Metals USA (MUSA) – Profitability and Demand Trending Higher in 1Q – Thoughts from the 4Q Conference Call

January 31, 2012 Posted by Steel Market Intelligence

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Metals USA reported 4Q earnings of $0.37/share, which adjusted to $0.33/share after non-recurring items, in line with the Street’s $0.32.

Guidance was qualitative with the company pointing to a more profitable 1Q compared to 4Q, and an “incrementally” more profitable 2Q versus 1Q.  Management said the “typical seasonality of the business is back” which is expected to lead to better demand in 1Q, although MUSA noted that the lagging impact of the company’s contract pricing mechanisms will hurt 1Q results but help in 2Q.

We’d note that the “typical seasonality” was actually never gone, but while demand has been fairly normal seasonally, it’s been supply – import/export balance and restarts – that has had as much impact on volume and pricing as end-demand at current ongoing low operating rates.

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