United States Steel Corporation Reports Fourth Quarter and Full-Year 2019 Results

Date : 01/30/2020 @ 9:49PM
Source : GlobeNewswire Inc.
Stock : US Steel Corp (X)
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United States Steel Corporation Reports Fourth Quarter and Full-Year 2019 Results

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United States Steel Corporation (NYSE: X) reported a full-year 2019 net loss of $642 million, or $3.75 per diluted share.  Adjusted net earnings were $15 million, or $0.09 per diluted share.  This compares to full-year 2018 net earnings of $1,115 million, or $6.25 per diluted share.  Adjusted net earnings for 2018 were $957 million, or $5.36 per diluted share.

Fourth quarter 2019 net loss of $680 million, or $4.00 per diluted share.  Adjusted net loss was $109 million, or $0.64 per diluted share. This compares to fourth quarter 2018 net earnings of $592 million, or $3.34 per diluted share.  Adjusted net earnings for fourth quarter 2018 were $324 million, or $1.82 per diluted share.

Earnings Highlights
 
 Quarter Ended Year Ended
 December 31, December 31,
(Dollars in millions, except per share amounts)2019 2018 2019 2018
Net Sales$2,824  $3,691  $12,937  $14,178 
Segment (loss) earnings before interest and income taxes       
  Flat-Rolled$(79) $328  $196  $883 
  U. S. Steel Europe(30) 62  (57) 359 
  Tubular(46) (3) (67) (58)
  Other Businesses(3) 11  23  55 
Total segment (loss) earnings before interest and income taxes$(158) $398  $95  $1,239 
Other items not allocated to segments(218) (85) (325) (115)
(Loss) earnings before interest and income taxes$(376) $313  $(230) $1,124 
Net interest and other financial costs71  60  222  312 
Income tax provision (benefit)233  (339) 190  (303)
Net (loss) earnings$(680) $592  $(642) $1,115 
(Loss) earnings per diluted share$(4.00) $3.34  $(3.75) $6.25 
        
Adjusted net (loss) earnings (a)$(109) $324  $15  $957 
Adjusted net (loss) earnings per diluted share (a)$(0.64) $1.82  $0.09  $5.36 
Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (a)$4  $535  $711  $1,760 

(a) Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of these amounts.

“We are pleased to deliver better than expected results to end the year and are excited to turn the page to 2020 where we will continue to transition the business towards our future," said U. S. Steel President and Chief Executive Officer David B. Burritt.  "2019 was a year of notable strategic progress and we took swift action to reposition the business ... we achieved $75 million of run-rate fixed cost reductions, we demonstrated flexibility by adjusting our 2020 capital spending to prioritize strategic investments, and we de-risked strategy execution by raising $1.1 billion of incremental capital."

Burritt continued, “We will take another step towards our world-competitive, 'best of both' strategy this year as we complete two important strategic projects … the electric arc furnace at Tubular and our XG3 AHSS investment at our PRO-TEC joint venture.  These projects will be yet another proof point to the market that our strategy will deliver cost and capability differentiation that is valuable to our customers, stockholders and employees.  I have never been more confident in our strategy and that our investments in Big River and Endless Casting and Rolling are the right priorities.  We won't be the biggest steel company ... but we will be the only 'best of both' steel company."

The Company currently expects the first quarter of 2020 to be the trough for the year due to the normal seasonality of our mining operations and lower first quarter shipments in Flat-rolled as the Company prepares for the April blast furnace outage at Gary Works.  Big River Steel expects their full-year 2020 depreciation and amortization expense and net interest costs to be approximately $150 million and approximately $95 million, respectively.

The Company will conduct a conference call on the fourth quarter and full-year 2019 earnings on Friday, January 31, at 8:30 a.m. Eastern Standard.  To listen to the webcast of the conference call, and to access the company's slide presentation, 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 January 31.

UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
         
  Quarter Ended Year Ended
  December 31, December 31,
  2019 2018 2019 2018
OPERATING STATISTICS       
Average realized price: ($/net ton unless otherwise noted)(a)       
 Flat-Rolled699  823  753  811 
 U. S. Steel Europe622  686  652  693 
 U. S. Steel Europe (€/net ton)562  601  582  586 
 Tubular1,298  1,488  1,450  1,483 
Steel shipments (thousands of net tons):(a)       
 Flat-Rolled2,517  2,733  10,700  10,510 
 U. S. Steel Europe757  1,073  3,590  4,457 
 Tubular193  216  769  780 
   Total Steel Shipments3,467  4,022  15,059  15,747 
         
Intersegment steel (unless otherwise noted) shipments (thousands of net tons):       
 Flat-Rolled to Tubular46  66  258  224 
 Flat-Rolled to U. S. Steel Europe (iron ore pellets and fines)    424   
 U. S. Steel Europe to Flat-Rolled      22 
Raw steel production (thousands of net tons):       
 Flat-Rolled2,567  3,334  11,409  11,893 
 U. S. Steel Europe773  1,213  3,903  5,023 
Raw steel capability utilization:(b)       
 Flat-Rolled60% 78% 67% 70%
 U. S. Steel Europe61% 96% 78% 100%
         
CAPITAL EXPENDITURES (dollars in millions)       
 Flat-Rolled$179  $289  $943  $820 
 U. S. Steel Europe42  41  153  104 
 Tubular48  12  145  45 
 Other Businesses5  13  11  32 
 Total$274  $355  $1,252  $1,001 
(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
CONDENSED STATEMENT OF OPERATIONS (Unaudited)
         
  Quarter Ended Year Ended
  December 31, December 31,
(Dollars in millions, except per share amounts)2019 2018 2019 2018
NET SALES $2,824  $3,691  $12,937  $14,178 
         
Operating expenses (income):        
Cost of sales (excludes items shown below) 2,781  3,204  12,082  12,305 
Selling, general and administrative expenses 66  85  289  336 
Depreciation, depletion and amortization 162  137  616  521 
Earnings from investees (11) (22) (79) (61)
Gain on equity investee transactions   (20)   (38)
Restructuring charges 221    275   
Net gain on disposal of assets (4) (3) (1) (6)
Other income, net (15) (3) (15) (3)
Total operating expenses 3,200  3,378  13,167  13,054 
         
(LOSS) EARNINGS BEFORE INTEREST AND INCOME TAXES (376) 313  (230) 1,124 
Net interest and other financial costs 71  60  222  312 
         
(LOSS) EARNINGS BEFORE INCOME TAXES (447) 253  (452) 812 
Income tax provision (benefit) 233  (339) 190  (303)
         
Net (loss) earnings (680) 592  (642) 1,115 
Less: Net earnings (loss) attributable to noncontrolling interests        
NET (LOSS) EARNINGS ATTRIBUTABLE TO UNITED STATES STEEL CORPORATION $(680) $592  $(642) $1,115 
         
COMMON STOCK DATA:        
Net (loss) earnings per share attributable to        
  United States Steel Corporation stockholders:        
   Basic $(4.00) $3.36  $(3.75) $6.31 
   Diluted $(4.00) $3.34  $(3.75) $6.25 
  Weighted average shares, in thousands        
   Basic 170,041  176,091  171,418  176,633 
   Diluted 170,041  177,649  171,418  178,461 
  Dividends paid per common share $0.05  $0.05  $0.20  $0.20 

UNITED STATES STEEL CORPORATION
CONDENSED CASH FLOW STATEMENT (Unaudited)
       
    Year Ended
    December 31,
(Dollars in millions) 2019 2018
Cash provided by (used in) operating activities:   
 Net (loss) earnings$(642) $1,115 
 Depreciation, depletion and amortization616  521 
 Gain on equity investee transactions  (38)
 Restructuring charges275   
 Loss on debt extinguishment  98 
 Pensions and other post-employment benefits101  77 
 Deferred income taxes215  (329)
 Net gain on disposal of assets(1) (6)
 Working capital changes276  (404)
 Income taxes receivable/payable13  (8)
 Other operating activities(171) (88)
  Total 682  938 
       
Cash used in investing activities:   
 Capital expenditures(1,252) (1,001)
 Investment in Big River Steel(710)  
 Disposal of assets4  10 
 Proceeds from sale of ownership interests in equity investees  30 
 Other investing activities  (2)
  Total (1,958) (963)
       
Cash provided by (used in) financing activities:   
 Revolving credit facilities - borrowings, net of financing costs860  228 
 Revolving credit facilities - repayments(100)  
 Issuance of long-term debt, net of financing costs702  640 
 Repayment of long-term debt(155) (1,299)
 Common stock repurchased(88) (75)
 Receipts from exercise of stock options  35 
 Taxes paid for equity compensation plans(7) (8)
 Dividends paid(35) (36)
  Total 1,177  (515)
       
Effect of exchange rate changes on cash(2) (17)
       
Net decrease in cash, cash equivalents and restricted cash(101) (557)
Cash, cash equivalents and restricted cash at beginning of the year1,040  1,597 
       
Cash, cash equivalents and restricted cash at end of the period$939  $1,040 

UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
      
   December 31, December 31,
(Dollars in millions) 2019 2018
Cash and cash equivalents$749  $1,000 
Receivables, net1,177  1,659 
Inventories1,785  2,092 
Other current assets102  79 
 Total current assets3,813  4,830 
Operating lease assets230   
Property, plant and equipment, net5,447  4,865 
Investments and long-term receivables, net1,466  513 
Intangible assets, net150  158 
Deferred income tax benefits7  445 
Other noncurrent assets530  171 
      
 Total assets $11,643  $10,982 
      
Accounts payable and other accrued liabilities2,054  2,535 
Payroll and benefits payable383  440 
Short-term debt and current maturities of long-term debt14  65 
Other current liabilities221  157 
 Total current liabilities2,672  3,197 
Noncurrent operating lease liabilities177   
Long-term debt, less unamortized discount and debt issuance costs3,627  2,316 
Employee benefits532  980 
Other long-term liabilities554  286 
United States Steel Corporation stockholders' equity4,080  4,202 
Noncontrolling interests1  1 
      
 Total liabilities and stockholders' equity$11,643  $10,982 

UNITED STATES STEEL CORPORATION 
NON-GAAP FINANCIAL MEASURES 
RECONCILIATION OF ADJUSTED NET (LOSS) EARNINGS 
         
  Quarter Ended Year Ended
  December 31, December 31,
(Dollars in millions, except per share amounts) (a)2019 2018 2019 2018
Reconciliation to adjusted net (loss) earnings attributable to United States Steel Corporation       
Net (loss) earnings attributable to United States Steel Corporation$(680) $592  $(642) $1,115 
 December 24, 2018 Clairton coke making facility fire(3)   41   
 Restructuring charges221    263   
 Big River Steel options mark to market7    7   
 United Steelworkers labor agreement signing bonus & related costs  88    81 
 Tax valuation allowance346  (374) 346  (374)
 Gain on equity investee transactions  (20)   (38)
 Loss on debt extinguishment and related costs  21    101 
 Granite City Works restart costs  17    80 
 Granite City Works temporary idling charges      (8)
 Total adjustments571  (268) 657  (158)
Adjusted net (loss) earnings attributable to United States Steel Corporation$(109) $324  $15  $957 
         
Reconciliation to adjusted diluted net (loss) earnings per share       
Diluted net (loss) earnings per share$(4.00) $3.34  $(3.75) $6.25 
 December 24, 2018 Clairton coke making facility fire(0.02)   0.23   
 Restructuring charges1.30    1.53   
 Big River Steel options mark to market0.04    0.04   
 United Steelworkers labor agreement signing bonus & related costs  0.49    0.45 
 Tax valuation allowance2.04  (2.11) 2.04  (2.11)
 Gain on equity investee transactions  (0.11)   (0.21)
 Loss on debt extinguishment and related costs  0.12    0.57 
 Granite City Works restart costs  0.09    0.45 
 Granite City Works temporary idling charges      (0.04)
 Total adjustments3.36  (1.52) 3.84  (0.89)
Adjusted diluted net (loss) earnings per share$(0.64) $1.82  $0.09  $5.36 
(a) The adjustments included in this table for the nine months ended September 30, 2019 have been tax effected.  This includes the first nine months of the 2019 year to date amounts. The adjustments for the three months ended December 31, 2019 and the three and twelve months ended December 31, 2018 have not been tax effected due to the full valuation allowance on our domestic deferred tax assets in the fourth quarter of 2019 and the entirety of 2018. 

UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED EBITDA
         
  Quarter Ended Year Ended
  December 31, December 31,
(Dollars in millions)2019 2018 2019 2018
Reconciliation to Adjusted EBITDA       
 Net (loss) earnings attributable to United States Steel Corporation$(680) $592  $(642) $1,115 
 Income tax provision (benefit)233  (339) 190  (303)
 Net interest and other financial costs71  60  222  312 
 Depreciation, depletion and amortization expense162  137  616  521 
 EBITDA(214) 450  386  1,645 
 December 24, 2018 Clairton coke making facility fire(3)   50   
 Restructuring charges221    275   
 United Steelworkers labor agreement signing bonus & related costs  88    81 
 Gain on equity investee transactions  (20)   (38)
 Granite City Works restart costs  17    80 
 Granite City Works temporary idling charges      (8)
 Adjusted EBITDA$4  $535  $711  $1,760 

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.

Adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share are non-GAAP measures that exclude the financial effects of items such as restructuring charges, the December 24, 2018 Clairton coke making facility fire, the Big River Steel options mark to market, United Steelworkers labor agreement signing bonus and related costs, the impact of the tax valuation allowance, the effects of gains on equity investee transactions, debt extinguishment and other related costs, facility restart costs, significant temporary idling charges and other charges that are not part of the Company's core operations (Adjustment Items).  Adjusted EBITDA is also a non-GAAP measure that excludes the financial effects of the Adjustment Items. 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 Adjustment Items. 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.  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 condensed consolidated statement of operations (unaudited), condensed 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 27A 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 changes, share of sales and earnings per share changes, 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, 2018, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, 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:MediaAmanda MalkowskiPublic Affairs Rep.Corporate CommunicationsT - (412) 433-2512E - almalkowski@uss.com

Investors/AnalystsKevin LewisGeneral ManagerInvestor RelationsT - (412) 433-6935E - KLewis@uss.com

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