United States Steel Corporation · NYSE:X
United States Steel — FY2023 Earnings Presentation
44 slides from United States Steel's earnings presentation, Feb 1, 2024
Slide 1: Earnings Fourth Quarter & Full Year 2023
1 EARNINGS FOURTH QUARTER & FULL YEAR 2023
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: Legal Disclaimers
3 LEGAL DISCLAIMERS Additional Information and Where to Find It This presentation relates to the proposed transaction between the United States Steel Corporation (“U. S. Steel”) and Nippon Steel Corporation (“NSC”). In connection with the proposed transaction, U. S. Steel has filed and will file rel
Slide 4: Explanation of Use of Non-GAAP Measures
4 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 5: Summary: Advancing Towards Our Best for All Future
5 SUMMARY: ADVANCING TOWARDS OUR BEST FOR ALL® FUTURE Current Landscape Strong 2023 with BEST performance • BEST Safety: 0.04 DAFW1, 15x better than the industry • BEST Partner to the marketplace: Providing the steels our customers crave • BEST stockholder return in the sector: 96% TSR2 Bullish for
Slide 6: Nippon Steel & U. S. Steel: Creating a Global Steel Leader in Value and Innovation
6 NIPPON STEEL & U. S. STEEL: CREATING A GLOBAL STEEL LEADER IN VALUE AND INNOVATION ✓ ✓ ✓ Moving forward together as the ‘Best Steelmaker with World- leading Capabilities’ Incorporating Nippon Steel’s world-class electrical and advanced high-strength auto steels Combining best-in-class technologies
Slide 7: Best Steelmaker with World-leading Capabilities
7 ‘Best Steelmaker with World-leading Capabilities’ NGO electrical steel can be used in motor cores for electric vehicles (EVs) and contribute to higher performance Meeting the growing electrical steel demand Combining Best-in-class Capabilities and Innovation ~$522M 2022 research & development spen
Slide 8: Nippon Steel & U. S. Steel: Maximizing Stockholder Value
8 NIPPON STEEL & U. S. STEEL: MAXIMIZING STOCKHOLDER VALUE Premium for stockholders The $55.00 per share transaction price represents a +40% premium to U. S. Steel’s closing stock price on December 15, 2023; +142% premium to the undisturbed price prior to the announcement of the strategic alternativ
Slide 9: Transaction Overview: Like-Minded Steel Companies
9 TRANSACTION OVERVIEW: LIKE-MINDED STEEL COMPANIES Unwavering commitment to safety Safety performance of both organizations are multiples better than the industry average Ethical business practices Shared goals and values Committed to decarbonization; shared 2050 targets Promoting hydrogen and CCUS
Slide 10: Q4 2023 Financial Performance
10 Q4 2023 FINANCIAL PERFORMANCE $330M Adjusted EBITDA Performance ~8% EBITDA margin Fourth quarter performance ($80M) Reported Net Loss ($0.36) per diluted share Note: For reconciliation of non-GAAP amounts, see Appendix. $181M Investable Free Cash Flow ($244M) of free cash flow which includes stra
Slide 11: Advancing Strategic Projects
11 ADVANCING STRATEGIC PROJECTS Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 3 5 DR PELLET COMPLETE BR2 STATUS CGL21 STATUS NGO COMPLETE GARY PIG COMPLETE31 2 4 5 1 2 4 Ahead of schedule On budget On time On budget On time On budget On time On budget On time BR2 total budget increased from $3.0 to $3.2 b
Slide 12: Progress Update: Recently Completed Strategic Projects
12 PROGRESS UPDATE: RECENTLY COMPLETED STRATEGIC PROJECTS Note: DR = Direct Reduced; NGO = Non-grain Oriented. KEETAC DR-Grade Pellets NGO Electrical Steel Line
Slide 13: Progress Update: Big River
13 PROGRESS UPDATE: BIG RIVER 2 Electric Arc Furnace steelmaking plant Endless Strip Production mill area Endless Strip Production caster turret
Slide 14: 2023 Fourth Quarter & Full Year Update
14 2023 F O U R T H Q U A R T E R & F U L L Y E A R U P D A T E
Slide 15: Improving on Record Safety Performance
15 IMPROVING ON RECORD SAFETY PERFORMANCE 0.07 0.06 0.05 0.04 2020 2021 2022 2023 OSHA Days Away from Work 2 BLS - Iron & Steel: 0.60 Benchmark 1 : Multiple years of record-setting performance 1 Bureau of Labor Statistics – Iron & Steel 2022 data. 2 Occupational Safety and Health Administration (OSH
Slide 16: Q4 2023 Financial Updates
16 Q4 2023 FINANCIAL UPDATES Reported Net Earnings (Loss) Adjusted Net Earnings Segment EBIT1 Adjusted EBITDA2 Profit Margin: 4% 4% 10% 7% (2%) $ Millions $ Millions $ Millions $ Millions 5% 4% 10% 8% 4% 6% 5% 12% 8% 2% Adjusted EBITDA Margin:2 10% 10% 16% 13% 8% Segment EBIT Margin:1 Note: For reco
Slide 17: Full Year 2023 Financial Updates
17 FULL YEAR 2023 FINANCIAL UPDATES Reported Net Earnings (Loss) Adjusted Net Earnings (Loss) Segment EBIT1 Adjusted EBITDA2 Profit Margin: (5%) (12%) 21% 12% 5% $ Millions $ Millions $ Millions $ Millions 0% (9%) 22% 13% 7% 1% (8%) 24% 17% 7% Adjusted EBITDA Margin:2 5% (2%) 28% 20% 12% Segment EBI
Slide 18: Key Operating Statistics Trends by Segment
18 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 Q4 2022 1,952 1,885
Slide 19: Key Operating Statistics Trends by Segment
19 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 FY 2019 11,409 10,70
Slide 20: EBITDA Trends by Segment
20 EBITDA TRENDS BY SEGMENT EBITDA Margin: 11% 5% 12% 13% 5% (5%) 8% 22% 13% 12% (7%) (1%) 9% 1% 0% EBITDA Margin: 44% 48% 42% 32% 38% 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 relat
Slide 21: EBITDA Trends by Segment
21 EBITDA TRENDS BY SEGMENT EBITDA Margin: 7% (1%) 26% 19% 9% - - 39% 21% 14% 1% 5% 25% 12% 3% EBITDA Margin: (2%) (22%) 6% 37% 41% EBITDA Margin: Note: For reconciliation of non-GAAP amounts, see Appendix. 1 2023 North American Flat-Rolled segment EBITDA includes the impact of approximately $10 mil
Slide 22: Flat-Rolled Segment EBITDA Change Analysis
22 $ Millions, Q3 2023 vs. Q4 2023 FLAT-ROLLED SEGMENT EBITDA CHANGE ANALYSIS Commercial The unfavorable impact is primarily the result of lower average realized prices, which was partially offset by higher realized volumes and a more profitable product mix. Raw Materials The favorable impact is pri
Slide 23: Mini Mill Segment EBITDA Change Analysis
23 $ Millions, Q3 2023 vs. Q4 2023 MINI MILL SEGMENT EBITDA CHANGE ANALYSIS Commercial The favorable impact is primarily the result of higher average realized prices. Raw Materials The favorable impact is primarily the result of lower metallics costs. Operating Costs The favorable impact is primaril
Slide 24: U. S. Steel Europe Segment EBITDA Change Analysis
24 $10 $3 Q3 2023 ($54) Commercial $10 Raw Materials $36 Operating Costs $1 Other Q4 2023 $ Millions, Q3 2023 vs. Q4 2023 U. S. STEEL EUROPE SEGMENT EBITDA CHANGE ANALYSIS Commercial The unfavorable impact is primarily the result of lower average realized prices, which was partially offset by labor
Slide 25: Tubular Segment EBITDA Change Analysis
25 $ Millions, Q3 2023 vs. Q4 2023 TUBULAR SEGMENT EBITDA CHANGE ANALYSIS 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 costs and higher yields. Operating Costs The change is not m
Slide 26: Operating Footprint and Capability by Segment
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. $682 $138 $4,090 $3,505 $2,100 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 $749 $1,985 $2,522 $3,504 $2,948 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 $2,284 $3,153 $4,971 $5,925 $5,174 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Slide 28: Appendix
28 APPENDIX
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%) Tin (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) is
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%) Tubular / 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: 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: Cost Structure: Blast Furnace Steelmaking
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: Cost Structure: Electric Arc Furnace Steelmaking
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: Quarterly Segment EBITDA
35 RECONCILIATION TABLE Flat-Rolled ($ millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Segment earnings (loss) before interest and income taxes $171 ($7) $231 $225 ($31) Depreciation 125 147 146 153 159 Flat-Rolled Segment EBITDA $296 $140 $377 $378 $128 Segment EBIT Margin1 6% (0%) 8% 8% (1%) Seg
Slide 36: Reconciliation Table: Annual Segment EBITDA
36 RECONCILIATION TABLE Flat-Rolled ($ millions) 2019 2020 2021 2022 2023 Segment earnings (loss) before interest and income taxes $196 ($596) $2,685 $2,008 $418 Depreciation 456 496 491 499 605 Flat-Rolled Segment EBITDA $652 ($100) $3,176 $2,507 $1,023 Tubular ($ millions) 2019 2020 2021 2022 2023
Slide 37: Supplemental Information: Big River Steel LLC Summary
37 SUPPLEMENTAL INFORMATION Big River Steel LLC1 Summary Table Customer Sales Intersegment Sales Net Sales EBIT2 $523M $76M $599M $38M Income Statement $ Millions Q4 2023 Cash and cash equivalents Total Assets 2029 Senior secured notes Environmental revenue bonds Financial leases and all other oblig
Slide 38: Reconciliation Table: Net Debt
38 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 $14 $3,627 YE 2019 $192 $4,695 $28 $3,863 $63 $3,914 $142 $4,080 Total Debt $4,222$3,977$3,891$4,887$3,6
Slide 39: Reconciliation Table: Free Cash Flow (Quarterly)
39 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 Best for All Strategic capital expenditures 476 Investable Free Cash Flow $577 Free Cash Flow / Investa
Slide 40: Reconciliation Table: Free Cash Flow (Annual)
40 RECONCILIATION TABLE 2020 $138 (563) ($425) - ($425) Free Cash Flow / Investable Free Cash Flow 2019 $682 (1,958) ($1,276) - ($1,276) 2022 $1,826 1,175 $3,001 2021 $4,090 (840) $3,250 215 $3,465 $3,505 (1,679) 2023 ($468) 1,889 $1,421 $2,100 (2,568) Net cash provided by operating activities Net c
Slide 41: Reconciliation Table: Adjusted Net Earnings
41 RECONCILIATION TABLE $ Millions Adjusted Net Earnings 3 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%. The tax impact of adjusted items in 2022 is calculated for U.S. domestic items using a blended tax rate of
Slide 42: Reconciliation Table: Adjusted EBITDA
42 RECONCILIATION TABLE $ Millions Adjusted EBITDA Adjusted EBITDA Q4 2023Q3 2023Q2 2023Q1 2023Q4 2022 $330$578$804$427$443 $174 51 (51) $174 197 $371 6 (9) (6) 12 67 - - - 2 Reported net earnings attributable to U. S. Steel Income tax expense Net interest and other financial costs Reported earning
Slide 43: Investor Relations
43 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 44: United States Steel Corporation
ss) United States Steel Corporation