United States Steel Corporation (NYSE:X) reported first quarter
2018 net earnings of $18 million, or $0.10 per diluted share.
Adjusted net earnings were $57 million, or $0.32 per diluted
share. This compares to a first quarter 2017 net loss of $180
million, or $1.03 per diluted share. Adjusted net loss for
first quarter 2017 was $145 million, or $0.83 per diluted share.
Earnings
Highlights |
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
March 31, |
(Dollars
in millions, except per share amounts) |
|
2018 |
2017 |
Net Sales |
|
$ |
3,149 |
|
$ |
2,725 |
|
|
|
|
|
|
|
|
|
Segment earnings (loss) before interest and income
taxes |
|
|
|
|
|
|
|
Flat-Rolled |
|
$ |
33 |
|
$ |
(88 |
) |
U. S. Steel Europe |
|
|
110 |
|
|
87 |
|
Tubular |
|
|
(27 |
) |
|
(57 |
) |
Other Businesses |
|
|
11 |
|
|
13 |
|
Total segment earnings (loss) before interest and income
taxes |
|
$ |
127 |
|
$ |
(45 |
) |
Other items not allocated to segments |
|
|
10 |
|
|
(35 |
) |
Earnings (loss) before interest and income
taxes |
|
$ |
137 |
|
$ |
(80 |
) |
Net interest and other financial costs |
|
|
118 |
|
|
81 |
|
Income tax provision |
|
|
1 |
|
|
19 |
|
Net earnings (loss) |
|
$ |
18 |
|
$ |
(180 |
) |
Earnings (loss) per diluted share |
|
$ |
0.10 |
|
$ |
(1.03 |
) |
|
Adjusted net earnings (loss)
(a) |
|
$ |
57 |
|
$ |
(145 |
) |
Adjusted earnings (loss) per diluted share
(a) |
|
$ |
0.32 |
|
$ |
(0.83 |
) |
Adjusted earnings before interest, income taxes,
depreciation and amortization (EBITDA)
(a) |
|
$ |
255 |
|
$ |
92 |
|
(a) Please refer to the non-GAAP Financial Measures section of
this document for the reconciliation of these amounts.
Commenting on U. S. Steel's results, President and Chief
Executive Officer David B. Burritt said, "Our performance was
significantly better than the first quarter of 2017, with improved
results for all three of our reportable segments enabling four
consecutive quarters of more predictable EBITDA. In spite of
operational issues related to weather and ongoing challenges with
assets not yet revitalized, the first quarter of 2018 was in line
with our expectations. During the first quarter, we also continued
to improve our risk profile and strengthen our balance sheet
through the successful completion of a $650 million senior
unsecured notes offering, and the subsequent repayment of $780
million of our senior secured notes, with the repayment of the
final $281 million being completed on April 12."
The improving strength of our balance sheet and total liquidity
supports the continued implementation of our asset revitalization
program in our Flat-Rolled segment, as well as increasing
investment in our European and Tubular businesses. Our net debt was
approximately $1.5 billion as of March 31, 2018, a decrease of over
$225 million from the same period last year. We maintain strong
cash and liquidity.
2018 Guidance
Commenting on U. S. Steel’s guidance for 2018,
Burritt said, "We are beginning the second year of our asset
revitalization program, and we are already seeing benefits from the
investments in our assets. It is prudent for us to anticipate the
possibility of continued operational volatility for those assets
yet to be revitalized. We remain focused on managing operating
volatility to ensure we take care of our customers, and the restart
of steelmaking at Granite City will increase our ability to do so.
While there is uncertainty about how country exemption and product
exclusion requests related to Section 232 will be resolved, we
continue to invest in revitalizing our assets and developing
innovative customer solutions. We are confident we will deliver our
2020 performance objectives."
Currently, we are experiencing operational
challenges at our steelmaking facility at Great Lakes Works that we
expect will have an unfavorable EBITDA impact of approximately $30
million on second quarter results. We currently believe that second
quarter 2018 adjusted EBITDA will be approximately $400 million,
and full-year 2018 adjusted EBITDA will be approximately $1.7 -
$1.8 billion.
The Company will conduct a conference call on
first quarter 2018 earnings on Friday, April 27, at 8:30 a.m.
Eastern Daylight. To listen to the webcast of the conference
call and to access the company's slide presentation and prepared
remarks, visit the U. S. Steel website, www.ussteel.com,
and click on the “Investors” section. Replays of the conference
call will be available on the website after 10:30 a.m. on April
27.
Please refer to the non-GAAP Financial Measures
section of this document for the reconciliation of Guidance net
earnings to consolidated Guidance adjusted EBITDA.
UNITED STATES STEEL CORPORATION |
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
|
March 31, |
|
|
|
|
2018 |
|
2017 |
OPERATING
STATISTICS |
|
|
|
|
Average
realized price: (a) |
|
|
|
|
|
Flat-Rolled
($/net ton) |
740 |
|
|
719 |
|
|
|
U. S. Steel
Europe ($/net ton) |
707 |
|
|
594 |
|
|
|
U. S. Steel Europe (euro/net ton) |
575 |
|
|
558 |
|
|
|
Tubular
($/net ton) |
1,387 |
|
|
1,097 |
|
|
Steel
Shipments (thousands of net tons): (a) |
|
|
|
|
|
|
|
Flat-Rolled |
2,534 |
|
|
2,404 |
|
|
|
U. S. Steel
Europe |
1,127 |
|
|
1,109 |
|
|
|
Tubular |
179 |
|
|
144 |
|
|
|
|
Total Steel
Shipments |
3,840 |
|
|
3,657 |
|
|
|
|
|
|
|
|
|
Intersegment Shipments (thousands of net tons): |
|
|
|
|
|
Flat-Rolled
to Tubular |
67 |
|
|
— |
|
|
|
U. S. Steel
Europe to Flat-Rolled |
— |
|
|
22 |
|
|
Raw Steel
Production (thousands of net tons): |
|
|
|
|
|
Flat-Rolled |
2,784 |
|
|
2,714 |
|
|
|
U. S. Steel
Europe |
1,292 |
|
|
1,258 |
|
|
Raw Steel
Capability Utilization: (b) |
|
|
|
|
|
Flat-Rolled |
66 |
% |
|
65 |
% |
|
|
U. S. Steel
Europe |
105 |
% |
|
102 |
% |
|
|
|
|
|
|
|
CAPITAL EXPENDITURES |
|
|
|
|
Flat-Rolled |
$ |
176 |
|
|
$ |
25 |
|
|
U. S. Steel
Europe |
21 |
|
|
14 |
|
|
Tubular |
11 |
|
|
7 |
|
|
Other
Businesses |
— |
|
|
1 |
|
|
|
|
|
|
|
Total |
$ |
208 |
|
|
$ |
47 |
|
(a) Excludes intersegment
shipments. (b) Based on annual raw steel production capability
of 17.0 million net tons for Flat-Rolled and 5.0 million net tons
for U. S. Steel Europe.
UNITED STATES STEEL CORPORATION |
STATEMENT OF OPERATIONS (Unaudited) |
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
March 31, |
(Dollars in millions, except per share amounts) |
2018 |
|
2017 |
NET
SALES |
|
$ |
3,149 |
|
|
$ |
2,725 |
|
|
|
|
|
|
|
OPERATING
EXPENSES (INCOME): |
|
|
|
|
Cost of
sales (excludes items shown below) |
2,808 |
|
|
2,559 |
|
|
Selling,
general and administrative expenses |
78 |
|
|
81 |
|
|
Depreciation, depletion and amortization |
128 |
|
|
137 |
|
|
Earnings
from investees |
(3 |
) |
|
(4 |
) |
|
Restructuring and other charges |
— |
|
|
33 |
|
|
Net loss
(gain) on disposal of assets |
1 |
|
|
(1 |
) |
|
|
|
|
|
|
|
Total operating expenses |
3,012 |
|
|
2,805 |
|
|
|
|
|
|
|
EARNINGS
(LOSS) BEFORE INTEREST AND INCOME TAXES |
137 |
|
|
(80 |
) |
Net
interest and other financial costs (a) |
118 |
|
|
81 |
|
|
EARNINGS
(LOSS) BEFORE INCOME TAXES |
19 |
|
|
(161 |
) |
Income tax
provision |
1 |
|
|
19 |
|
Net
earnings (loss) |
18 |
|
|
(180 |
) |
|
Less: Net
earnings (loss) attributable to |
|
|
|
|
noncontrolling interests |
— |
|
|
— |
|
NET
EARNINGS (LOSS) ATTRIBUTABLE TO |
|
|
|
|
UNITED
STATES STEEL CORPORATION |
$ |
18 |
|
|
$ |
(180 |
) |
|
|
|
|
|
|
COMMON
STOCK DATA: |
|
|
|
|
|
|
|
|
|
Net
earnings (loss) per share attributable to |
|
|
|
United States Steel Corporation stockholders: |
|
|
|
|
Basic |
|
$ |
0.10 |
|
|
$ |
(1.03 |
) |
|
Diluted |
|
$ |
0.10 |
|
|
$ |
(1.03 |
) |
Weighted
average shares, in thousands |
|
|
|
|
Basic |
|
176,157 |
|
|
174,242 |
|
|
Diluted |
|
178,289 |
|
|
174,242 |
|
Dividends paid per common share |
$ |
0.05 |
|
|
$ |
0.05 |
|
(a) Includes $17 million and $18 million for the
three months ended March 31, 2018 and 2017, respectively, of
postretirement benefit expense (other than service cost) related to
the retrospective presentation change of net periodic benefit cost
of our defined benefit pension and other post-employment benefits
as a result of the adoption of Accounting Standards Update 2017-07,
Compensation - Retirement Benefits on January 1, 2018.
UNITED STATES STEEL CORPORATION |
CASH FLOW STATEMENT (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
|
March 31, |
(Dollars in millions) |
|
2018 |
|
2017 |
Cash
provided by (used in) operating activities: |
|
|
|
|
Net
earnings (loss) |
|
$ |
18 |
|
|
$ |
(180 |
) |
|
Depreciation, depletion and amortization |
128 |
|
|
137 |
|
|
Restructuring and other charges |
— |
|
|
33 |
|
|
Loss on
debt extinguishment |
46 |
|
|
— |
|
|
Pensions
and other postretirement benefits |
22 |
|
|
14 |
|
|
Deferred
income taxes |
— |
|
|
2 |
|
|
Net loss
(gain) on disposal of assets |
1 |
|
|
(1 |
) |
|
Working
capital changes |
(269 |
) |
|
(170 |
) |
|
Income
taxes receivable/payable |
(8 |
) |
|
15 |
|
|
Other
operating activities |
(37 |
) |
|
15 |
|
|
|
Total |
|
(99 |
) |
|
(135 |
) |
|
|
|
|
|
|
|
Cash used
in investing activities: |
|
|
|
|
Capital
expenditures |
|
(208 |
) |
|
(47 |
) |
|
Other
investing activities |
|
— |
|
|
(1 |
) |
|
|
Total |
|
(208 |
) |
|
(48 |
) |
|
|
|
|
|
|
|
Cash
provided by (used in) financing activities: |
|
|
|
|
Issuance of
long-term debt, net of financing costs |
640 |
|
|
— |
|
|
Repayment
of long-term debt |
|
(538 |
) |
|
— |
|
|
Receipts
from exercise of stock options |
30 |
|
|
12 |
|
|
Dividends
paid |
|
(9 |
) |
|
(9 |
) |
|
Taxes paid
for equity compensation plans |
(6 |
) |
|
(7 |
) |
|
|
Total |
|
117 |
|
|
(4 |
) |
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash |
10 |
|
|
1 |
|
|
|
|
|
|
|
|
Net
decrease in cash, cash equivalents and restricted cash |
(180 |
) |
|
(186 |
) |
Cash, cash
equivalents and restricted cash at beginning of the year (a) |
1,597 |
|
|
1,555 |
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of
the period (a) |
$ |
1,417 |
|
|
$ |
1,369 |
|
(a) Includes restricted cash in the
beginning-of-period and end-of-period amounts as a result of the
retrospective adoption of Accounting Standards Update 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash on January 1,
2018.
UNITED STATES STEEL CORPORATION |
CONDENSED BALANCE SHEET (Unaudited) |
|
|
|
|
|
|
|
|
|
March 31 |
|
Dec. 31 |
(Dollars in millions) |
|
2018 |
|
2017 |
Cash and
cash equivalents |
$ |
1,372 |
|
|
$ |
1,553 |
|
Receivables, net |
1,566 |
|
|
1,379 |
|
Inventories |
1,824 |
|
|
1,738 |
|
Other
current assets |
68 |
|
|
85 |
|
|
Total current assets |
4,830 |
|
|
4,755 |
|
Property,
plant and equipment, net |
4,357 |
|
|
4,280 |
|
Investments
and long-term receivables, net |
491 |
|
|
480 |
|
Intangible
assets, net |
165 |
|
|
167 |
|
Other
assets |
183 |
|
|
180 |
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
10,026 |
|
|
$ |
9,862 |
|
|
|
|
|
|
|
Accounts
payable and other accrued liabilities |
$ |
2,174 |
|
|
$ |
2,170 |
|
Payroll and
benefits payable |
326 |
|
|
347 |
|
Short-term
debt and current maturities of long-term debt |
281 |
|
|
3 |
|
Other
current liabilities |
178 |
|
|
201 |
|
|
Total current liabilities |
2,959 |
|
|
2,721 |
|
Long-term
debt, less unamortized discount and debt issuance costs |
2,571 |
|
|
2,700 |
|
Employee
benefits |
728 |
|
|
759 |
|
Other
long-term liabilities |
329 |
|
|
361 |
|
United
States Steel Corporation stockholders' equity |
3,438 |
|
|
3,320 |
|
Noncontrolling interests |
1 |
|
|
1 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
10,026 |
|
|
$ |
9,862 |
|
UNITED STATES STEEL CORPORATION |
|
NON-GAAP FINANCIAL MEASURES |
RECONCILIATION OF ADJUSTED EBITDA |
|
|
|
|
|
|
|
Quarter Ended |
|
|
March 31, |
(Dollars in millions) |
2018 |
|
2017 |
Reconciliation to Adjusted EBITDA |
|
|
|
|
Net earnings (loss)
attributable to United States Steel Corporation |
$ |
18 |
|
|
$ |
(180 |
) |
|
Income tax
provision |
1 |
|
|
19 |
|
|
Net interest and other
financial costs |
118 |
|
|
81 |
|
|
Depreciation, depletion
and amortization expense |
128 |
|
|
137 |
|
|
EBITDA |
265 |
|
|
57 |
|
|
Granite City Works
adjustment to temporary idling charges |
(10 |
) |
|
— |
|
|
Loss on shutdown of
certain tubular pipe mill assets |
— |
|
|
35 |
|
|
Adjusted
EBITDA |
$ |
255 |
|
|
$ |
92 |
|
UNITED STATES STEEL CORPORATION |
|
NON-GAAP FINANCIAL MEASURES |
RECONCILIATION OF ADJUSTED NET EARNINGS (LOSS) |
|
|
|
|
|
|
|
Quarter Ended(a) |
|
|
March 31, |
(Dollars in millions, except per share amounts) |
2018 |
|
2017 |
Reconciliation to adjusted net earnings (loss) attributable
to United States Steel Corporation |
|
|
|
|
Net earnings (loss)
attributable to United States Steel Corporation |
$ |
18 |
|
|
$ |
(180 |
) |
|
Granite City Works
adjustment to temporary idling charges |
(10 |
) |
|
— |
|
|
Loss on debt
extinguishment and other related costs |
49 |
|
|
— |
|
|
Loss on shutdown of
certain tubular pipe mill assets |
— |
|
|
35 |
|
|
Total
adjustments |
39 |
|
|
35 |
|
|
Adjusted net earnings
(loss) attributable to United States Steel Corporation |
$ |
57 |
|
|
$ |
(145 |
) |
|
|
|
|
|
Reconciliation to adjusted diluted net earnings (loss) per
share |
|
|
|
|
Diluted net earnings
(loss) per share |
$ |
0.10 |
|
|
$ |
(1.03 |
) |
|
Granite City Works
adjustment to temporary idling charges |
(0.05 |
) |
|
— |
|
|
Loss on debt
extinguishment and other related costs |
0.27 |
|
|
— |
|
|
Loss on shutdown of
certain tubular pipe mill assets |
— |
|
|
0.20 |
|
|
Total
adjustments |
0.22 |
|
|
0.20 |
|
|
Adjusted
diluted net earnings (loss) per share |
$ |
0.32 |
|
|
$ |
(0.83 |
) |
(a) The adjustments included in this table have
been tax effected at a 0% tax rate due to the recognition of a full
valuation allowance.
UNITED STATES STEEL CORPORATION |
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE |
|
|
|
Year Ended |
Year Ended |
|
|
Quarter Ended |
Dec. 31 |
Dec. 31 |
|
|
June 30 |
2018 |
2018 |
(Dollars in millions) |
2018 |
(Low end of range) |
(High end of range) |
Reconciliation to Projected Adjusted EBITDA Included in
Guidance |
|
|
|
|
Projected net earnings
attributable to United States Steel Corporation included in
Guidance |
$ |
190 |
|
$ |
855 |
|
$ |
955 |
|
|
Estimated income tax
expense |
20 |
|
40 |
|
40 |
|
|
Estimated net interest
and other financial costs |
67 |
|
320 |
|
320 |
|
|
Estimated depreciation,
depletion and amortization |
123 |
|
495 |
|
495 |
|
|
Granite
City Works adjustment to temporary idling charges |
— |
|
(10 |
) |
(10 |
) |
|
Projected
adjusted EBITDA included in Guidance |
$ |
400 |
|
$ |
1,700 |
|
$ |
1,800 |
|
UNITED STATES STEEL CORPORATION |
RECONCILIATION OF NET DEBT |
|
|
|
|
|
|
March 31, |
(Dollars in millions) |
2018 |
2017 |
Reconciliation of net debt |
|
|
|
Short-term debt and
current maturities of long-term debt |
$ |
281 |
|
$ |
281 |
|
|
Long-term debt, less
unamortized discount and debt issuance costs |
2,571 |
|
2,752 |
|
|
Total debt |
$ |
2,852 |
|
$ |
3,033 |
|
|
Less:
Cash and cash equivalents |
1,372 |
|
1,326 |
|
|
Net
debt |
$ |
1,480 |
|
$ |
1,707 |
|
|
|
|
|
|
|
|
|
We present adjusted net earnings (loss),
adjusted net earnings (loss) per diluted share, earnings (loss)
before interest, income taxes, depreciation and amortization
(EBITDA) and adjusted EBITDA, which are non-GAAP measures, as
additional measurements to enhance the understanding of our
operating performance. We believe that EBITDA, considered
along with net earnings (loss), is a relevant indicator of trends
relating to our operating performance and provides management and
investors with additional information for comparison of our
operating results to the operating results of other
companies. Net debt is a non-GAAP measure calculated as total
debt less cash and cash equivalents. We believe net debt is a
useful measure in calculating enterprise value. Both EBITDA and net
debt are used by analysts to refine and improve the accuracy of
their financial models that utilize enterprise value.
Adjusted net earnings (loss) and adjusted net
earnings (loss) per diluted share are non-GAAP measures that
exclude the effects of gains (losses) associated with restructuring
charges, significant temporary idling charges and debt
extinguishment and other related costs that are not part of the
Company's core operations. Adjusted EBITDA is also a non-GAAP
measure that excludes the effects of restructuring charges and
significant temporary idling charges. We present adjusted net
earnings (loss), adjusted net earnings (loss) per diluted share and
adjusted EBITDA to enhance the understanding of our ongoing
operating performance and established trends affecting our core
operations, by excluding the effects of restructuring charges,
significant temporary idling charges and debt extinguishment and
other related costs that can obscure underlying trends. U. S.
Steel's management considers adjusted net earnings (loss), adjusted
net earnings (loss) per diluted share and adjusted EBITDA as
alternative measures of operating performance and not alternative
measures of the Company's liquidity. U. S. Steel’s management
considers adjusted net earnings (loss), adjusted net earnings
(loss) per diluted share and adjusted EBITDA useful to investors by
facilitating a comparison of our operating performance to the
operating performance of our competitors. Additionally, the
presentation of adjusted net earnings (loss), adjusted net earnings
(loss) per diluted share and adjusted EBITDA provides insight into
management’s view and assessment of the Company’s ongoing operating
performance, because management does not consider the adjusting
items when evaluating the Company’s financial performance or in
preparing the Company’s annual financial guidance. Adjusted
net earnings (loss), adjusted net earnings (loss) per diluted share
and adjusted EBITDA should not be considered a substitute for net
earnings (loss), earnings (loss) per diluted share or other
financial measures as computed in accordance with U.S. GAAP and is
not necessarily comparable to similarly titled measures used by
other companies. A consolidated statement of operations
(unaudited), consolidated cash flow statement (unaudited),
condensed consolidated balance sheet (unaudited) and preliminary
supplemental statistics (unaudited) for U. S. Steel are
attached.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This release contains information that may
constitute “forward-looking statements” within the meaning of
Section 27 of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. We
intend the forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements in those
sections. Generally, we have identified such forward-looking
statements by using the words “believe,” “expect,” “intend,”
“estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,”
“should,” “will” and similar expressions or by using future dates
in connection with any discussion of, among other things, operating
performance, trends, events or developments that we expect or
anticipate will occur in the future, statements relating to volume
growth, share of sales and earnings per share growth, and
statements expressing general views about future operating
results. However, the absence of these words or similar
expressions does not mean that a statement is not
forward-looking. Forward-looking statements are not
historical facts, but instead represent only the Company’s beliefs
regarding future events, many of which, by their nature, are
inherently uncertain and outside of the Company’s control. It
is possible that the Company’s actual results and financial
condition may differ, possibly materially, from the anticipated
results and financial condition indicated in these forward-looking
statements. Management believes that these forward-looking
statements are reasonable as of the time made. However,
caution should be taken not to place undue reliance on any such
forward-looking statements because such statements speak only as of
the date when made. Our Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law. In addition, forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from our Company's historical
experience and our present expectations or projections. These
risks and uncertainties include, but are not limited to the risks
and uncertainties described in “Item 1A. Risk Factors” in our
Annual Report on Form 10-K for the year ended
December 31, 2017, and those described from time to time in
our future reports filed with the Securities and Exchange
Commission. References to "we," "us," "our," the "Company,"
and "U. S. Steel," refer to United States Steel Corporation and its
consolidated subsidiaries.
CONTACTS:MediaMeghan
CoxManagerCorporate CommunicationsT - (412) 433-6777E -
mmcox@uss.com |
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Investors/AnalystsDan
LesnakGeneral ManagerInvestor RelationsT - (412) 433-1184E -
dtlesnak@uss.com |
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