United States Steel Corporation · NYSE:X
United States Steel — Q3 2019 Earnings Presentation
27 slides from United States Steel's earnings presentation, Oct 31, 2019
Slide 1: Third Quarter 2019 Earnings Presentation
Third Quarter 2019 Earnings Presentation October 31, 2019 www.ussteel.com
Slide 2: Forward-looking Statements
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 for the third quarter of 2019. They should be read in conjunction with the consolidated financial statements
Slide 3: Explanation of Use of Non-GAAP Measures
Explanation of Use of Non-GAAP Measures We present adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, earnings (loss) before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA, which are non-GAAP measures, as additional measurements to enhan
Slide 4: Delivering on our S.T.E.E.L. Principles
Delivering on our S.T.E.E.L. Principles Safety First Days Away from Work1 0.17 0.15 0.14 Trust & Respect 0.13 0.11 Environmentally Friendly Activities 2015 2016 2017 2018 3Q 2019 Ethical Behavior TTM Lawful Business Conduct 1 Days Away from Work is defined as number of days away cases x 200,000 / ho
Slide 5: Third Quarter Update
THIRD QUARTER UPDATE
Slide 6: Third Quarter 2019 Financial Highlights
Third Quarter 2019 Financial Highlights Reported Net Earnings (Loss) $ Millions Adjusted Net Earnings (Loss) $ Millions $592 $321 $324 $291 $81 $78 $54 $68 -$84 -$35 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Adjusted Profit 8% 16% 2% 2% (3%) Profit 9% 9% 2% 2% (
Slide 7: Flat-rolled Segment
Flat-rolled Segment Key Segment Statistics Select End – Market Indicators1 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Automotive Shipments: 2,659 2,733 2,725 2,804 2,654 September sales beat expectations at SAAR2 of 17.19M. in 000s, net tons Vehicle inventories stable at 66 days despite GM strike. Prod
Slide 8: U. S. Steel Europe Segment
U. S. Steel Europe Segment Key Segment Statistics Select End – Market Indicators1 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Automotive Shipments: 1,101 1,073 1,064 1,004 765 EU car production expected to decline 3.7% year-over-year in 000s, net tons (y-o-y) in 2019, however the V4 region2 is projected
Slide 9: Tubular Segment
Tubular Segment Key Segment Statistics Select End – Market Indicators1 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Oil Prices Shipments: 184 216 207 195 174 West Texas Intermediate Oil Price at ~$54/barrel, up ~18% in 000s, net tons since the end of 2018. Imports Imports of OCTG remain high. During 3Q,
Slide 10: Third Quarter Segment EBITDA Bridges
Third Quarter Segment EBITDA Bridges 3Q 2018 vs 3Q 2019 Flat-rolled $ Millions Commercial: The unfavorable impact is primarily the result of lower average realized prices. Raw Materials: The favorable impact is primarily the result of $392 $97 lower costs for purchased scrap. $15 $167 Maintenance &
Slide 11: Cash and Liquidity
Cash and Liquidity Cash from Operations $ Millions Cash and Cash Equivalents $ Millions $938 $1,515 $1,553 $826 $754 $1,000 $755 $360 $396 $476 YE 2015 YE 2016 YE 2017 YE 2018 YTD 2019 YE 2015 YE 2016 YE 2017 YE 2018 YTD 2019 Total Estimated Liquidity $ Millions Net Debt $ Millions $3,350 $2,383 $2,
Slide 12: "Best of Both" Strategy Update
“BEST OF BOTH” STRATEGY UPDATE
Slide 13: Organizational Changes to Occur Through January 1, 2020
Organizational Changes to Occur Through January 1, 2020 CURRENT Kevin Christine Scott Doug ROLE Bradley Breves Buckiso Matthews Executive Vice President SVP, Manufacturing SVP, Automotive SVP, Industrial, Service & Chief Financial Officer Support & Chief Supply Solutions Center, Mining Solutions Cha
Slide 14: Enhanced Operating Model to Support the Next Phase of Strategy Execution
Enhanced Operating Model to Support the Next Phase of Strategy Execution Aligning around our world competitive “Best of Both” strategy Creating a more nimble and efficient executive function Enhancing focus on operational and commercial excellence and promoting technological innovation 14
Slide 15: Executing on Our Strategic Framework
Executing on Our Strategic Framework 6 To Be 1 As-Is World competitive “best of ▪ ▪ Reshaped footprint both” integrated and mini 6 mill business models ▪ Transformed balance sheet To Be ▪ Improved competitiveness ▪ Executing technology and and through cycle cash 5 1 capability driven strategy flow F
Slide 16: Strategy Brings Together the "Best of Both"
Strategy Brings Together the “Best of Both” ✓ World competitive positioning in strategic, high-margin end markets ✓ Unparalleled product platform to serve * customers ✓ Big River will unlock value across our entire footprint Transforms business to drive long term cash flow through industry cycles *
Slide 17: Playing Offense and Will be Flexible to Ensure the Strategy is Executed
Playing Offense and Will be Flexible to Ensure the Strategy is Executed Our Strategic Priorities … Our Strategy Delivers … 1 Big River Steel Cost Differentiation 2 EAF at Tubular* Capability 3 Endless Casting and Rolling at Mon Valley* Differentiation 4 Gary Hot Strip Mill* World Competitive Footpri
Slide 18: Financing Update
FINANCING UPDATE
Slide 19: Raised ~$1.1 Billion Incremental Capital to Enable Execution of Our Strategy
Raised ~$1.1 Billion Incremental Capital to Enable Execution of Our Strategy $350M $275M $500M Convertible Notes ERBs1 ABL2 Upsize $300M offering + $275M offering $500M upsize $50M greenshoe (to fund Fairfield EAF) ($700M draw funded Big River purchase) 7-years, non- 30-years, payable 5-years callab
Slide 20: Appendix
APPENDIX
Slide 21: Second Quarter Segment EBITDA Bridges
Second Quarter Segment EBITDA Bridges 2Q 2019 vs 3Q 2019 Flat-rolled $ Millions Commercial: The unfavorable impact is primarily the result of lower average realized prices. $35 Raw Materials: The favorable impact is primarily the result of $27 $244 $22 reduced costs for scrap and blast furnace fuels
Slide 22: Total Corporation Adjusted EBITDA Bridges
Total Corporation Adjusted EBITDA Bridges 3Q 2018 vs 3Q 2019 $ Millions 3Q 2018 vs 3Q 2019 $ Millions $526 $526 ($225) $51 $13 ($118) ($32) $144 ($7) $144 ($445) ($1) 3Q Commercial Raw Maintenance Other 3Q 3Q Flat- U. S. Steel Tubular Other 3Q 2018 Materials & Outage 2019 2018 rolled Europe 2019 2Q
Slide 23: Reconciliation of Segment EBITDA
Reconciliation of Segment EBITDA Segment EBITDA – Flat-rolled 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 ($ millions) Segment earnings before interest and income taxes $305 $328 $95 $134 $46 Depreciation 87 98 104 110 121 Flat-rolled Segment EBITDA $392 $426 $199 $244 $167 Segment EBITDA – U. S. Steel
Slide 24: Reconciliation of Net Debt
Reconciliation of Net Debt Net Debt YE YE YE YE YTD ($ millions) 2015 2016 2017 2018 2019 Short-term debt and current maturities of long- $45 $50 $3 $65 $67 term debt Long-term debt, less unamortized discount and 3,093 2,981 2,700 2,316 2,500 debt issuance costs Total Debt $3,138 $3,031 $2,703 $2,38
Slide 25: Reconciliation of Reported and Adjusted Net Earnings
Reconciliation of Reported and Adjusted Net Earnings ($ millions) 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Reported net earnings (loss) attributable to U. S. Steel $291 $592 $54 $68 ($84) December 24, 2018 Clairton coke making facility fire ─ ─ 27 10 7 Restructuring Charges ─ ─ ─ ─ 42 United Steelwor
Slide 26: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA ($ millions) 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 Reported net earnings (loss) attributable to U. S. Steel $291 $592 $54 $68 ($84) Income tax provision (benefit) 23 (339) 8 (7) (44) Net interest and other financial costs 59 60 49 54 48 Reported earnings (loss) be
Slide 27: Investor Relations
INVESTOR RELATIONS Kevin Lewis General Manager 412-433-6935 klewis@uss.com Eric Linn Manager 412-433-2385 eplinn@uss.com www.ussteel.com