What happened

Shares of steel industry icon U.S. Steel (NYSE:X) stock are rushing out of the gate this morning, already up 12.1% as of 10:35 a.m. EDT.

Expected to earn only $0.17 per share heading into Q1 earnings, the company instead thrilled investors with a report that it actually earned $0.31 per share -- and $0.47 pro forma! Quarterly sales of $3.5 billion likewise exceeded analyst predictions of only $3.25 billion in sales.

Burning cash.

Image source: Getty Images.

So what

Q1 sales surged 11% higher year over year, and earnings per share tripled to the aforementioned $0.31. Reduced interest "and other financial costs" contributed to the big improvement in profits.

Also helping was a marked improvement in profitability at what CEO David Burritt called the company's "most critical flat-rolled steelmaking assets," where operating profits before interest and income tax nearly tripled to $95 million, helping to offset lower profit in the company's European steel division.

Now what

The news wasn't all good, though, and I'd urge investors to be at least a little cautious before joining today's buying frenzy. Improved efficiency appears to have helped U.S. Steel turn cash flow positive in Q1, with operating cash flow rolling in at $29 million. Capital spending, however, remains high and rising -- $302 million, and nearly 50% higher than what the company was spending a year ago.

This left the company with negative free cash flow for the quarter (i.e., U.S. Steel is "burning cash") -- just a little bit less cash than it burned in last year's Q1. Overall, despite reporting more than $1.1 billion in net "profits" over the past year, the company remains a free cash flow-negative business.

Caveat emptor.

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