United States Steel Corporation (NYSE: X) today provided second
quarter 2020 guidance and an update on its latest liquidity
requirements for the remainder of the year. Second quarter
2020 adjusted EBITDA is expected to be approximately ($315)
million, which excludes approximately $100 million of estimated
restructuring and other charges. The company expects second
quarter 2020 adjusted diluted loss per share to be approximately
($3.06). The company also expects its liquidity requirements
through December 31, 2020 to be approximately $700 million
(excluding approximately $64 million of incremental interest
payments in 2020 resulting from the company’s recent senior secured
notes offering), unchanged from the comparable $700 million
previously disclosed on May 21, 2020.
“As expected, the second quarter is being significantly impacted
by the effects of COVID-19 and the expected nonrecurring costs
associated with a significant portion of our steelmaking operations
being idled in the quarter. As we mentioned on our first
quarter earnings call, we expect the second quarter to mark the
trough for the year,” commented U. S. Steel President and Chief
Executive Officer David B. Burritt. “At the onset of the
pandemic, we took swift and meaningful action in response to
stay-at-home orders, original equipment manufacturer (OEM) closures
and reduced customer demand. While the second quarter has
been challenging, our optimism continues to grow as OEM restarts
are progressing well and customer demand has started to
return. Still, we are continuing to identify additional
management actions and operating improvements to improve our cash
usage through the end of the year. Protecting lives and
livelihoods remains our top priority and by keeping our employees
and communities safe and the business resilient, we can continue to
meet our customers’ needs as we emerge from unprecedented market
conditions.”
Burritt concluded, “Our future is now, and we have taken
significant actions this quarter to advance our ‘best of both’
integrated and mini-mill steel customer-focused technology
strategy. We are delivering on our commitment to extract
incremental value from our iron ore assets, having entered into new
agreements that deliver incremental earnings and cash to the
balance sheet in 2020 and beyond. We continue to actively
market our valuable portfolio of real estate assets and are
evaluating strategic options for our UPI business and related
property. Additionally, we have identified and completed
actions that position us to achieve our $200 million fixed cost
reduction target a year ahead of our original 2022 goal. Our
successful senior secured notes offering in May also further
enhanced our balance sheet and bolstered our liquidity. Big
River Steel remains our number one strategic priority and we are
confident that we are positioned to emerge from this crisis having
made meaningful progress in the execution of our ‘best of both’
strategy.”
Adjusted EBITDA Commentary
Our Flat-rolled segment results are expected to be significantly
lower than the first quarter as the impacts from COVID-19
negatively impacted customer activity, particularly in the
automotive and energy end-markets. Second quarter customer
activity is expected to mark the trough for the year as demand is
beginning to improve in June. We responded quickly at the end
of the first quarter to align our footprint with the expected
reduction in demand. These decisive actions helped to
preserve cash but did not completely offset the inefficiencies of
idling a significant portion of our steelmaking footprint. We
continue to evaluate our order book and regularly assess our
footprint to remain nimble to meet changes in customer
demand.
In Europe, market activity remained limited throughout much of
the quarter due to a slow emergence from COVID-19 related economic
shutdowns, particularly in the automotive sector.
Additionally, weakness in underlying demand has also negatively
impacted the segment’s performance. As a result of slow
economic recovery in Europe, we pulled forward a ten-day hot strip
mill outage into late May 2020, originally scheduled for the third
quarter. We also idled #1 blast furnace in late May to align
our melt with the planned hot strip mill outage. The hot
strip mill and the #1 blast furnace have both been restarted, as
planned.
In Tubular, market conditions remain challenged. Rig
counts continue to decline, and oil prices remain at historically
low levels. As a result, demand for welded and seamless pipe
has significantly declined. We are focused on what we can
control and have indefinitely idled our Lone Star and Lorain
facilities and consolidated tubular production to our Fairfield
seamless mill. We are continuing to identify ways to cut
costs within the segment, including the cost reduction expected by
in-sourcing our rounds production to our new electric arc
furnace. The electric arc furnace is scheduled to begin
production in the second half of 2020.
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
impacts, 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. The 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 the Company's historical
experience and 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, 2019 and quarterly report on Form 10-Q for the
quarter ended March 31, 2020, and those described from time to time
in the Company’s 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.
|
|
|
UNITED STATES STEEL CORPORATIONNON-GAAP FINANCIAL
MEASURESRECONCILIATION OF ADJUSTED EBITDA GUIDANCE |
|
|
|
(Dollars in millions) |
|
|
Reconciliation to
Projected Adjusted EBITDA Included in Guidance |
2Q 2020 |
Projected net loss attributable to United States Steel Corporation
included in guidance |
$ |
(625 |
) |
Estimated income tax benefit |
|
(5 |
) |
Estimated net interest and other financial costs |
|
55 |
|
Estimated depreciation, depletion and amortization |
|
160 |
|
Projected EBITDA included in guidance |
$ |
(415 |
) |
Estimated second quarter adjustments |
|
100 |
|
Projected adjusted EBITDA included in guidance |
$ |
( 315 |
) |
|
|
|
|
|
|
UNITED STATES STEEL CORPORATIONNON-GAAP FINANCIAL
MEASURESRECONCILIATION OF ADJUSTED NET LOSS GUIDANCE |
|
|
(Dollars in millions, except per share amounts) |
|
Reconciliation to
Projected Adjusted Net Loss Attributable to U. S. Steel Included in
Guidance |
2Q 2020 |
Projected net loss attributable to United States Steel Corporation
included in guidance |
$ |
(625 |
) |
Estimated second quarter adjustments 1 |
|
104 |
|
Projected adjusted net loss attributable to United States Steel
Corporation included in guidance |
$ |
(521 |
) |
Reconciliation to
Projected Adjusted Diluted Net Loss Per Share Included in
Guidance |
2Q 2020 |
Projected diluted net loss per share included in guidance |
$ |
(3.67 |
) |
Estimated second quarter adjustments 1 |
|
0.61 |
|
Projected adjusted diluted net loss per share included in
guidance |
$ |
(3.06 |
) |
1 Certain adjustments have not been tax effected due to the full
valuation allowance on our domestic deferred tax assets established
in the fourth quarter of 2019.
Note: Excludes the impact of the Company’s quarterly mark to
market adjustment related to the Big River Steel put and call
options. See Notes 5 and 20 in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019 for an explanation
of the Big River Steel put and call options. This item will
not impact adjusted EBITDA, adjusted net loss or adjusted diluted
net loss per share.
Note Regarding Non-GAAP Financial Measures
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), adjusted net earnings (loss) per
diluted share and adjusted EBITDA are non-GAAP measures that
exclude the financial effects of restructuring charges and other
adjustments that are not part of the Company's core operations.
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
financial effects of restructuring charges and other adjustments
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.
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.
United States Steel Corporation, headquartered in Pittsburgh,
Pa., is a leading integrated steel producer and Fortune 250 company
with major operations in the United States and Central
Europe. For more information about U. S. Steel, please visit
www.ussteel.com.
CONTACTS:
John Ambler Vice PresidentCorporate CommunicationsT – (412)
433-2407E – joambler@uss.com
Kevin Lewis Vice PresidentInvestor RelationsT – (412) 433-6935E
– klewis@uss.com
US Steel (NYSE:X)
Historical Stock Chart
From Mar 2024 to Apr 2024
US Steel (NYSE:X)
Historical Stock Chart
From Apr 2023 to Apr 2024