United States Steel Corporation · NYSE:X
United States Steel — Q2 2024 Earnings Presentation
41 slides from United States Steel's earnings presentation, Aug 1, 2024
Slide 1: Earnings Second Quarter 2024
1 EARNINGS SECOND QUARTER 2024 August 1, 2024
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS This presentation contains information regarding the Company and NSC that may constitute “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 and other securities laws, that are subject to risks and uncertaintie
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 margin, adjusted net earnings per diluted share, earnings before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures,
Slide 4: Summary: Advancing Towards Our Best for All Future
4 SUMMARY: ADVANCING TOWARDS OUR BEST FOR ALL® FUTURE Current Landscape Progressing towards second half 2024 closing of the transaction with Nippon Steel Corporation (NSC) Tracking towards a Q4 2024 Big River 2 (BR2) start-up Challenges Successfully navigating a dynamic steel industry backdrop Solut
Slide 5: NSC & U. S. Steel: Progressing Towards Deal Closing
5 NSC & U. S. STEEL: PROGRESSING TOWARDS DEAL CLOSING Merger approved by shareholders Progressing towards regulatory approval ~99% of shareholder votes cast were in favor of the deal Receipt of all non-U.S. regulatory approvals: both antitrust and CFIUS reviews are underway Expected closing in H2 20
Slide 6: NSC & U. S. Steel: Best Steelmaker with World-Leading Capabilities
6 NSC & U. S. STEEL: BEST STEELMAKER WITH WORLD-LEADING CAPABILITIES BEST FOR EMPLOYEES BEST FOR COMMUNITIES BEST FOR INVESTORS + BEST FOR CUSTOMERS
Slide 7: NSC & U. S. Steel: Best for Employees
7 NSC & U. S. STEEL: BEST FOR EMPLOYEES Investing more in USW facilities NSC has committed to investing an additional $1.4 billion in capital expenditures into facilities covered by the current basic labor agreement (BLA) with the United Steelworkers (USW), above and beyond what is required in the B
Slide 8: NSC & U. S. Steel: Best for Customers
8 NSC & U. S. STEEL: BEST FOR CUSTOMERS Expanded capabilities, innovation and a global platform Sharing NSC’s and U. S. Steel’s world-leading technologies and manufacturing capabilities for the benefit of customers Accelerating decarbonization goals Collaborating on alternative technologies in decar
Slide 9: NSC & U. S. Steel: Best for Communities
9 NSC & U. S. STEEL: BEST FOR COMMUNITIES Driving the global steel industry towards carbon neutrality Advancing NSC’s breakthrough technologies to progress towards carbon neutrality: (1) hydrogen injection in BFs; (2) hydrogen use in DRI; and (3) high-grade steel through large size EAFs Moving Nippo
Slide 10: NSC & U. S. Steel: Best for Investors
10 NSC & U. S. STEEL: BEST FOR INVESTORS Maximizing stockholder value $55 per share transaction price, all-cash deal; ~$15 billion total enterprise value Significant premium for stockholders +40% premium to U. S. Steel’s closing stock price on December 15, 2023; +142% premium to the undisturbed pric
Slide 11: CGL2: Steady Progress Towards Run-Rate Production
11 CGL2: STEADY PROGRESS TOWARDS RUN-RATE PRODUCTION Successful CGL2 ramp-up Progressing as-expected; commercial sales of galvanized product already achieved / galvalume coils expected later this summer On-track for value creation Tracking towards expected in-year and run-rate EBITDA contributions;
Slide 12: BR2: Approaching Start-Up
12 BR2: APPROACHING START-UP First column set at BR2 Q4 2022 Approaching start-up First coil expected in Q4 2024
Slide 13: BR2: Planned Fourth Quarter 2024 Start-Up; Revised Capex
13 BR2: PLANNED FOURTH QUARTER 2024 START-UP; REVISED CAPEX Note: DR = Direct Reduced; NGO = Non-grain Oriented. CGL2 COMPLETE NGO COMPLETE GARY PIG COMPLETE DR PELLET COMPLETE On track for fourth quarter 2024 start-up Updated total capex = $3.35B BR2 ON TRACK 2024 enterprise capital expenditure for
Slide 14: BR2: Planned Fourth Quarter 2024 Start-Up
14 BR2: PLANNED FOURTH QUARTER 2024 START-UP Endless Strip Production induction furnaces Endless Strip Production downcoiler Hot Autonomous Coil Storage coil staging area
Slide 15: Q2 2024 Financial Performance: Summary
15 Q2 2024 FINANCIAL PERFORMANCE: SUMMARY $443M Adjusted EBITDA ~11% EBITDA margin Second quarter performance $183M Reported Net Earnings $0.72 per diluted share Note: For reconciliation of non-GAAP amounts, see Appendix. $211M Adjusted Net Earnings $0.84 per diluted share $4.3B Liquidity Including
Slide 16: Q2 2024 Financial Performance: Each Segment Contributing
16 Q2 2024 FINANCIAL PERFORMANCE: EACH SEGMENT CONTRIBUTING Meaningful contributions from each operating segment Million Adjusted EBITDA $443 N. American Flat-Rolled Segment Resilient average selling prices and volumes reflect successful fixed price contract negotiations and a diverse product mix; m
Slide 17: Q3 2024 Outlook: $275 to $325 Million Adjusted EBITDA
17 Q3 2024 OUTLOOK: $275 TO $325 MILLION ADJUSTED EBITDA North American Flat-Rolled Mini Mill1 U. S. Steel Europe Tubular Raw Materials No material change expected Operating Costs Favorable impact expected from reduced spending Commercial Unfavorable impact expected from lower average selling prices
Slide 18: 2024 Second Quarter Update
18 2024 S E C O N D Q U A R T E R U P D A T E
Slide 19: Financial Updates
19 FINANCIAL UPDATES Reported Net Earnings (Loss) Adjusted Net Earnings Segment EBIT1 Adjusted EBITDA2 Profit Margin: 10% 7% (2%) 4% 4% $ Millions $ Millions $ Millions $ Millions 10% 8% 4% 5% 5% 12% 8% 2% 5% 5% Adjusted EBITDA Margin:2 16% 13% 8% 10% 11% Segment EBIT Margin:1 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 U. S. Steel Europe (USSE) Operating Statistics Tubular Operating Statistics Shipments: in 000s, net tons Production: in 000s, net tons Average Selling Price: $ / net ton Q2 2023 2,529 2,235
Slide 21: EBITDA Trends by Segment
21 EBITDA TRENDS BY SEGMENT EBITDA Margin: 12% 13% 5% 6% 12% 22% 13% 12% 21% 12% 9% 1% 0% 5% 3% EBITDA Margin: 42% 32% 38% 25% 17% EBITDA Margin: Note: For reconciliation of non-GAAP amounts, see Appendix. 1 Q4 2023 North American Flat-Rolled segment includes the impact of construction and related s
Slide 22: Flat-Rolled Segment EBITDA Change Analysis
22 $ Millions, Q1 2024 vs. Q2 2024 FLAT-ROLLED SEGMENT EBITDA CHANGE ANALYSIS Commercial The unfavorable impact is primarily the result of lower shipment volumes and lower average realized prices. Raw Materials The favorable impact is primarily related to lower additions, coal, and scrap costs. Oper
Slide 23: Mini Mill Segment EBITDA Change Analysis
23 $ Millions, Q1 2024 vs. Q2 2024 MINI MILL SEGMENT EBITDA CHANGE ANALYSIS $173 $74 $13 Q2 2023 ($186) Commercial $87 Raw Materials Operating Costs ($13) Other Q2 2024 $ Millions, Q2 2023 vs. Q2 2024 $145 $74 $29 Q1 2024 ($102) Commercial Raw Materials $3 Operating Costs ($1) Other Q2 2024 Note: Q2
Slide 24: U. S. Steel Europe Segment EBITDA Change Analysis
24 $46 $21 $16 $6 Q1 2024 ($39) Commercial Raw Materials ($8) Operating Costs Other Q2 2024 $ Millions, Q1 2024 vs. Q2 2024 U. S. STEEL EUROPE SEGMENT EBITDA CHANGE ANALYSIS $97 $21 Q2 2023 ($167) Commercial $58 Raw Materials ($1) Operating Costs $34 Other Q2 2024 $ Millions, Q2 2023 vs. Q2 2024 Com
Slide 25: Tubular Segment EBITDA Change Analysis
25 $ Millions, Q1 2024 vs. Q2 2024 TUBULAR SEGMENT EBITDA CHANGE ANALYSIS $169 $42$8 $14 Q2 2023 ($152) Commercial Raw Materials $3 Operating Costs Other Q2 2024 $ Millions, Q2 2023 vs. Q2 2024 $69 $42 $5 Q1 2024 ($27) Commercial Raw Materials ($2) Operating Costs ($3) Other Q2 2024 Commercial The u
Slide 26: Operating Footprint and Capability
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 IdledOperating 1 Raw steel capability, e
Slide 27: Cash and Liquidity
27 CASH AND LIQUIDITY Note: For reconciliation of non-GAAP amounts, see Appendix. 1 TTM = Trailing twelve months $138 $4,090 $3,505 $2,100 $1,652 FY 2020 FY 2021 FY 2022 FY 2023 TTM Q2 20241 $1,985 $2,522 $3,504 $2,948 $2,031 FY 2020 FY 2021 FY 2022 FY 2023 Q2 2024 $3,153 $4,971 $5,925 $5,174 $4,259
Slide 28: Supplemental Information
ZERO EMISSIONS = —~ Pures HICLAIRTON PLANT
Slide 29: Supplemental Information: 2023 Shipments by Product Mix
29 SUPPLEMENTAL INFORMATION HRC (30%) CRC (40%) Coated (25%) Tin (5%) HRC (60%) CRC (15%) Coated (25%) HRC (60%) CRC (10%) Coated (20%) Other (10%) Seamless (100%) Flat-Rolled Mini Mill1 U. S. Steel Europe Tubular 2023 Shipments by product mix 1 Mini Mill segment product mix, once Big River 2 (BR2)
Slide 30: Supplemental Information: 2023 Revenue by Product Mix
30 SUPPLEMENTAL INFORMATION HRC (20%) CRC (40%) Coated (30%) Other (5%) HRC (55%) CRC (15%) Coated (30%) HRC (45%) CRC (10%) Coated (35%) Other (5%) Tubular Product (100%) Flat-Rolled Mini Mill U. S. Steel Europe Tubular 2023 Revenue by product mix Semi-finished (5%) Semi-finished (5%)
Slide 31: Supplemental Information: 2023 Shipments by Major Market
31 SUPPLEMENTAL INFORMATION Service Centers (17%) Converters (25%) Auto (33%) Construction (10%) Oil & Gas (94%) Flat-Rolled Mini Mill U. S. Steel Europe Tubular 2023 Shipments by major market Packaging (7%) Appliance & Electrical (5%) Other (3%) Service Centers (46%) Converters (30%) Auto (1%) Cons
Slide 32: Supplemental Information: 2023 Contract / Spot Mix by Segment
32 SUPPLEMENTAL INFORMATION Firm (23%) Market based quarterly (29%) Market based monthly (15%) Spot (33%) Firm (6%) Cost based (9%) Market based quarterly (5%) Market based monthly (38%) Spot (42%) Firm (31%) Cost based (2%) Market based quarterly (2%) Market based monthly (10%) Spot (55%) Program (
Slide 33: Supplemental Information: Blast Furnace Steelmaking Cost Structure
33 SUPPLEMENTAL INFORMATION Cost structure: Blast furnace steelmaking illustrative Coke (~35%) Natural Gas (~5%) Scrap (~30%) Raw Material Costs1 Iron ore (~30%) Key Inputs Ratio1 Pricing Convention Iron Ore 1.3 tons of pellets / ton of raw steel x raw steel volume (million tons) x iron ore price as
Slide 34: Supplemental Information: Electric Arc Furnace Steelmaking Cost Structure
34 SUPPLEMENTAL INFORMATION Cost structure: Electric arc furnace steelmaking illustrative Prime Scrap (~30%) Pig Iron (~25%) HBI / DRI (~10%) Raw Material Costs Obsolete Scrap (~35%) Key Inputs Ratio Pricing Convention Scrap 0.8 tons of scrap / ton of raw steel x raw steel volume (million tons) x sc
Slide 35: Reconciliation Table
35 RECONCILIATION TABLE Flat-Rolled ($ millions) Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Segment earnings (loss) before interest and income taxes $231 $225 ($31) $34 $183 Depreciation 146 153 159 122 127 Flat-Rolled Segment EBITDA $377 $378 $128 $156 $310 Segment EBIT Margin1 8% 8% (1%) 1% 7% Segmen
Slide 36: Supplemental Information: Big River Steel LLC Summary Table
36 SUPPLEMENTAL INFORMATION Big River Steel LLC1 Summary Table Customer Sales Intersegment Sales Net Sales EBIT2 $512M $91M $603M $57M Income Statement $ Millions Q2 2024 Cash and cash equivalents Total Assets 2029 Senior secured notes Environmental revenue bonds Financial leases and all other oblig
Slide 37: Reconciliation Table: Net Debt
37 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 YE 2023YE 2022YE 2021YE 2020 $192 $4,695 $28 $3,863 $63 $3,914 $142 $4,080 Total Debt $4,222$3,977$3,891$4,887 Less: Cash and cash eq
Slide 38: Reconciliation Table: Adjusted Net Earnings
38 RECONCILIATION TABLE Adjusted Net Earnings 1 The tax impact of the adjusted items in 2024 is calculated using a blended tax rate of 24%. The tax impact of adjusted items in 2023 is calculated for U.S. domestic items using a blended tax rate of 24% and for USSE items 21%. $167$350$483 Reported net
Slide 39: Reconciliation Table: Adjusted EBITDA
39 RECONCILIATION TABLE $ Millions Adjusted EBITDA Adjusted EBITDA Q4 2023Q3 2023Q2 2023 $330$578$804 Reported net earnings attributable to U. S. Steel Income tax expense Net interest and other financial costs Reported earning before interest and income taxes Depreciation, depletion and amortization
Slide 40: Investor Relations
40 Emily Chieng Investor Relations Officer ecchieng@uss.com 412-618-9554 Eric Linn Director – Investor Relations eplinn@uss.com 412-433-2385 INVESTOR RELATIONS
Slide 41: United States Steel Corporation
ss) United States Steel Corporation