United States Steel Corporation · NYSE:X
United States Steel — Q3 2024 Earnings Presentation
43 slides from United States Steel's earnings presentation, Oct 31, 2024
Slide 1: Earnings Presentation Third Quarter 2024
1 EARNINGS PRESENTATION THIRD QUARTER 2024 October 31, 2024
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS This presentation contains information regarding the Company and Nippon Steel Corporation (“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 subj
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, adjusted EBITDA margin and adjusted profit margin, which
Slide 4: Summary: Advancing Towards Our Best for All Future
4 SUMMARY: ADVANCING TOWARDS OUR BEST FOR ALL® FUTURE Current Landscape Progressing towards closing of the transaction with Nippon Steel Corporation (NSC) by the end of the year The first coil at Big River 2 (BR2) was successfully produced on October 31, 2024 Challenges Successfully navigating a dyn
Slide 5: NSC & U. S. Steel: Progressing Towards Deal Closing
5 NSC & U. S. STEEL: PROGRESSING TOWARDS DEAL CLOSING Board of Arbitration rules in favor of U. S. Steel Working towards regulatory approval Confirmed that the successorship clause has been satisfied by U. S. Steel Receipt of all non-U.S. regulatory approvals Both U.S. antitrust and CFIUS reviews pr
Slide 6: Board of Arbitration Rules in Favor of U. S. Steel
6 NSC & U. S. STEEL: BOARD OF ARBITRATION RULES IN FAVOR OF U. S. STEEL U. S. Steel has satisfied the successorship obligations in the Basic Labor Agreement (BLA) with the United Steelworkers (USW) All BLA issues between U. S. Steel and USW related to the transaction are now resolved No further acti
Slide 7: NSC: Additional Commitments to Strengthen Transaction
7 NSC: ADDITIONAL COMMITMENTS TO STRENGTHEN U. S. STEEL TRANSACTION Mon Valley Works: To replace and/or upgrade the existing hot strip mill and other facilities with an investment of at least $1B. To improve yield, energy efficiency, product quality, operating effectiveness and expand the markets an
Slide 8: Best Steelmaker with World-Leading Capabilities
8 NSC & U. S. STEEL: BEST STEELMAKER WITH WORLD-LEADING CAPABILITIES BEST FOR EMPLOYEES BEST FOR COMMUNITIES BEST FOR INVESTORS + BEST FOR CUSTOMERS
Slide 9: BR2: First Coil Achieved - A World-Class Mini Mill
9 Big River 2 First Coil The U. S. Steel Competitive Edge: Creating a capability edge to produce wider and thinner steels with Endless Casting & Rolling Technology Creating a customer edge by building a suite of finishing assets for broader customer reach into value-added products Creating a sustain
Slide 10: BR2: North America's Most Technologically Advanced Steel Mill
10 Then November 2022 – Construction Begins Now October 2024 – First Coil Achieved BR2: NORTH AMERICA'S MOST TECHNOLOGICALLY ADVANCED STEEL MILL
Slide 11: Mini Mill Facilities
11 Mini Mill Facilities: F A C I L I T Y H I G H L I G H T S I N D U S T R Y - L E A D I N G P R O D U C T I V I T Y C A R B O N I M P A C T 3.0 MNT capability per year two EAFs3.3 MNT capability per year two EAFs 1 Endless casting & rolling line Light gauge / wide; ideal for auto end-market Best-in
Slide 12: BR2: Enhancing the Mini Mill Segment's Earnings Profile
12 Product mix 3rd party shipments Coated 25% 60% 25% 15% Hot rolled coil Cold rolled coil 2 0 2 3 Coated 40% 15% 40% Hot rolled coil Cold rolled coil F U T U R E P R O D U C T M I X NGO 5% Higher through- cycle margin product mix Enhancing our earnings profile Increasing mix of value- added product
Slide 13: Financial Performance
13 FINANCIAL PERFORMANCE
Slide 14: Q3 2024 Financial Performance: Summary
14 Q3 2024 FINANCIAL PERFORMANCE: SUMMARY $319M Adjusted EBITDA ~8% adjusted EBITDA margin Third quarter performance $119M Reported Net Earnings $0.48 per diluted share Note: For reconciliation of non-GAAP amounts, see Appendix. $140M Adjusted Net Earnings $0.56 per diluted share $4.1B Liquidity Inc
Slide 15: Positive EBITDA Across Each Segment
15 Q3 2024 FINANCIAL PERFORMANCE: POSITIVE EBITDA ACROSS EACH SEGMENT Resilience in our business model offsets weaker market environment Million Adjusted EBITDA $319 North American Flat-Rolled Segment Resilient average selling prices and volumes reflect a strong commercial strategy and a diverse pro
Slide 16: Q4 2024 Outlook: $225 to $275 Million Adjusted EBITDA
16 Q4 2024 OUTLOOK: $225 TO $275 MILLION ADJUSTED EBITDA North American Flat-Rolled Mini Mill1 U. S. Steel Europe Tubular Raw Materials Unfavorable raw material pricing expected Operating Costs No material change expected Commercial Unfavorable impact expected from lower average selling prices Raw M
Slide 17: Resilient Performance Despite a Challenging Market Environment
17 RESILIENT PERFORMANCE DESPITE A CHALLENGING MARKET ENVIRONMENT 2024E Outlook from Q3 2023 Earnings Presentation1 Commercial Strategic Investments All Other Latest 2024E Expectations ~$2B (~$1.0B) (~$0.2B) ~$0.7B ~$1.4 - $1.5B • Timing of BR2 startup • Extended qualification period for automotive
Slide 18: Strategic Growth Capital Cycle Approaching End
18 STRATEGIC GROWTH CAPITAL CYCLE APPROACHING END Capital Expenditure by Year Capex is stepping down following completion of strategic growth spend ~$0.7B ~$0.2B 2021 ~$0.6B ~$1.2B 2022 ~$0.6B ~$2.0B 2023 ~$0.7B ~$1.6B 2024E ~$0.7B ~$0.2B ~$0.1B 2025E1 Expected Future State ~$0.9B ~$1.8B ~$2.6B ~$2.
Slide 19: Higher Capital Required to Finish Strategic Projects by 2024
19 HIGHER CAPITAL REQUIRED TO FINISH STRATEGIC PROJECTS BY 2024 2024 Capital Expenditure Evolution … How did we get here? 2024 capex is now ~$2.3B; BR2 capex now $3.6 billion Previous Budget BR2 2025 Growth Capex Pull Forward Latest Budget ~$1.9B ~$0.2B ~$0.2B ~$2.3B Primarily related to labor cost
Slide 20: 2024 Third Quarter Update
20 2024 T H I R D Q U A R T E R U P D A T E
Slide 21: Financial Updates
21 FINANCIAL UPDATES Reported Net Earnings (Loss) Adjusted Net Earnings Segment EBIT2 Adjusted EBITDA3 Profit Margin: 7% (2%) 4% 4% 3% $ Millions $ Millions $ Millions $ Millions 8% 4% 5% 5% 8% 2% 5% 5% Adjusted EBITDA Margin:3 13% 8% 10% 11%Segment EBIT Margin:2 Note: For reconciliation of non-GAAP
Slide 22: Key Operating Statistics Trends by Segment
22 KEY OPERATING STATISTICS TRENDS BY SEGMENT Flat-Rolled Operating Statistics Mini Mill Operating Statistics U. S. Steel Europe (USSE) Operating Statistics Tubular Operating Statistics1 Shipments: in 000s, net tons Production: in 000s, net tons Average Selling Price: $ / net ton Q3 2023 2,390 2,159
Slide 23: EBITDA Trends by Segment
23 EBITDA TRENDS BY SEGMENT EBITDA Margin: 13% 5% 6% 12% 13% 12% 21% 12% 1% 0% 5% 3% EBITDA Margin: 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 start-up costs of
Slide 24: Flat-Rolled Segment EBITDA Change Analysis
24 $ Millions, Q2 2024 vs. Q3 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 change is not material. Operating Costs The unfavorable impact is primarily the resul
Slide 25: Mini Mill Segment EBITDA Change Analysis
25 $ Millions, Q2 2024 vs. Q3 2024 MINI MILL SEGMENT EBITDA CHANGE ANALYSIS $84 $22 $29 $5 Q3 2023 ($68) Commercial Raw Materials Operating Costs ($28) Other Q3 2024 $ Millions, Q3 2023 vs. Q3 2024 $74 $22 $12 Q2 2024 ($44) Commercial Raw Materials ($3) Operating Costs ($17) Other Q3 2024 Note: Q3 2
Slide 26: U. S. Steel Europe Segment EBITDA Change Analysis
26 $21 $30 $39 $3 $6 Q2 2024 ($21) Commercial Raw Materials Operating Costs Other Q3 2024 $ Millions, Q2 2024 vs. Q3 2024 U. S. STEEL EUROPE SEGMENT EBITDA CHANGE ANALYSIS $10 $39 $18 Q3 2023 ($44) Commercial $57 Raw Materials ($2) Operating Costs Other Q3 2024 $ Millions, Q3 2023 vs. Q3 2024 Commer
Slide 27: Tubular Segment EBITDA Change Analysis
27 $ Millions, Q2 2024 vs. Q3 2024 TUBULAR SEGMENT EBITDA CHANGE ANALYSIS $99 $7 $9 Q3 2023 ($99) Commercial Raw Materials ($1) Operating Costs $3 Other Q3 2024 $ Millions, Q3 2023 vs. Q3 2024 $42 $9 $2 Q2 2024 ($27) Commercial Raw Materials ($4) Operating Costs ($4) Other Q3 2024 Commercial The unf
Slide 28: Asset Footprint and Capabilities
28 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 29: Cash and Liquidity
29 CASH AND LIQUIDITY Note: For reconciliation of non-GAAP amounts, see Appendix. 1 TTM = Trailing twelve months $138 $4,090 $3,505 $2,100 $1,100 FY 2020 FY 2021 FY 2022 FY 2023 TTM Q3 20241 $1,985 $2,522 $3,504 $2,948 $1,773 FY 2020 FY 2021 FY 2022 FY 2023 Q3 2024 $3,153 $4,971 $5,925 $5,174 $4,052
Slide 30: Appendix
30 APPENDIX
Slide 31: Supplemental Information: 2023 Shipments by Product Mix
31 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 Tubular2023 Shipments by product mix 1 Mini Mill segment product mix, once Big River 2 (BR2) i
Slide 32: Supplemental Information: 2023 Revenue by Product Mix
32 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 Tubular2023 Revenue by product mix Semi-finished (5%) Semi-finished (5%)
Slide 33: Supplemental Information: 2023 Shipments by Major Market
33 SUPPLEMENTAL INFORMATION Service Centers (17%) Converters (25%) Auto (33%) Construction (10%) Oil & Gas (94%) Flat-Rolled Mini Mill U. S. Steel Europe Tubular2023 Shipments by major market Packaging (7%) Appliance & Electrical (5%) Other (3%) Service Centers (46%) Converters (30%) Auto (1%) Const
Slide 34: Supplemental Information: Contract / Spot Mix by Segment
34 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 35: Cost Structure: Blast Furnace Steelmaking
35 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 36: Cost Structure: Electric Arc Furnace Steelmaking
36 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 37: Reconciliation Table: Segment EBITDA
37 RECONCILIATION TABLE Flat-Rolled ($ millions) Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Segment earnings (loss) before interest and income taxes $225 ($31) $34 $183 $106 Depreciation 153 159 122 127 140 Flat-Rolled Segment EBITDA $378 $128 $156 $310 $246 Segment EBIT Margin1 8% (1%) 1% 7% 4% Segmen
Slide 38: Supplemental Information: Big River Steel LLC
38 SUPPLEMENTAL INFORMATION Big River Steel LLC1 Summary Table Customer Sales Intersegment Sales Net Sales EBIT2 $508M $93M $601M $13M Income Statement $ Millions Q3 2024 Cash and cash equivalents Total Assets 2029 Senior secured notes Environmental revenue bonds Financial leases and all other oblig
Slide 39: Reconciliation Table: Net Debt
39 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 40: Reconciliation Table: Adjusted Net Earnings
40 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 Reported net ear
Slide 41: Reconciliation Table: Adjusted EBITDA
41 RECONCILIATION TABLE $ Millions Adjusted EBITDA Adjusted EBITDA Q4 2023Q3 2023 $330$578 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 expense EB
Slide 42: Investor Relations
42 Emily Chieng Investor Relations Officer ecchieng@uss.com 412-618-9554 Alana Blatz Manager – Investor Relations agblatz@uss.com 412-303-6521 INVESTOR RELATIONS
Slide 43: United States Steel Corporation
ss) United States Steel Corporation