United States Steel Corporation · NYSE:X
United States Steel — Q2 2020 Earnings Presentation
30 slides from United States Steel's earnings presentation, Jul 30, 2020
Slide 1: Second Quarter 2020 Earnings Presentation
Second Quarter 2020 Earnings Presentation July 30, 2020 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 second quarter of 2020. 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 (loss) earnings, adjusted net (loss) earnings per diluted share, (loss) earnings before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA, which are non-GAAP measures, as additional measurements to enhan
Slide 4: Business Update
BUSINESS UPDATE
Slide 5: Business Update
Business Update SAFETY: Protecting lives and livelihoods LIQUIDITY: Fortifying the balance sheet STRATEGY: Executing our “best of both” strategy OPERATIONS: Supporting increased customer demand 5
Slide 6: Protecting lives and livelihoods guided by our S.T.E.E.L. Principles
Protecting lives and livelihoods guided by our S.T.E.E.L. Principles Safety First 2 Benchmarks : BLS - Iron & Steel: 0.70 AISI: 0.31 0.14 0.10 0.07 2018 2019 2020 YTD Days Away from Work1 1 Days Away from Work is defined as number of days away cases x 200,000 / hours worked 2 BLS – Iron & Steel 2018
Slide 7: Protecting lives and livelihoods
Protecting lives and livelihoods 360 o safety Physical Safety environment free from harm or injury Psychological Safety environment where individuals are encouraged to contribute their unique ideas and perspectives Incorporating all aspects of a safe working environment 7
Slide 8: Fortifying the balance sheet: prioritizing cash and liquidity
Fortifying the balance sheet prioritizing cash and liquidity NET PROCEEDS NET PROCEEDS $977 $410 million million SECURED NOTES COMMON STOCK Approximately $1.4 billion of additional liquidity raised in 2Q 2020 8
Slide 9: Fortifying the balance sheet: strong liquidity in an unprecedented market
Fortifying the balance sheet strong liquidity in an unprecedented market Total Liquidity as of June 30, 2020 6% 7% 0% Continued focus $2.7B cash and cost improvements Liquidity 87% Cash ($2,300M) U.S. ABL ($190M) USSK Facilities ($155M) Actively marketing UPI ABL ($7M)1 non-core assets2 1 The UPI Am
Slide 10: Fortifying the balance sheet: liquidity drivers progressing as expected
Fortifying the balance sheet liquidity drivers progressing as expected 2Q Key Components Actuals Status Comment EBITDA expected to improve Adjusted EBITDA ($264M) throughout second half 2020 as expected Working capital release of Working Capital $120M ~$250M in second half of 2020 as expected Capi
Slide 11: Executing our "best of both" strategy
Executing our “best of both” strategy Big River remains our #1 strategic priority 3+ years call option 2x Well-positioned to increasing operating leverage acquire the remaining by doubling capacity1 50.1% stake in Big River Steel on-track ahead of schedule and on-budget2 1 Big River Steel Phase 2-A
Slide 12: Executing our "best of both" strategy: strategic projects status
Executing our “best of both” strategy strategic projects status Strategic Projects Status Details On track to complete in the fourth EAF at Tubular quarter of 2020 Status Update Endless Casting and Project delayed for an indeterminate Rolling at Mon Valley period of time Remaining upgrades delayed f
Slide 13: Supporting increased customer demand informed by our order book
Supporting increased customer demand informed by our order book Operating Idled Indefinitely Idled Total Idled Capacity1 Iron ore pellets Minntac Keetac 6.0 22.4 rolled Clairton cokemaking Extended coking times – 4.3 - Gary BF #4 BF #6 BF #82 BF #14 1.5 7.5 Granite City BF ‘A’ BF ‘B’ 1.4 2.8 Great L
Slide 14: Market Update
MARKETMARKET UPDATEUPDATE
Slide 15: Responding to improved customer demand
Responding to improved customer demand increased shipments in second half of June N. American Flat-rolled daily shipment pace ~50% Improvement 1st Half of June 2nd Half of June Increased momentum gives us confidence 2Q was the trough 15
Slide 16: Encouraging signs of sustained improvement
Responding to improved customer demand encouraging signs of sustained improvement OEM restart activity accelerated in June and has sustained Automotive activity levels through July. Healthy production expected to continue in order to build vehicle inventory. 3Q construction order book has exceeded o
Slide 17: Second Quarter Update
SECOND QUARTER UPDATE
Slide 18: Second quarter 2020 financial highlights
Second quarter 2020 financial highlights Reported Net (Loss) Earnings $ Millions Adjusted Net (Loss) Earnings $ Millions $68 $78 ($84) ($35) ($109) ($123) ($391) ($589) ($680) ($469) 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Adjusted Profit 2% (3%) (24%) (14%) (
Slide 19: Flat-rolled segment
Flat-rolled segment Key Segment Statistics Segment EBITDA $ Millions $244 2Q 3Q 4Q 1Q 2Q $167 $86 2019 2019 2019 2020 2020 $42 Shipments: 2,804 2,654 2,517 2,509 1,790 in 000s, net tons Production: 2,984 2,783 2,567 3,148 1,468 ($203) in 000s, net tons 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Average
Slide 20: U. S. Steel Europe segment
U. S. Steel Europe segment Key Segment Statistics Segment EBITDA $ Millions $13 $9 2Q 3Q 4Q 1Q 2Q 2019 2019 2019 2020 2020 Shipments: ($3) 1,004 765 757 801 610 ($7) in 000s, net tons Production: 1,148 823 773 882 645 ($23) in 000s, net tons 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Average Selling Pr
Slide 21: Tubular segment
Tubular segment Key Segment Statistics Segment EBITDA $ Millions $6 2Q 3Q 4Q 1Q 2Q 2019 2019 2019 2020 2020 Shipments: ($14) 195 174 193 187 132 in 000s, net tons Average Selling Price ($34) ($35) $1,524 $1,417 $1,298 $1,283 $1,288 ($40) $ / net ton 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 EBITDA 2%
Slide 22: Cash and liquidity
Cash and liquidity Cash from Operations $ Millions Cash and Cash Equivalents $ Millions $938 $2,300 $826 $754 $682 $1,515 $1,553 $1,000 $749 ($362) YE 2016 YE 2017 YE 2018 YE 2019 1H 2020 YE 2016 YE 2017 YE 2018 YE 2019 1H 2020 Total Estimated Liquidity $ Millions Net Debt $ Millions $3,350 $3,299 $
Slide 23: Appendix
APPENDIX
Slide 24: Second quarter segment EBITDA bridges
Second quarter segment EBITDA bridges 1Q 2020 vs 2Q 2020 Flat-rolled $ Millions The unfavorable impact is primarily the result of $86 Commercial: decreased volumes and mix. ($244) ($203) Raw Materials: The unfavorable impact is primarily the result of higher blast furnace fuel costs to bank blast fu
Slide 25: Total corporation adjusted EBITDA bridges
Total corporation adjusted EBITDA bridges 2Q 2019 vs 2Q 2020 $ Millions 2Q 2019 vs 2Q 2020 $ Millions $278 $278 ($486) ($447) ($264) ($264) ($16) $22 $9 ($46) ($87) ($33) 2Q Commercial Raw Maintenance Other 2Q 2Q Flat- U. S. Steel Tubular Other 2Q 2019 Materials & Outage 2020 2019 rolled Europe 2020
Slide 26: Reconciliation of segment EBITDA
Reconciliation of segment EBITDA Flat-rolled ($millions) 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Segment (loss) earnings before interest and income taxes $134 $46 ($79) ($35) ($329) Depreciation 110 121 121 121 126 Flat-rolled Segment EBITDA $244 $167 $42 $86 ($203) U. S. Steel Europe ($ millions) 2
Slide 27: Reconciliation of net debt
Reconciliation of net debt Net Debt YE 2016 YE 2017 YE 2018 YE 2019 1H 2020 ($ millions) Short-term debt and current maturities of long-term $50 $3 $65 $14 $94 debt Long-term debt, less unamortized discount and debt 2,981 2,700 2,316 3,627 5,505 issuance costs Total Debt $3,031 $2,703 $2,381 $3,641
Slide 28: Reconciliation of reported and adjusted net earnings
Reconciliation of reported and adjusted net earnings ($ millions) 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Reported net (loss) earnings attributable to U. S. Steel $68 ($84) ($680) ($391) ($589) Tubular asset impairment charges ─ ─ ─ 263 ─ Restructuring and other charges ─ 42 221 41 82 Gain on previo
Slide 29: Reconciliation of adjusted EBITDA
Reconciliation of adjusted EBITDA ($ millions) 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Reported net (loss) earnings attributable to U. S. Steel $68 ($84) ($680) ($391) ($589) Income tax provision (benefit) (7) (44) 233 (19) (5) Net interest and other financial costs 54 48 71 35 62 Reported (loss) ea
Slide 30: Investor Relations
INVESTOR RELATIONS Kevin Lewis Vice President 412-433-6935 klewis@uss.com Eric Linn Senior Manager 412-433-2385 eplinn@uss.com www.ussteel.com