter.

In a statement highlighting the first-quarter results, U.S. Steel CEO David Burritt said the company recorded its highest number of shipments from its Big River Steel 2 (BR2) facility in northeast Arkansas, which is ramping toward full capacity later this year. He said the company now expects second-quarter earnings to be between $375 million and $425 million, largely due to BR2 sales and higher steel prices.

“We are pleased to see shipments from BR2 continue to rise, with customers praising product quality, especially related to our industry-leading ultra-light gauge hot roll, a first in North America, including for the U.S. commercial construction industry,” he said.

If U.S. regulators approve the U.S. Steel deal, Nippon has said it will close the company’s older mills and shift most of its U.S. production to northeast Arkansas, where U.S. Steel operates the mammoth Big River Steel complex on a 1,400-acre site near the Mississippi River.

In the first quarter, Burritt said the company’s $4 billion Big River 2 facility is expected to boost earnings in the second half of 2025 and 2026. The new mini mill will have an annual capacity of 3 million metric tons of steel and specialize in light and wide gauge steel products primarily for the U.S. and European automotive industry.

U.S. steel prices have spiked nearly 32 percent since January, reaching as high as $960 per ton in March due to higher domestic demand and tariffs. However, the price of hot-rolled coil averaged $865 per ton in April, down slightly from $901 per ton in the previous month.

In the after-hours session, U.S. Steel shares fell 1.01 percent at $43.02 on the New York Stock Exchange. The stock closed at $43.46, down 0.57 percent, during the May 1 trading session. For the year, the Pittsburgh steel producer’s shares have gained 27.8 percent, up 22 percent in the past month. Correction: A previous version of this article incorrectly stated that U.S. Steel canceled a quarterly conference call. The Epoch Times regrets the error.