This article is part of a Real Money series on 20 distressed companies investors should consider adding to their distressed watch list.
As Real Money reported, investors should be keeping their eye on the big U.S. steelmakers that have been hammered by low prices, cheaper imports and waning demand from energy customers.
The crisis came to a head on Wednesday, as three members of Real Money's distressed watch list plummeted on weak earnings and deteriorating market conditions.
The first is U.S. Steel (X), which dropped 13% in afternoon trading after booking a loss of roughly $33 million in the fourth quarter.
The Pittsburgh-based producer has been plummeting in the market after repeatedly posting losses and sitting under a massive debt load, although CFO David Burritt maintains the company has adequate liquidity to pay off debt and turn things around.
But shareholders Wednesday seem to disagree.
"We're still in great cash position, paying off $300 million worth of debt, and we still got $2.4 billion worth of liquidity," Burritt said on Wednesday's earnings call. "So we feel extraordinarily comfortable where we are today. But living in this paranoid world of steel, we certainly have to adapt whatever's there."
But how exactly U.S. Steel plans to reverse a sustained drought in profits was left unclear.
"We're not going to tell you what the next steps are," Burritt said. "But you can understand that we're on it, and we got it."
AK Steel (AKS) was down 4.5% in mid-day trading despite beating earnings yesterday, as investors appear to be losing faith in the West Chester, Ohio-based steelmaker's ability to escape from a mounting debt-to-earnings ratio, as Real Money reported.
The last stressed-out producer is TimkenSteel (TMST), whose shares have tanked roughly 85% over the past 12 months. But in mid-day trading Wednesday, the Canton, Ohio-based producer was trading up 1%.
Shareholders appear confident the market will see an earnings beat when TimkenSteel posts earnings tomorrow, despite the company's nearly 8x leverage ratio (based on its total debt and the trailing four quarters of EBITDA).
U.S. Steel, AK Steel and TimkenSteel are all members of Real Money's index of 20 distressed companies investors should have on their watch list.
For more on Real Money's 20 distressed companies to watch:
Stressed Out: Introducing Real Money's Distressed Watch List
Stressed Out: Is Avon Using Vanishing Cream on Its Cash?
Stressed Out: Sprint Is Collapsing Under the Weight of Its High-Yield Debt
