Consumer confidence surged in February, with the Conference Board reading rising from 61.5 in January to 70.8, exceeding not only the forecast level of 63 from the median of the Bloomberg survey of 77 economists, but surpassing even the most optimistic forecast in the group, which ranged from 58-67.6.

Both components of the Index contributed to this overall increase with the Present Situation Index rising from 38.8 to 45, while the Expectations Index climbed from 76.7 to 88.

Highlights of each individual index follow.

Present Situation Index

The percentage of consumers rating current business conditions as “bad” decreased 18.5% during the past month, from 38.3% to 31.2%. The percentage of consumers rating current business conditions as “good” fractionally rose from 13.2% to 13.3%. Slightly more consumers now think jobs are easy to get, as the percentage of consumers finding jobs “plentiful” rose from 6.2% to 6.6%. The percentage finding jobs “hard to get” changed more dramatically, falling 11% from 43.3% to 38.7%.

Expectations Index

Consumer optimism about economic conditions in the next six months improved in February as compared to January. The percentage of consumers expecting business conditions to get worse in the next six months dropped 19%, from 14.6% to 11.8%, while the percentage of consumers expecting an improvement in business conditions in the next six months increased 12%, from 16.7% to 18.7%.

In the area of employment, 16.9% of consumers now expect fewer jobs in the next six months, down 11.5% from 19.1% in January. Meanwhile, 18.7% of consumers expect more jobs in the next six months, up 14% from 16.4% the prior month.

The proportion of consumers expecting an increase in their incomes improved roughly 12%, to 15.4% from 13.8% in January.

Source: The Conference Board, Bloomberg News

New Report Preview

Graftech International (GTI)’s adjusted 4Q EBITDA of $75M missed the Street’s outlook of $84.9M.  Guidance for 2012 fell 30-40% short of consensus causing the shares to drop sharply on Thursday and Friday of last week and sent a chill through the steel sector, as some read the lowered guidance as commentary on the steel outlook for 2012.

We suspect that the shortfall was due to some over-optimism from the company.

Our full report is available to subscribers only and provides further thoughts on Graftech’s 4Q earnings report and conference call as well as the implication for the stock and other equities.

For a free trial subscription, please contact us.

New Report Preview

Vallourec (VK) reported 4Q EBITDA of €254 million, beating the Street’s estimate of €233 million with 4Q EBITDA margins at 16.4%.  First quarter results could be weaker on seasonal impact together with softness in Europe and Brazil’s non-oil and gas activities.

However, the company expects sales to increase 10% in 2012 driven by continued strength in oil and gas operations and the price increases achieved in 2011, but EBITDA margins are likely to decline versus 2011 as start-up costs from new mills in the US and Brazil hurt results.

The company said the new 500,000 tpy OCTG mill in Youngstown, OH is near completion with commercial production expected to start in the summer.  VK aims for a “rapid” ramp-up of the facility to meet growing OCTG demand related to nearby shale plays.

For a free trial subscription, please contact us.

Weekly domestic raw steel production decreased 0.6% to 1.930 million tons (mt) for the week ending February 25, 2012, but is up 4.8% from the year-ago level.  The highest production since the recession began was 1.945 mt on December 17, 2011, while the lowest was 0.8 mt on December 27, 2008.

The capacity utilization rate declined from 78.6% last week to 78.1% this week, but is still above the 75.3% rate recorded a year ago. The highest capacity utilization since the recession began was last week’s 78.6%, while the lowest was 33.5% on December 27, 2008.

Note: AISI weekly production data only includes real-time input from 50% of producing members; the remainder of the data is a guesstimate based on each company’s prior-month production and therefore the weekly AISI data lags when there are production cuts or increases going on.

Source: AISI and Steel Market Intelligence

The number of active oil and natural gas rigs in the United States fell 0.7% to 1,981 for the week ending February 24, 2012, hitting the lowest count since September 10, 2011.  However, the rig count is up 16.6% from the year-ago level.

The highest weekly rig count in the United States since 1940 was recorded on December 28, 1981, at 4,530; the lowest was recorded on April 23, 1999, at 488.

The number of rigs in Canada this week decreased 0.6% from 705 last week to 701, but was 12.5% higher than last year.

The highest rig count for Canada was 727 on February 3, 2006; the lowest was 29, recorded on April 24, 1992.

Source: Baker Hughes Inc.

New Report Preview

Gibraltar Industries (ROCK) recorded a loss of $(0.22)/share in 4Q, which adjusted to a loss of $(0.17) excluding acquisition-related and exit activity costs, below the Street’s $0.03/share as an increase in expense for equity-based compensation, caused by a spike in ROCK’s stock price in 4Q, contributed to the surprise.

Management expressed optimism that the residential construction market was finally starting to turn around and noted that recent Architectural Billings Index (ABI) readings indicate the nonresidential construction market may have bottomed and might improve “modestly” in 2012.

Our full report is available to subscribers only and provides further thoughts on Gibraltar’s 4Q earnings report and conference call as well as the implication for the stock and other equities.

For a free trial subscription, please contact us.

New Report Preview

Ternium S.A. (TX) reported 4Q EBITDA of $369.6m, beating the Street’s forecast of $346.3m and 4Q 2010 EBITDA of $237m but down 18% sequentially.

Guidance is for operating income to decrease sequentially in 1Q mainly because of higher costs owing to exchange rate changes and higher cost slabs flowing through inventory. Shipments are expected to be stable, with stronger shipments in Mexico in 1Q as North American demand improves offsetting a seasonally slower period in Argentina.

Management noted that it will have more details about the company’s Usiminas investment in March.

Our full report is available to subscribers only and provides further thoughts on Ternium’s 4Q earnings report and conference call as well as the implication for the stock and other equities.

For a free trial subscription, please contact us.

New Report Preview

Tenaris (TS) reported 4Q EBITDA of $709.6m, ahead of the Street’s $690.3m and 3Q’s $620.3m, and up 38% from year-ago.  EBITDA margins improved in 4Q as higher volumes led to greater fixed-cost absorption.

Guidance for 1Q was for lower sales and operating income due to seasonal maintenance outages and lower shipments in the Projects segment, although management expects both sales and operating income for full-year 2012 to rise versus 2012 due to in part to an improved product mix.  The company expects 2012 sales of tubular products for demanding applications to grow faster than for standard products as customers undertake investments in more difficult operating conditions.

Our full report is available to subscribers only and provides further thoughts on Tenaris’ 4Q earnings report and conference call as well as the implication for the stock and other equities.

For a free trial subscription, please contact us.

New Report Preview

L.B. Foster (FSTR) reported adjusted 4Q earnings of $0.62/share, missing the Street’s $0.67/share, as the company’s construction products business saw a sharp drop in 4Q sales.

While the company’s visibility into 2012 is limited for construction markets due to the lack of a new transportation bill, management believes that the non-res construction market has bottomed.  The outlook for the rail segment is brighter due to strong capex spending budgets from North American class 1 railroads in 2012 as well as increased rail traffic.  The company also expects continued growth in its tubular business in 2012.

Our full report is available to subscribers only and provides further thoughts on L.B. Foster’s 4Q earnings report and conference call as well as the implication for the stock and other equities.

For a free trial subscription, please contact us.