NEW YORK, NY / ACCESSWIRE / June 20, 2017 / Pomerantz LLP announces that a class action lawsuit has been filed against United States Steel Corporation ("U.S. Steel" or the "Company") (NYSE: X) and certain of its officers. The class action, filed in United States District Court, Western District of Pennsylvania, is on behalf of a class consisting of investors who purchased or otherwise acquired U.S. Steel securities, seeking to recover compensable damages caused by defendants' violations of the Securities Exchange Act of 1934.
If you are a shareholder who purchased U.S. Steel securities between November 1, 2016 and April 25, 2017, both dates inclusive, you have until July 3, 2017 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
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U.S. Steel is an integrated steel producer of flat-rolled and tubular products with major production operations in North America and Europe.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) while the Company was implementing its Carnegie Way program, it was focused on cutting costs and was not making investments necessary to position U.S. Steel so that it could respond to improved market conditions; (ii) Defendants' failure to invest in improving capital assets during the industry downturn, in order to report apparent financial improvements, meant that U.S. Steel had higher production costs than its competitors, even in the face of improved pricing, which would negatively impact its financial results; and (iii) Defendants were forestalling expensive capital equipment upgrades in order to boost the Company's short-term financial results at the expense of long-term financial performance, leaving U.S. Steel in need of accelerated, costly equipment upgrades that would leave the Company years away from generating improved financial performance; and (iv) as a result of the foregoing, U.S. Steel's public statements were materially false and misleading at all relevant times.
During the Class Period, steel market conditions improved substantially. Indeed, in the first quarter of 2017, the average price of U.S. hot-rolled steel coil, a benchmark product used in a variety of products ranging from bridges to microwaves, rose 55% from a year earlier, helped by successful U.S. trade cases against foreign imports. By all accounts, U.S. Steel appeared primed to pounce on the domestic steel market turnaround.
After the market closed on April 25, 2017, however, the Company reported what analysts labeled "hard-to-fathom" and "abysmal" financial results, as U.S. Steel revealed shortcomings that, according to Bloomberg, "choked earnings even as prices of the metal surged." Specifically, the Company reported a net loss of $180 million, or negative $1.03 per diluted share, and adjusted earnings before interest, tax, depreciation, and amortization ("EBITDA") of $74 million. The Company's earnings release revealed negative operating cash flow of $135 million, a significant decline in the Company's Flat-Rolled segment, and a reduced 2017 outlook that widely missed analyst expectations, including a 35% reduction to 2017 EBITDA guidance. 2017 guidance was worse at the earnings level, where guidance was cut 50% from $3.08 per share to $1.50. The $1.50 earnings per share ("EPS"), however, included the benefit of an accounting change that cut $175 million from operating costs. Factoring that positive accounting change out of the mix, the Company's adjusted EPS guidance was closer to $0.85, a cut of approximately 72%. The Company also eliminated language about being "cash positive" for the year.
The Company's earnings release quoted Chief Executive Officer ("CEO"), Mario Longhi ("Longhi"), as stating, in part, that "operating challenges at our Flat-Rolled facilities prevented us from benefiting fully from improved market conditions." Longhi also added that U.S. Steel would "not let favorable near-term business conditions distract us from taking the outages we need to revitalize our assets in order to achieve more reliable and consistent operations, improve quality and cost performance, and generate more consistent financial results." He also added that U.S. Steel "made the strategic decision to accelerate [its] efforts to resolve the issues that challenge our ability to achieve sustainable long-term profitability." During a conference call before the market opened on April 26, 2017, Longhi stated that in 2017 the Company would "be taking more downtime at our facilities, which will limit our steel production volumes."
On this news, U.S. Steel's share price fell $8.33, or 26.78%, to close at $22.78 on April 26, 2017.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
SOURCE: Pomerantz LLP
