United States Steel Corporation (NYSE: X) reported first
quarter 2020 net loss of $391 million, or $2.30 per diluted share.
Adjusted net loss was $123 million, or $0.73 per diluted
share. This compares to first quarter 2019 net earnings of
$54 million, or $0.31 per diluted share. Adjusted net
earnings for first quarter 2019 were $81 million, or $0.47
per diluted share.
Earnings Highlights |
|
Quarter Ended |
|
March 31, |
|
March 31, |
(Dollars in millions, except
per share amounts) |
2020 |
|
2019 |
Net Sales |
$ |
2,748 |
|
|
$ |
3,499 |
|
Segment (loss) earnings before interest and income
taxes |
|
|
|
Flat-Rolled |
$ |
(35 |
) |
|
$ |
95 |
|
U. S. Steel Europe |
(14 |
) |
|
29 |
|
Tubular |
(48 |
) |
|
10 |
|
Other Businesses |
1 |
|
|
8 |
|
Total segment (loss) earnings before interest and income
taxes |
$ |
(96 |
) |
|
$ |
142 |
|
Other
items not allocated to segments |
(279 |
) |
|
(31 |
) |
(Loss) earnings before interest and income
taxes |
$ |
(375 |
) |
|
$ |
111 |
|
Net interest and other financial costs |
35 |
|
|
49 |
|
Income tax (benefit) provision |
(19 |
) |
|
8 |
|
Net (loss) earnings |
$ |
(391 |
) |
|
$ |
54 |
|
(Loss) earnings per diluted share |
$ |
(2.30 |
) |
|
$ |
0.31 |
|
|
|
|
|
Adjusted net (loss) earnings (a) |
$ |
(123 |
) |
|
$ |
81 |
|
Adjusted net (loss) earnings per diluted share
(a) |
$ |
(0.73 |
) |
|
$ |
0.47 |
|
Adjusted earnings before interest, income taxes,
depreciation and amortization (EBITDA) (a) |
$ |
64 |
|
|
$ |
285 |
|
|
|
|
|
|
|
|
|
(a) Please refer to the non-GAAP Financial Measures section of
this document for the reconciliation of these amounts.
“Our goal during these unprecedented
circumstances is to protect lives and livelihoods, which means
keeping our employees and communities safe and healthy and the
business resilient,” said U. S. Steel President and Chief Executive
Officer David B. Burritt. “Over the past several weeks, we
have announced a series of actions in response to the coronavirus
pandemic (COVID-19) and the significant changes in the global oil
and gas markets. We continue to serve customers and the
stakeholders who count on us as an essential business.”
Burritt continued, “Challenging days are ahead, but I am confident
in the men and women at U. S. Steel who are continuing to make
steel as a critical part of our nation’s infrastructure and
progress our 'best of both' integrated and mini mill technology
strategy. We remain calm and focused to ensure a stronger U.
S. Steel for all of our stakeholders.”
Reflecting on the quarter, Burritt commented,
“Market activity was beginning to improve prior to the emergence of
COVID-19 and the sudden changes in global oil and gas markets.
As the impacts from these unprecedented market dynamics
became apparent, we adjusted our footprint, fortified our balance
sheet and aggressively cut costs. While these decisive
actions helped us exceed our first quarter guidance, we have
quickly turned our attention to the second quarter to not only
ensure the safety and health of our employees but also to preserve
cash and liquidity.”
Update on the Company's Strategic Objective to
Monetize Iron Ore Assets
U. S. Steel today granted Stelco Inc. (Stelco)
at a purchase price of $100 million the option to acquire a 25
percent interest in the company’s Minntac iron ore mining
operations for an aggregate purchase price of $600 million.
Under the agreement, $20 million was paid to U. S. Steel upon
signing the option agreement and the remaining $80 million will be
paid ratably over the remainder of the 2020 calendar
year. Once Stelco has completed paying the remaining
$80 million, the option can be exercised any time before January
31, 2027 and, upon exercise, Stelco will make an additional payment
of $500 million to acquire its 25% interest in the new cost-sharing
joint venture. This agreement ensures U. S. Steel will
continue to be the operator and majority owner of the Minntac mine
and implies a $2.4 billion enterprise value for the Minntac
operation. Morgan Stanley & Co. LLC acted as financial
advisor to U. S. Steel and Jones Day acted as legal advisor to U.
S. Steel on the transactions.
“This transaction shows that while we will be
nimble and flexible in executing our world-competitive, 'best of
both' strategy, we will not be deterred," Burritt concluded.
"In October of last year, we announced our acquisition of our 49.9%
interest in Big River Steel and our goal of extracting incremental
value from our iron ore assets. Today's announcement
demonstrates the continued execution of our strategy and delivers
$100 million of incremental cash to the balance sheet in
2020. We are pleased that this transaction validates the
competitive advantage of our iron ore mining assets and gives us a
path to an additional $500 million of capital to support continued
execution of our strategy."
The Company will conduct a conference call on the
first quarter 2020 earnings on Friday, May 1, at 8:30 a.m. Eastern
Daylight Time. To listen to the webcast of the conference
call, and to access the company's slide presentation, visit the
U. S. Steel website, www.ussteel.com, and click on the
“Investors” section. Replays of the conference call will be
available on the website after 10:30 a.m. on May 1.
UNITED STATES STEEL CORPORATION |
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited) |
|
Quarter Ended |
|
March 31, |
|
March 31, |
|
2020 |
|
2019 |
OPERATING
STATISTICS |
|
|
|
Average realized price: ($/net
ton unless otherwise noted)(a) |
|
|
|
Flat-Rolled |
711 |
|
|
798 |
|
U. S. Steel Europe |
611 |
|
|
670 |
|
U. S. Steel Europe (€/net ton) |
554 |
|
|
590 |
|
Tubular |
1,283 |
|
|
1,549 |
|
Steel shipments (thousands of
net tons):(a) |
|
|
|
Flat-Rolled |
2,509 |
|
|
2,725 |
|
U. S. Steel Europe |
801 |
|
|
1,064 |
|
Tubular |
187 |
|
|
207 |
|
Total Steel Shipments |
3,497 |
|
|
3,996 |
|
|
|
|
|
Intersegment steel (unless
otherwise noted) shipments (thousands of net tons): |
|
|
|
Flat-Rolled to Tubular |
92 |
|
|
81 |
|
Raw steel production
(thousands of net tons): |
|
|
|
Flat-Rolled |
3,148 |
|
|
3,075 |
|
U. S. Steel Europe |
882 |
|
|
1,159 |
|
Raw steel capability
utilization:(b) |
|
|
|
Flat-Rolled |
74 |
% |
|
73 |
% |
U. S. Steel Europe |
71 |
% |
|
94 |
% |
|
|
|
|
CAPITAL EXPENDITURES
(dollars in millions) |
|
|
|
Flat-Rolled |
$ |
192 |
|
|
$ |
247 |
|
U. S. Steel Europe |
34 |
|
|
34 |
|
Tubular |
54 |
|
|
19 |
|
Other Businesses |
2 |
|
|
2 |
|
Total |
$ |
282 |
|
|
$ |
302 |
|
(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 |
|
March 31, |
|
March 31, |
(Dollars in millions, except per share amounts) |
2020 |
|
2019 |
NET SALES |
$ |
2,748 |
|
|
$ |
3,499 |
|
|
|
|
|
Operating expenses
(income): |
|
|
|
Cost of sales (excludes items shown below) |
2,605 |
|
|
3,172 |
|
Selling, general and administrative expenses |
72 |
|
|
78 |
|
Depreciation, depletion and amortization |
160 |
|
|
143 |
|
Loss (earnings) from investees |
8 |
|
|
(9 |
) |
Tubular asset impairment charges |
263 |
|
|
— |
|
Gain on equity investee transactions |
(31 |
) |
|
— |
|
Restructuring and other charges |
41 |
|
|
— |
|
Net loss on sale of assets |
— |
|
|
4 |
|
Other losses, net |
5 |
|
|
— |
|
Total operating expenses |
3,123 |
|
|
3,388 |
|
(LOSS) EARNINGS BEFORE
INTEREST AND INCOME TAXES |
(375 |
) |
|
111 |
|
|
|
|
|
Net interest and other
financial costs |
35 |
|
|
49 |
|
(LOSS) EARNINGS BEFORE INCOME
TAXES |
(410 |
) |
|
62 |
|
|
|
|
|
Income tax (benefit)
provision |
(19 |
) |
|
8 |
|
Net (loss) earnings |
(391 |
) |
|
54 |
|
Less: Net earnings (loss)
attributable to noncontrolling interests |
— |
|
|
— |
|
NET (LOSS) EARNINGS
ATTRIBUTABLE TO UNITED STATES STEEL CORPORATION |
$ |
(391 |
) |
|
$ |
54 |
|
|
|
|
|
COMMON
STOCK DATA: |
|
|
|
Net (loss) earnings per share
attributable to United States Steel Corporation
stockholders: |
|
|
|
Basic |
$ |
(2.30 |
) |
|
$ |
0.31 |
|
Diluted |
$ |
(2.30 |
) |
|
$ |
0.31 |
|
Weighted average shares, in thousands |
|
|
|
Basic |
170,224 |
|
|
173,241 |
|
Diluted |
170,224 |
|
|
174,545 |
|
Dividends paid per common share |
$ |
0.01 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
UNITED STATES STEEL CORPORATION |
CONDENSED CASH FLOW STATEMENT (Unaudited) |
|
Quarter Ended |
|
March 31, |
|
March 31, |
(Dollars in millions) |
2020 |
|
2019 |
Cash provided by (used in)
operating activities: |
|
|
|
Net (loss) earnings |
$ |
(391 |
) |
|
$ |
54 |
|
Depreciation, depletion and amortization |
160 |
|
|
143 |
|
Tubular asset impairment charges |
263 |
|
|
— |
|
Gain on equity investee transactions |
(31 |
) |
|
— |
|
Restructuring and other charges |
41 |
|
|
— |
|
Pensions and other post-employment benefits |
(1 |
) |
|
30 |
|
Deferred income taxes |
6 |
|
|
6 |
|
Net loss on sale of assets |
— |
|
|
4 |
|
Working capital changes |
(162 |
) |
|
(247 |
) |
Income taxes receivable/payable |
3 |
|
|
41 |
|
Other operating activities |
(30 |
) |
|
(2 |
) |
Total |
(142 |
) |
|
29 |
|
|
|
|
|
Cash used in investing
activities: |
|
|
|
Capital expenditures |
(282 |
) |
|
(302 |
) |
Proceeds from sale of assets |
1 |
|
|
— |
|
Proceeds from sale of ownership interests in equity investees |
8 |
|
|
— |
|
Investments, net |
(4 |
) |
|
— |
|
Total |
(277 |
) |
|
(302 |
) |
|
|
|
|
Cash provided by (used in)
financing activities: |
|
|
|
Revolving credit facilities - borrowing, net of financing
costs |
1,202 |
|
|
— |
|
Revolving credit facilities - repayments |
(281 |
) |
|
— |
|
Issuance of long-term debt, net of financing costs |
67 |
|
|
— |
|
Repayment of long-term debt |
(2 |
) |
|
— |
|
Common stock repurchased |
— |
|
|
(42 |
) |
Dividends paid |
(2 |
) |
|
(9 |
) |
Taxes paid for equity compensation plans |
(1 |
) |
|
(5 |
) |
Total |
983 |
|
|
(56 |
) |
|
|
|
|
Effect of exchange rate
changes on cash |
(6 |
) |
|
(2 |
) |
|
|
|
|
Net increase (decrease) in
cash, cash equivalents and restricted cash |
558 |
|
|
(331 |
) |
Cash, cash equivalents and
restricted cash at beginning of the year |
939 |
|
|
1,040 |
|
|
|
|
|
Cash,
cash equivalents and restricted cash at end of the period |
$ |
1,497 |
|
|
$ |
709 |
|
|
|
|
|
|
|
|
|
UNITED STATES STEEL CORPORATION |
CONDENSED BALANCE SHEET (Unaudited) |
|
|
|
|
(Dollars in millions) |
March 31, 2020 |
|
December 31, 2019 |
Cash and cash equivalents |
$ |
1,350 |
|
|
$ |
749 |
|
Receivables, net |
1,172 |
|
|
1,177 |
|
Inventories |
2,075 |
|
|
1,785 |
|
Other current assets |
89 |
|
|
102 |
|
Total current assets |
4,686 |
|
|
3,813 |
|
Operating lease assets |
246 |
|
|
230 |
|
Property, plant and equipment,
net |
5,407 |
|
|
5,447 |
|
Investments and long-term
receivables, net |
1,421 |
|
|
1,466 |
|
Intangible assets, net |
134 |
|
|
150 |
|
Deferred income tax
benefits |
5 |
|
|
19 |
|
Other noncurrent assets |
467 |
|
|
483 |
|
|
|
|
|
Total assets |
$ |
12,366 |
|
|
$ |
11,608 |
|
|
|
|
|
Accounts payable and other
accrued liabilities |
2,133 |
|
|
2,054 |
|
Payroll and benefits
payable |
325 |
|
|
336 |
|
Short-term debt and current
maturities of long-term debt |
99 |
|
|
14 |
|
Other current liabilities |
220 |
|
|
221 |
|
Total current liabilities |
2,777 |
|
|
2,625 |
|
Noncurrent operating lease
liabilities |
193 |
|
|
177 |
|
Long-term debt, less
unamortized discount and debt issuance costs |
4,616 |
|
|
3,627 |
|
Employee benefits |
584 |
|
|
532 |
|
Other long-term
liabilities |
470 |
|
|
554 |
|
United States Steel
Corporation stockholders' equity |
3,725 |
|
|
4,092 |
|
Noncontrolling interests |
1 |
|
|
1 |
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
12,366 |
|
|
$ |
11,608 |
|
|
|
|
|
|
|
|
|
UNITED STATES STEEL CORPORATION |
NON-GAAP FINANCIAL MEASURES |
RECONCILIATION OF ADJUSTED NET (LOSS) EARNINGS |
|
|
|
|
|
Three Months Ended |
|
March 31, |
(Dollars in millions, except per share amounts) (a) |
2020 |
|
2019 |
Reconciliation to
adjusted net (loss) earnings attributable to United States Steel
Corporation |
|
|
|
Net (loss) earnings attributable to United States Steel
Corporation |
$ |
(391 |
) |
|
$ |
54 |
|
Tubular asset impairment charges |
263 |
|
|
— |
|
Gain on previously held investment in UPI |
(25 |
) |
|
— |
|
Restructuring and other charges |
41 |
|
|
— |
|
Big River Steel options mark to market |
(11 |
) |
|
— |
|
December 24, 2018 Clairton coke making facility fire |
— |
|
|
27 |
|
Total adjustments |
268 |
|
|
27 |
|
Adjusted net (loss) earnings attributable to United States Steel
Corporation |
$ |
(123 |
) |
|
$ |
81 |
|
|
|
|
|
Reconciliation to
adjusted diluted net (loss) earnings per share |
|
|
|
Diluted net (loss) earnings per share |
$ |
(2.30 |
) |
|
$ |
0.31 |
|
Tubular asset impairment charges |
1.54 |
|
|
— |
|
Gain on previously held investment in UPI |
(0.14 |
) |
|
— |
|
Restructuring and other charges |
0.23 |
|
|
— |
|
Big River Steel options mark to market |
(0.06 |
) |
|
— |
|
December 24, 2018 Clairton coke making facility fire |
— |
|
|
0.16 |
|
Total adjustments |
1.57 |
|
|
0.16 |
|
Adjusted diluted net (loss) earnings per share |
$ |
(0.73 |
) |
|
$ |
0.47 |
|
(a) The adjustments
included in this table for the three months ended March 31, 2020
have not been tax effected due to the full valuation allowance on
our domestic deferred tax assets. The adjustments included in this
table for the three months ended March 31, 2019 have been tax
effected. |
|
UNITED STATES STEEL CORPORATION |
NON-GAAP FINANCIAL MEASURES |
RECONCILIATION OF ADJUSTED EBITDA |
|
|
|
|
|
Three Months Ended |
|
March 31, |
(Dollars in millions) |
2020 |
|
2019 |
Reconciliation to Adjusted
EBITDA |
|
|
|
Net (loss) earnings attributable to United States Steel
Corporation |
$ |
(391 |
) |
|
$ |
54 |
|
Income tax (benefit) provision |
(19 |
) |
|
8 |
|
Net interest and other financial costs |
35 |
|
|
49 |
|
Depreciation, depletion and amortization expense |
160 |
|
|
143 |
|
EBITDA |
(215 |
) |
|
254 |
|
Tubular asset impairment charges |
263 |
|
|
— |
|
Gain on previously held investment in UPI |
(25 |
) |
|
— |
|
Restructuring and other charges |
41 |
|
|
— |
|
December 24, 2018 Clairton coke making facility fire |
— |
|
|
31 |
|
Adjusted EBITDA |
$ |
64 |
|
|
$ |
285 |
|
|
|
|
|
|
|
|
|
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 and segment
EBITDA, considered along with net earnings (loss) and segment
earnings (loss) before interest and income taxes, are relevant
indicators of trends relating to our operating performance and
provide 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 effects of items such as asset impairments,
restructuring and other charges, the December 24, 2018
Clairton coke making facility fire, the Big River Steel options
mark to market, and significant gains (losses) on the sale or
purchase of ownership interests in equity investees, 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 Adjustment
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,” "may" 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, anticipated
cost savings, potential capital and operational cash improvements,
U. S. Steel's future ability or plans to take ownership of the Big
River Steel joint venture as a wholly owned subsidiary, 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 risks
related to the satisfaction of the conditions of creating the joint
venture with Stelco in the anticipated timeframe or at all and the
possibility that the option will not be exercised by Stelco,
possible production or operations interruptions related to the
novel coronavirus (COVID-19) pandemic that could disrupt supply or
delivery of, or demand for, the Company’s products, as well as the
risks and uncertainties described in “Item 1A. Risk Factors” in our
Annual Report on Form 10-K for the year ended
December 31, 2019, our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020, 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:
MediaJohn AmblerVice PresidentCorporate CommunicationsT - (412)
477-1719E - joambler@uss.com |
|
Investors/AnalystsKevin LewisVice PresidentInvestor RelationsT -
(412) 433-6935E - klewis@uss.com |
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US Steel (NYSE:X)
Historical Stock Chart
From Aug 2024 to Sep 2024
US Steel (NYSE:X)
Historical Stock Chart
From Sep 2023 to Sep 2024