UNITED STATES STEEL CORPORATION TAKES ACTION TO PRESERVE STRONG LONG-TERM FUTURE IN RESPONSE TO COVID-19 IMPACTS
March 27 2020 - 8:30AM
United States Steel Corporation (NYSE: X) today announced a series
of aggressive and meaningful actions to provide greater certainty
on the company’s response to impacts from the coronavirus
(COVID-19) and the sudden, significant changes in global oil and
gas markets. These actions strengthen the company’s ability
to serve customers, partner with suppliers, create long-term value
for investors and ensure a more secure future for employees and the
communities where we work and live. By prioritizing cash and
liquidity, the company will maintain strategic flexibility in order
to be well prepared for when the global economy ultimately recovers
from the current situation.
“In this unprecedented and rapidly changing situation, our first
priority remains the safety and well-being of our employees.
As an essential part of our critical infrastructure, our employees
have embraced the special responsibility to continue making the
steel society needs, including the packaging for our food supply
during the COVID-19 pandemic response. To ensure a more
secure future for all our stakeholders, the time has come for us to
take aggressive actions to reposition the company,” commented
President and Chief Executive Officer David B. Burritt. “U.
S. Steel has been a cornerstone of manufacturing for over a century
and our products are vital to national and economic security.
I am confident in the resilience of our employees, the strength of
our customer relationships, and the reliability of our regional
supply chain. The actions we are announcing today make us
stronger and enable us to weather the current situation to emerge
as a leader in sustainable steel solutions for generations to
come.”
Today, the company announced the following to provide greater
certainty that short-term actions enable our longer-term “best of
both” strategy:
- North American Flat-rolled Footprint Actions: The company will
idle the #4 blast furnace at Gary Works immediately to begin a
planned outage. This outage was originally planned to begin
in April and last for 48-days. The scope of the current
outage has been reduced and the remainder of the Gary #4 blast
furnace outage is being delayed. The company expects the Gary
#4 blast furnace to remain idled until market conditions
improve. In addition, the company will temporarily idle blast
furnace “A” at Granite City Works, effective immediately. As
previously communicated, the company will also complete the
indefinite idling of the iron and steelmaking facilities at Great
Lakes Works. The company will continue to monitor the impacts
of the coronavirus on its orderbook and will regularly assess the
footprint required to support its customers’ needs.
- Tubular Footprint Actions: Beginning in late-May, the company
plans to idle all or most of Lone Star Tubular Operations and
Lorain Tubular Operations for an indefinite period of time in
response to weak tubular market conditions, including continued
high levels of imports and decreased demand driven by a sudden,
significant drop in oil prices. The company has issued Worker
Adjustment and Retraining Notification (WARN) Act notices to
employees at both facilities.
- Revised Capital Spending for 2020: The company is aligning its
strategic projects with today’s market realities by reducing
capital spending in 2020 by $125 million. The company now
expects 2020 capital spending to be approximately $750
million. Impacts to strategic projects are as
follows:Endless Casting and Rolling and Cogeneration
Investments at Mon Valley: The company plans to delay
construction of the endless casting and rolling line and
cogeneration facility at its Mon Valley Works. On March 23,
the Allegheny County Health Department (ACHD) announced, after
consultation with the company, that a temporary pause in the
permitting process is appropriate given the challenges posed to the
public comment process while COVID-19 public health orders are in
effect in Allegheny County. The company agrees with a pause
during this time of social distancing precautions implemented by
the county. In addition to the regulatory delay, in order to
preserve cash and liquidity, the company currently expects
groundbreaking for this project to be delayed for an indeterminate
period of time until market conditions become more certain.
The company now expects 2020 capital spending for the project to be
approximately $85 million. The company will continue to
assess the project timeline and remaining budget.
Electric Arc Furnace (EAF) at
Tubular: The company currently expects to complete the EAF
at Tubular as planned, with first arc anticipated in the second
half of 2020. The expected 2020 capital spending budget for
the EAF project is unchanged at $150 million. The investment
in the EAF has been prefunded with environmental revenue bonds
issued in the fourth quarter of 2019. Gary Hot Strip
Mill (HSM) Investments: The company currently has paused
planned upgrades and will continue to evaluate the pace and
timeline for completing the remaining investments in the
HSM. Dynamo Line at USSE: The
investment in a new non-grain oriented electrical steel line at
USSE remains delayed.
- Revolving Credit Facility: As a precautionary measure, the
company increased its borrowings under its Revolving Credit
Facility by $800 million in order to increase its cash position and
preserve financial flexibility. This action safeguards the
business, as well as the company’s customers, suppliers, workforce
and investors and ensures that the company will maintain the cash
and balance sheet strength required to navigate the current
environment. The draw-down proceeds from the Revolving Credit
Facility are being held as cash on the company’s balance sheet and
may be used for general corporate purposes.
The company does not expect the actions announced today to
meaningfully impact the first quarter adjusted EBITDA, adjusted net
loss or adjusted diluted net loss per share included in our
guidance that was provided last week. However, given the
rapid pace of change in market dynamics in the current environment,
the company is regularly monitoring and updating impacts to first
quarter shipments. The company expects a meaningful reduction
in demand for the full fiscal year, though an updated full-year
estimate of third-party shipments for each of its operating
segments cannot be determined at this time. The company is
continuing to monitor the financial and operational impacts of the
coronavirus on the business and plans to provide more information
in its first quarter disclosures and on its first quarter earnings
call.
Burritt concluded, “Our world-competitive, ‘best of both’
integrated and mini mill strategy is our future. The
short-term actions announced today are difficult but
necessary. Our focus on cash and liquidity will ultimately
position us to achieve our longer-term goals as a stronger
organization.”
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 e 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 possible
production or operations interruptions related to the Coronavirus
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, 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.
2020-014United 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 |
Kevin Lewis |
Vice President |
Vice President |
Corporate Communications |
Investor Relations |
T – (412) 433-2407 |
T – (412) 433-6935 |
E – joambler@uss.com |
E – klewis@uss.com |
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