U.S. Steel’s Free Cash Flow in 2017
Free cash flows
Previously in this series, we looked at steel companies’ 4Q17 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization). In this part, we’ll look at their free cash flow profiles. You can define “free cash flow” as operating cash flows minus capital expenditure.
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- AK Steel (AKS) generated free cash flow of -$19 million in 4Q17. The company had generated negative free cash flow in 3Q17. However, thanks to the positive free cash flow of $147 million in 2Q17, AK Steel managed to generate positive free cash flow in fiscal 2017.
- U.S. Steel Corporation (X) reported free cash flow of $47 million in 4Q17. The company has posted positive free cash flows for three consecutive quarters. In fiscal 2017, U.S. Steel generated free cash flows of $297 million. Notably, U.S. Steel is investing ~$2 billion over the next few years to modernize its plants under its “asset revitalization plan.” Higher capital expenditure is expected to drag on U.S. Steel’s cash flows. However, the company has significant cash on its balance sheet to fund its asset revitalization plan.
- Nucor (NUE) posted free cash flows of $133 million in 4Q17, taking its 2017 cash flows to $603 million. Notably, Nucor has one of the strongest balance sheets in the steel industry, and it’s the only US steel producer to carry an investment-grade credit rating.
- Steel Dynamics (STLD) reported free cash flows of $155 million in 4Q17, compared to $183 million in 3Q17 and $132 million in 4Q16. ArcelorMittal (MT) posted free cash flow of $1.85 billion in 4Q17.
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