United States Steel Corporation · NYSE:X
United States Steel — Q2 2023 Earnings Presentation
36 slides from United States Steel's earnings presentation, Jul 28, 2023
Slide 1: Earnings Call Second Quarter 2023
1 EARNINGS CALL SECOND QUARTER 2023 David Burritt President and Chief Executive Officer Jessica Graziano SVP and Chief Financial Officer Rich Fruehauf SVP, Chief Strategy and Sustainability Officer Kevin Lewis VP, Finance
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS These slides are being provided to assist readers in understanding the results of operations, financial condition and cash flows of United States Steel Corporation as of and for the second quarter 2023. Financial results as of and for the periods ended June 30, 2023 prov
Slide 3: Explanation of Use of Non-GAAP Measures
3 EXPLANATION OF USE OF NON-GAAP MEASURES 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 understandin
Slide 4: Advancing Towards Our Best for All Future
4 ADVANCING TOWARDS OUR BEST FOR ALL® FUTURE Current Landscape Delivered a strong second quarter performance Advancing strategic projects on-time and on-budget Bullish on U. S. Steel Challenges Transitioning to a less cost- / capital- and carbon-intensive business model to become the best steel comp
Slide 5: Today's Discussion
5 TODAY’S DISCUSSION BEST Focused on the things we can control Safety I Environmental I Operations I Partner Delivering our best Expanding BEST capabilities Delivering the new U. S. Steel today N G O E L E C T R I C A L S T E E L D U A L C O A T I N G L I N E B I G R I V E R 2
Slide 6: Favorable External Trends: Decarbonization
6 FAVORABLE EXTERNAL TRENDS: DECARBONIZATION Strengthening domestic supply chains Bringing advanced manufacturing back to our shores Serving one of the fastest growing markets +7% CAGR electrical steels1 vs. +1% CAGR sheet market Providing the most capable and efficient NGO steel in the market today
Slide 7: Bringing Unmatched NGO Electrical Steels to the Domestic Market
7 Unmatched in... Scale Becoming the market leader in NGO electrical steels Capabilities Partnering with customers on what matters most Customer value Centrally located to support manufacturing concentration in the U.S., Canada & Mexico BRINGING UNMATCHED NGO ELECTRICAL STEELS TO THE DOMESTIC MARKET
Slide 8: Delivering the New U. S. Steel Today
8 DELIVERING THE NEW U. S. STEEL TODAY Phase 1 Oct ’21–Feb ’22 Site Selection, OEM Selection and Contract Negotiation, Permitting 45% of spend 2% of execution 65% of spend 15% of execution 90% of spend 65% of execution 98% of spend 95% of execution 100% of spend 100% of execution ✓ ✓ 25-30% of equip
Slide 9: Favorable External Trends: Deglobalization
9 FAVORABLE EXTERNAL TRENDS: DEGLOBALIZATION Mined, melted and made in the U.S.A.
Slide 10: Favorable External Trends: Digitization
10 FAVORABLE EXTERNAL TRENDS: DIGITIZATION Energy cost optimization models inform electricity purchases Machine learning tools recommend real-time operating / process actions Advanced analytics improve costs and increase productivity
Slide 11: Q2 2023 Financial Performance
11 Q2 2023 FINANCIAL PERFORMANCE $804M Adjusted EBITDA Performance ~16% EBITDA margin Strong second quarter performance $1.92 Adjusted Earnings per Share ~150% sequential increase $~5.5B Strong Liquidity Including ~$3.1B of cash Note: For reconciliation of non-GAAP amounts see Appendix.
Slide 12: U. S. Steel: Stockholder Value-Creating Opportunity
12 U. S. STEEL: STOCKHOLDER VALUE-CREATING OPPORTUNITY Value creation framework E N H A N C E D G R O W T H & R E T U R N S + + + + B E T T E R C A P I T A L I N T E N S I T Y B E T T E R C A R B O N I N T E N S I T Y B E T T E R E A R N I N G S R E S I L I E N C Y B E T T E R F C F C O N V E R S I
Slide 13: Operating Segment Overview
13 OPERATING SEGMENT OVERVIEW Flat-Rolled Mini Mill USSE Tubular
Slide 14: A Unique Opportunity
14 A UNIQUE OPPORTUNITY Our stock provides a unique opportunity to … … invest in a growing business … with a transformed balance sheet … at a significant discount versus peers … and continued and meaningful direct returns to stockholders
Slide 15: Recap
15 RECAP Safely delivered a strong second quarter On pace for another year of healthy performance Delivering the new U. S. Steel today Delivering our “BEST” Advancing strategic investments Focused on the things we can control Saying what we’re doing … and doing what we say
Slide 16: Closing Remarks
16 CLOSING REMARKS 2022 Environmental, Social and Governance (ESG) Report Released on June 13, 2023 (link)
Slide 17: U. S. Steel Delivers Another Strong Quarter; Best for All Strategy On-Track
17 U. S. STEEL DELIVERS ANOTHER STRONG QUARTER; BEST FOR ALL STRATEGY ON-TRACK 2023 S E C O N D Q U A R T E R U P D A T E
Slide 18: Improving on Record Safety Performance
18 IMPROVING ON RECORD SAFETY PERFORMANCE 0.07 0.06 0.05 0.03 2020 2021 2022 YTD 2023 OSHA Days Away from Work 2 SAFETY FIRST BLS - Iron & Steel: 0.90 Benchmark 1 : Multiple years of record-setting performance 1 Bureau of Labor Statistics – Iron & Steel 2021 data. 2 Occupational Safety and Health Ad
Slide 19: Financial Updates
19 FINANCIAL UPDATES Reported Net Earnings Adjusted Net Earnings Segment EBIT1 Adjusted EBITDA2 Profit Margin: 16% 9% 4% 4% 10% $ Millions $ Millions $ Millions $ Millions 18% 10% 5% 4% 10% 23% 13% 6% 5% 12% Adjusted Profit Margin2: 26% 17% 10% 10% 16% Adjusted Profit Margin1: Note: For reconciliati
Slide 20: Key Operating Statistics Trends by Segment
20 KEY OPERATING STATISTICS TRENDS BY SEGMENT Flat-Rolled Operating Statistics Mini Mill Operating Statistics USSE Operating Statistics Tubular Operating Statistics Shipments: in 000s, net tons Production: in 000s, net tons Average Selling Price $ / net ton Q2 2022 2,424 2,365 $1,339 Q3 2022 2,265 2
Slide 21: EBITDA Trends by Segment
21 EBITDA TRENDS BY SEGMENT EBITDA Margin: 24% 19% 11% 5% 12% 31% 6% (5%) 8% 22% 22% (1%) (7%) (1%) 9% EBITDA Margin: 31% 39% 44% 48% 42% EBITDA Margin: Note: For reconciliation of non-GAAP amounts see Appendix. EBITDA Margin: $918 $644 $296 $140 $377 Q4 2022Q2 2022 Q3 2022 Q1 2023 Q2 2023 $309 $40
Slide 22: EBITDA Change Analysis – Flat-Rolled Segment
22 $ Millions, Q1 2023 vs. Q2 2023 EBITDA CHANGE ANALYSIS – FLAT-ROLLED SEGMENT Commercial The unfavorable impact is primarily the result of lower average realized prices and lower shipment volumes. Raw Materials The favorable impact is primarily the result of lower alloy cost and usage partially of
Slide 23: EBITDA Change Analysis – Mini Mill Segment
23 $ Millions, Q1 2023 vs. Q2 2023 EBITDA CHANGE ANALYSIS – MINI MILL SEGMENT Commercial The unfavorable impact is primarily the result of lower average realized prices. Raw Materials The favorable impact is primarily the result of lower scrap and pig iron costs. Operating Costs The change is not ma
Slide 24: EBITDA Change Analysis – U. S. Steel Europe Segment
24 $ Millions, Q1 2023 vs. Q2 2023 EBITDA CHANGE ANALYSIS – U. S. STEEL EUROPE SEGMENT Commercial The unfavorable impact is primarily the result of lower average realized prices. Raw Materials The favorable impact is primarily the result of lower iron ore and coal costs. Operating Costs The unfavora
Slide 25: EBITDA Change Analysis – Tubular Segment
25 $ Millions, Q1 2023 vs. Q2 2023 EBITDA CHANGE ANALYSIS – TUBULAR SEGMENT Commercial The favorable impact is primarily the result of higher average realized prices partially offset by lower shipment volumes. Raw Materials The favorable impact is primarily the result of lower scrap costs. Operating
Slide 26: Global Operating Footprint
26 Minntac M I N I M I L L T U B U L A R Clairton Keetac BF #4 BF #6 BF #8 BF #14 BF ‘A’ BF ‘B’ N O R T H A M E R I C A N F L A T - R O L L E D BF #1 BF #3 EAF #1 EAF #2 BF #1 BF #3BF #2 Seamless Pipe #1 ERW #2 ERW EAF Steelmaking / Seamless Pipe Indefinitely Idled Operating 1 Raw steel capability,
Slide 27: Cash and Liquidity
27 CASH AND LIQUIDITY Note: For reconciliation of non-GAAP amounts see Appendix. $682 $138 $4,090 $3,505 $894 FY 2019 FY 2020 H1 2023FY 2021 FY 2022 $749 $1,985 $2,522 $3,504 $3,080 FY 2019 H1 2023FY 2020 FY 2021 FY 2022 $2,284 $3,153 $4,971 $5,925 $5,518 H1 2023FY 2019 FY 2020 FY 2021 FY 2022 $2,89
Slide 28: Units Stats Stee! Corporation
Units Stats Stee! Corporation
Slide 29: Reconciliation Table
29 RECONCILIATION TABLE Flat-Rolled ($ millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Segment earnings (loss) before interest and income taxes $793 $518 $171 ($7) $231 Depreciation 125 126 125 147 146 Flat-Rolled Segment EBITDA $918 $644 $296 $140 $377 Tubular ($ millions) Q2 2022 Q3 2022 Q4 2022
Slide 30: Supplemental Information: Big River Steel LLC
30 SUPPLEMENTAL INFORMATION Big River Steel LLC1 Summary Table Customer Sales Intersegment Sales Net Sales EBIT2 $620M $168M $789M $138M Income Statement $ Millions Q2 2023 Cash and cash equivalents Total Assets 2029 Senior secured notes Environmental revenue bonds Financial leases and all other obl
Slide 31: Reconciliation Table: Net Debt
31 RECONCILIATION TABLE Short-term debt and current maturities of long-term debt Long-term debt, less unamortized discount and debt issuance costs Net Debt $ millions H1 2023YE 2022YE 2021YE 2020 $14 $3,627 YE 2019 $192 $4,695 $28 $3,863 $63 $3,914 $98 $4,153 Total Debt $4,251$3,977$3,891$4,887$3,64
Slide 32: Reconciliation Table: Free Cash Flow
32 RECONCILIATION TABLE Net cash provided by operating activities Net cash used in investing activities Free Cash Flow / Investable Free Cash Flow $ millions Q2 2023 $713 (612) Free Cash Flow $101 Strategic capital expenditures 476 Investable Free Cash Flow $577 Free Cash Flow / Investable Free Cash
Slide 33: Reconciliation Table: Adjusted Net Earnings
33 RECONCILIATION TABLE $ Millions Adjusted Net Earnings 3 The tax impact of adjusted items for the three months ended June 30, 2022 and three months ended September 30, 2022 is calculated using a blended tax rate of 25%. The tax impact of adjusted items for the three months ended December 31, 2022
Slide 34: Reconciliation Table: Adjusted EBITDA
34 RECONCILIATION TABLE $ Millions Adjusted EBITDA Adjusted EBITDA Q2 2023Q1 2023Q4 2022Q3 2022Q2 2022 $804$427$443$861$1,636 $978 284 (8) $1,254 198 $1,452 151 17 - 16 - - - Reported net earnings attributable to U. S. Steel Income tax expense Net interest and other financial costs Reported earning
Slide 35: Investor Relations
35 Kevin Lewis VP – Finance klewis@uss.com 412-433-6935 Eric Linn Director – Investor Relations eplinn@uss.com 412-433-2385 INVESTOR RELATIONS
Slide 36: United States Steel Corporation
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