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U. S. Steel Delivers Another Strong Quarter; Best for All® Strategy On-Track

2023-07-28 04:19
PITTSBURGH--(BUSINESS WIRE)--Jul 27, 2023--
U. S. Steel Delivers Another Strong Quarter; Best for All® Strategy On-Track

PITTSBURGH--(BUSINESS WIRE)--Jul 27, 2023--

United States Steel Corporation (NYSE: X) reported second quarter 2023 net earnings of $477 million, or $1.89 per diluted share. Adjusted net earnings was $483 million, or $1.92 per diluted share. This compares to second quarter 2022 net earnings of $978 million, or $3.42 per diluted share. Adjusted net earnings for the second quarter 2022 was $1,116 million, or $3.89 per diluted share.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230727467846/en/

U. S. Steel Delivers Another Strong Quarter; Best for All® Strategy On-Track

Commenting on the second quarter's performance, U. S. Steel President and Chief Executive Officer David B. Burritt said, “We are pleased to deliver strong results for the quarter, supported by healthy sequential growth in the Mini Mill segment in both adjusted EBITDA and EBITDA margin. We generated $713 million of cash from operations in the quarter and free cash flow of $101 million, further strengthening our balance sheet. Our in-flight strategic projects remain fully funded and we are prioritizing direct returns consistent with our capital allocation framework, with $86 million returned to stockholders through buybacks and dividends in the second quarter.”

Burritt continued, “We are executing exceptionally well against our strategic initiatives, with all in-flight projects progressing on-time and on-budget. Notably, our non-grain oriented, or NGO, electrical steel line at Big River Steel is currently being commissioned and on track to start-up later in the third quarter. Customer demand has been robust for our NGO steels and we are pleased to announce that we've already secured our first customer orders in both industrial and electric vehicle markets.”

Commenting on the Company's Best for All strategy, Burritt concluded, “We are an essential partner to the countries and communities where we operate. Notably, we are supplying customers with cutting edge steels that are mined, melted and made in the USA. Our strategy is expanding our competitive advantages and generating growth and returns for stockholders as we strengthen domestic supply chains and support advanced manufacturing returning to our shores. We remain bullish for U. S. Steel.”

Earnings Highlights

Three Months Ended

June 30,

Six Months Ended

June 30,

(Dollars in millions, except per share amounts)

2023

2022

2023

2022

Net Sales

$

5,008

$

6,290

$

9,478

$

11,524

Segment earnings (loss) before interest and income taxes

Flat-Rolled

$

231

$

793

$

224

$

1,322

Mini Mill

132

270

144

548

U. S. Steel Europe

72

280

38

544

Tubular

157

107

389

184

Other

(12

)

(12

)

(9

)

(5

)

Total segment earnings before interest and income taxes

$

580

$

1,438

$

786

$

2,593

Other items not allocated to segments

(16

)

(184

)

(33

)

(221

)

Earnings before interest and income taxes

$

564

$

1,254

$

753

$

2,372

Net interest and other financial benefits

(57

)

(8

)

(118

)

(18

)

Income tax expense

144

284

195

530

Net earnings

$

477

$

978

$

676

$

1,860

Earnings per diluted share

$

1.89

$

3.42

$

2.67

$

6.45

Adjusted net earnings (a)

$

483

$

1,116

$

678

$

2,026

Adjusted net earnings per diluted share (a)

$

1.92

$

3.89

$

2.68

$

7.01

Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (a)

$

804

$

1,636

$

1,231

$

2,989

(a) Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of these amounts. The prior year was retroactively adjusted to reflect the reclassification of stock-based compensation expense.

*****

The Company will conduct a conference call on the second quarter earnings on Friday, July 28, 2023, at 8:30 a.m. Eastern. 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. Replay will be available on the website after 10:30 a.m. on July 28, 2023.

UNITED STATES STEEL CORPORATION

PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

OPERATING STATISTICS

Average realized price: ($/net ton unless otherwise noted) (a)

Flat-Rolled

1,088

1,339

1,050

1,352

Mini Mill

1,011

1,331

897

1,349

U. S. Steel Europe

965

1,217

939

1,162

U. S. Steel Europe (€/net ton)

886

1,142

868

1,064

Tubular

3,493

2,727

3,636

2,543

Steel shipments (thousands of net tons): (a)

Flat-Rolled

2,235

2,365

4,513

4,312

Mini Mill

587

615

1,246

1,122

U. S. Steel Europe

1,034

1,067

1,917

2,177

Tubular

111

136

242

264

Total steel shipments

3,967

4,183

7,918

7,875

Intersegment steel (unless otherwise noted) shipments (thousands of net tons):

Mini Mill to Flat-Rolled

142

110

225

199

Flat-Rolled to Mini Mill

23

23

Flat-Rolled to Mini Mill (pig iron)

86

115

Flat-Rolled to USSE (b)

159

82

458

82

Raw steel production (thousands of net tons):

Flat-Rolled

2,529

2,424

4,922

4,629

Mini Mill

749

750

1,508

1,351

U. S. Steel Europe

1,213

1,216

2,305

2,304

Tubular

129

168

300

324

Raw steel capability utilization: (c)

Flat-Rolled

77

%

74

%

75

%

71

%

Mini Mill

91

%

91

%

92

%

83

%

U. S. Steel Europe

97

%

98

%

93

%

93

%

Tubular

57

%

75

%

67

%

73

%

CAPITAL EXPENDITURES (dollars in millions)

Flat-Rolled

104

112

243

229

Mini Mill

488

179

1,051

390

U. S. Steel Europe

16

17

42

34

Tubular

5

3

17

7

Other Businesses

Total

$

613

$

311

$

1,353

$

660

(a) Excludes intersegment shipments.

(b) Consists of coal in 2023 and iron ore pellets and fines in 2022.

(c) Based on annual raw steel production capability of 13.2 million net tons for Flat-Rolled, 3.3 million net tons for Mini Mill, 5.0 million net tons for U. S. Steel Europe and 0.9 million net tons for Tubular.

UNITED STATES STEEL CORPORATION

CONDENSED STATEMENT OF OPERATIONS (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions, except per share amounts)

2023

2022

2023

2022

Net Sales

$

5,008

$

6,290

$

9,478

$

11,524

Operating expenses (income):

Cost of sales

4,161

4,661

8,114

8,484

Selling, general and administrative expenses

103

112

202

229

Depreciation, depletion and amortization

224

198

445

396

Earnings from investees

(38

)

(95

)

(25

)

(131

)

Asset impairment charges

151

4

157

Restructuring and other charges

2

17

3

34

Other gains, net

(8

)

(8

)

(18

)

(17

)

Total operating expenses

4,444

5,036

8,725

9,152

Earnings before interest and income taxes

564

1,254

753

2,372

Net interest and other financial benefits

(57

)

(8

)

(118

)

(18

)

Earnings before income taxes

621

1,262

871

2,390

Income tax expense

144

284

195

530

Net earnings

477

978

676

1,860

Less: Net earnings attributable to noncontrolling interests

Net earnings attributable to United States Steel Corporation

$

477

$

978

$

676

$

1,860

COMMON STOCK DATA:

Net earnings per share attributable to United States Steel Corporation Stockholders

Basic

$

2.12

$

3.80

$

2.99

$

7.17

Diluted

$

1.89

$

3.42

$

2.67

$

6.45

Weighted average shares, in thousands

Basic

225,538

257,267

226,430

259,348

Diluted

254,155

286,680

255,757

289,246

Dividends paid per common share

$

0.05

$

0.05

$

0.10

$

0.10

UNITED STATES STEEL CORPORATION

CONDENSED CASH FLOW STATEMENT (Unaudited)

Six Months Ended June 30,

(Dollars in millions)

2023

2022

Increase (decrease) in cash, cash equivalents and restricted cash

Operating activities:

Net earnings

$

676

$

1,860

Depreciation, depletion and amortization

445

396

Asset impairment charges

4

157

Restructuring and other charges

3

34

Pensions and other postretirement benefits

(84

)

(106

)

Deferred income taxes

135

247

Working capital changes

(111

)

(925

)

Income taxes receivable/payable

48

229

Other operating activities

(222

)

(216

)

Net cash provided by operating activities

894

1,676

Investing activities:

Capital expenditures

(1,353

)

(660

)

Proceeds from cost reimbursement government grants

53

Proceeds from sale of assets

3

12

Other investing activities

(7

)

Net cash used in investing activities

(1,350

)

(602

)

Financing activities:

Issuance of long-term debt, net of financing costs

238

4

Repayment of long-term debt

(20

)

(73

)

Common stock repurchased

(150

)

(522

)

Proceeds from government incentives

82

Other financing activities

(42

)

(39

)

Net cash provided by (used in) financing activities

26

(548

)

Effect of exchange rate changes on cash

8

(27

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(422

)

499

Cash, cash equivalents and restricted cash at beginning of year

3,539

2,600

Cash, cash equivalents and restricted cash at end of period

$

3,117

$

3,099

UNITED STATES STEEL CORPORATION

CONDENSED BALANCE SHEET (Unaudited)

June 30,

December 31,

(Dollars in millions)

2023

2022

Cash and cash equivalents

$

3,080

$

3,504

Receivables, net

1,864

1,635

Inventories

2,540

2,359

Other current assets

351

368

Total current assets

7,835

7,866

Operating lease assets

129

146

Property, plant and equipment, net

9,436

8,492

Investments and long-term receivables, net

832

840

Intangibles, net

457

478

Goodwill

920

920

Other noncurrent assets

700

716

Total assets

$

20,309

$

19,458

Accounts payable and other accrued liabilities

3,112

3,016

Payroll and benefits payable

457

493

Short-term debt and current maturities of long-term debt

98

63

Other current liabilities

405

387

Total current liabilities

4,072

3,959

Noncurrent operating lease liabilities

90

105

Long-term debt, less unamortized discount and debt issuance costs

4,153

3,914

Employee benefits

139

209

Deferred income tax liabilities

576

456

Other long-term liabilities

461

504

United States Steel Corporation stockholders' equity

10,725

10,218

Noncontrolling interests

93

93

Total liabilities and stockholders' equity

$

20,309

$

19,458

UNITED STATES STEEL CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED NET EARNINGS

Three Months Ended June 30,

Six Months Ended June 30,

(In millions of dollars)

2023

2022

2023

2022

Net earnings and diluted net earnings per share attributable to United States Steel Corporation, as reported

$

477

$

1.89

$

978

$

3.42

$

676

$

2.67

$

1,860

$

6.45

Restructuring and other charges

2

17

3

34

Stock-based compensation expense (a)

12

16

23

32

VEBA asset surplus adjustment

(8

)

(30

)

Asset impairment charges

151

4

157

Environmental remediation charges

2

2

Other charges, net

1

(2

)

Adjusted pre-tax net earnings to United States Steel Corporation

485

1,162

679

2,081

Tax impact of adjusted items (b)

(2

)

(46

)

(1

)

(55

)

Adjusted net earnings and diluted net earnings per share attributable to United States Steel Corporation

$

483

$

1.92

$

1,116

$

3.89

$

678

$

2.68

$

2,026

$

7.01

Weight average diluted ordinary shares outstanding, in millions

254.2

286.7

255.8

289.2

(a) The prior year was retroactively adjusted to reflect the reclassification of stock-based compensation expense. The adjustment was $9 million, $17 million, $12 million and $24 million, net of taxes, for the three and six months ended June 30, 2023 and 2022, respectively.

(b) The tax impact of adjusted items for the three months and six months ended June 30, 2023 is calculated using a blended tax rate of 24%. The tax impact of adjusted items for the three and six months ended June 30, 2022 was calculated using a blended tax rate of 25%.

UNITED STATES STEEL CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED EBITDA

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in millions)

2023

2022

2023

2022

Reconciliation to Adjusted EBITDA

Net earnings attributable to United States Steel Corporation

$

477

$

978

$

676

$

1,860

Income tax expense

144

284

195

530

Net interest and other financial benefits

(57

)

(8

)

(118

)

(18

)

Depreciation, depletion and amortization expense

224

198

445

396

EBITDA

788

1,452

1,198

2,768

Restructuring and other charges

2

17

3

34

Stock-based compensation expense (a)

12

16

23

32

Asset impairment charges

151

4

157

Environmental remediation charges

2

2

Other charges, net

1

(2

)

Adjusted EBITDA

$

804

$

1,636

$

1,231

$

2,989

(a) The prior year was retroactively adjusted to reflect the reclassification of stock-based compensation expense.

UNITED STATES STEEL CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF PAST TWELVE MONTHS OF FREE AND INVESTABLE CASH FLOW

3rd

4th

1st

2nd

Quarter

Quarter

Quarter

Quarter

Total of the

(Dollars in millions)

2022

2022

2023

2023

Four Quarters

Net cash provided by operating activities

$

1,074

$

755

$

181

$

713

$

2,723

Net cash used in investing activities

(463

)

(614

)

(738

)

(612

)

(2,427

)

Free cash flow

611

141

(557

)

101

296

Strategic capital expenditures

330

479

565

476

1,850

Investable free cash flow

$

941

$

620

$

8

$

577

$

2,146

We present adjusted net earnings, adjusted net earnings per diluted share, earnings 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, 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 and adjusted net earnings per diluted share are non-GAAP measures that exclude the effects of items that include: restructuring and other charges, stock-based compensation expense, VEBA asset surplus adjustment, asset impairment charges, environmental remediation charges, tax impact of adjusted items and other charges, net (Adjustment Items). Adjusted EBITDA is also a non-GAAP measure that excludes the effects of certain Adjustment Items. We present adjusted net earnings, adjusted net earnings 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 events that can obscure underlying trends. U. S. Steel's management considers adjusted net earnings, adjusted net earnings 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, adjusted net earnings 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, adjusted net earnings 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, adjusted net earnings per diluted share and adjusted EBITDA should not be considered a substitute for net earnings, earnings 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.

We also present free cash flow, a non-GAAP measure of cash generated from operations after any investing activity and investable free cash flow, a non-GAAP measure of cash generated from operations, after any investing activity adjusted for strategic capital expenditures. We believe that free cash flow and investable free cash flow provides further insight into the Company's overall utilization of cash. 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,” “plan,” “goal,” “future,” “will,” “may,” and similar expressions or by using future dates in connection with any discussion of, among other things, the construction or operation of new or existing facilities or operating capabilities, the timing, size and form of share repurchase transactions, operating or financial 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, changes in the global economic environment, including supply and demand conditions, inflation, interest rates, supply chain disruptions and changes in prices for our products, international trade duties and other aspects of international trade policy, statements regarding our future strategies, products and innovations, statements regarding our greenhouse gas emissions reduction goals, statements regarding existing or new regulations 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, 2022 and those described from time to time in our future reports filed with the Securities and Exchange Commission.

References to “U. S. Steel,” “the Company,” “we,” “us,” and “our” refer to United States Steel Corporation and its consolidated subsidiaries, and references to “Big River Steel” refer to Big River Steel Holdings LLC and its direct and indirect subsidiaries unless otherwise indicated by the context.

###

Founded in 1901, United States Steel Corporation is a leading steel producer. With an unwavering focus on safety, the Company’s customer-centric Best for All ® strategy is advancing a more secure, sustainable future for U. S. Steel and its stakeholders. With a renewed emphasis on innovation, U. S. Steel serves the automotive, construction, appliance, energy, containers, and packaging industries with high value-added steel products such as U. S. Steel’s proprietary XG3 ® advanced high-strength steel. The Company also maintains competitively advantaged iron ore production and has an annual raw steelmaking capability of 22.4 million net tons. U. S. Steel is headquartered in Pittsburgh, Pennsylvania, with world-class operations across the United States and in Central Europe. For more information, please visit www.ussteel.com.

View source version on businesswire.com:https://www.businesswire.com/news/home/20230727467846/en/

CONTACT: Arista Joyner

Manager

Corporate Communications

T - (412) 433-3994

E -AEjoyner@uss.comKevin Lewis

Vice President

Finance

T - (412) 433-6935

E -KLewis@uss.com

KEYWORD: UNITED STATES NORTH AMERICA PENNSYLVANIA

INDUSTRY KEYWORD: NATURAL RESOURCES MANUFACTURING STEEL MINING/MINERALS MACHINE TOOLS, METALWORKING & METALLURGY

SOURCE: United States Steel Corporation

Copyright Business Wire 2023.

PUB: 07/27/2023 04:17 PM/DISC: 07/27/2023 04:16 PM

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