RE:Fiscal 2023 Second Quarter Results November 7, 2022Not good Q2.
Summary from what I gather after a quick read:
- Bad Q2 - don't expect high margins and EBITDA as before for the next few quartes.
- Expect Q3 to be quite the same as Q2, perharps marginally better, unlikely to be worse IMO.
- Still remains profitable though despite downturn.
- Don't expect another repurchase program for the next few quarters/years (I was hoping they could announce something) -they are being cautious here and want to keep their cash safe.
- Steal price still low, but could have reached a bottom and they expect that it goes higher a little bit.
- Electric funrace on schedule, but no more news there (not sure if they moved the start date from mid-2024 to late-2024). I would not be suprised if they announce a delay at some point.
- Plate mill: "We meshed it up and this costs money, we are doing some damage control and the worst are behind us"
Guess EPS is a "weightened average" of the shares available through the quarter, so some before the auction and some afterwards, and there are also some warrants...
Bottom line: They are still profitable and is a company that can't go banckrupt, unless they manage to burn the whole facility down (they could achieve something like that though). I expect that North America steel demand will remain stable and they are in an advantageous position given where they are located. They will manage to get the plate mill working and upgraded in 2023, although they lost some milions in the meantime. They will complete the electric furnace in 2024, but I would not be suprised if there is also a delay there. So, if by 2024 world is not in a recession and steel price goes up, they will make tons of money because of increased production and all the upgrades they would have achieved in the meantime. If still in recession, probably they will still be managing and remain marginally profitable (which is still good given the circumstances). Union will have a contract still for further 2-3 years, so workforce is relatively stable.
In the meantime, the risk is they spill some oil here and there, burn something, delaying their biggest upgrade and not be in a position to produce steel when the price goes up, and a prolonged recession where steel will not be relevant anymore.
I am holding.