United States Steel Corporation · NYSE:X
United States Steel — Q3 2023 Earnings Presentation
43 slides from United States Steel's earnings presentation, Oct 27, 2023
Slide 1: Earnings Call Third Quarter 2023
1 EARNINGS CALL THIRD QUARTER 2023 David Burritt President and Chief Executive Officer Jessica Graziano SVP and Chief Financial Officer Rich Fruehauf SVP, Chief Strategy and Sustainability Officer Kevin Lewis VP, Finance
Slide 2: Forward-Looking Statements
2 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 as of and for the third quarter 2023. Financial results as of and for the periods ended September 30, 2023
Slide 3: Explanation of Use of Non-GAAP Measures
3 EXPLANATION OF USE OF NON-GAAP MEASURES We present adjusted net earnings, earnings before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures, as additional measurements to enhance the understanding of our operatin
Slide 4: Advancing Towards Our Best for All Future
4 ADVANCING TOWARDS OUR BEST FOR ALL® FUTURE Current Landscape Enthusiasm for maximizing stockholder value Challenges Harnessing mega trends Solution Leverage our unique competitive advantages to capture mega trends in: • Deglobalization • Decarbonization • Digitization Path Forward Unlock stockhold
Slide 5: Q3 2023 Financial Performance
5 Q3 2023 FINANCIAL PERFORMANCE $578M Adjusted EBITDA Performance ~13% EBITDA margin Strong third quarter performance $299M Reported Net Earnings $1.20 per diluted share Note: For reconciliation of non-GAAP amounts, see Appendix. $232M Free Cash Flow $655M excluding strategic capex of $423M (provide
Slide 6: Safely Delivering Strong Performance Across Each Segment
6 SAFELY DELIVERING STRONG PERFORMANCE ACROSS EACH SEGMENT Flat-Rolled Mini Mill USSE Tubular
Slide 7: Strategy Execution Largely De-Risked
7 STRATEGY EXECUTION LARGELY DE-RISKED Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 3 5 DR PELLET STATUS 92% of spend committed 70% of execution completed BR2 STATUS 92% of spend committed 62% of execution completed CGL21 STATUS 89% of spend committed 50% of execution completed NGO COMPLETE 100% of spend
Slide 8: Progress Update: Big River
8 PROGRESS UPDATE: BIG RIVER 2 Aerial View Big River 2 Endless Strip Production roughing & finishing mill PLTCM1 entry section 1 PLTCM = Pickle Line Tandem Cold Mill
Slide 9: Approaching Considerable Value Unlock
9 APPROACHING CONSIDERABLE VALUE UNLOCK ~70% Completed Capex ~30% Remaining Capex Strategic Capital Expenditures (Capex) Progressing As-Expected % of strategic capex complete for in-flight projects Capital Expenditures by Year Manageable capex expected in future years ~$800M 2023E ~$1,800M ~$700M 20
Slide 10: Expected 2024 EBITDA At-a-Glance
10 EXPECTED 2024 EBITDA AT-A-GLANCE ~$0.2B Strategic Investments1 2023E All Other ~$0.1B Fixed Cost Reductions (~$0.3B) 2024E ~$2B ~$2B 1 Strategic project EBITDA contribution assumes a historical, through-cycle $616/nt HRC price environment. ✓ 2024 strategic project EBITDA contribution ✓ Run-rate c
Slide 11: Projecting Incremental EBITDA in '24 from Strategic Projects
11 PROJECTING ~$155-$210M INCREMENTAL EBITDA IN ‘24 FROM STRATEGIC PROJECTS NGO Electrical Steel Dual Coating Line Gary Works Pig Iron Machine Big River 2 ✓ Monthly run-rate production already achieved ✓ Annual run-rate production = 500k tons ✓ ~100k tons; 50% of production expected in ‘24 ✓ ~$1,000
Slide 12: Structurally Improved Segment Performance
12 NORTH AMERICAN FLAT-ROLLED MINI MILL U. S. STEEL EUROPE TUBULAR Segment EBITDA in billions Segment EBITDA in billions Segment EBITDA in billions Segment EBITDA in billions $0.1 $0.4 $0.7 $1.3 $0.7 ($0.1) $3.2 $2.5 $1.0 ’16’15 ’22’21’17 ’19 ’20’18 ’23E ’24E ~$1.0 Well-capitalized assets; beneficia
Slide 13: Delivering Strong Free Cash Flow
13 … DELIVERING STRONG FREE CASH FLOW Strategic projects ramping up … Creating incremental EBITDA FREE CASH FLOW ($0.2) $0.4 $0.4 $0.0 ($1.3) ($0.4) $3.3 $1.8 $1.8 $1.2 ($0.8) $0.8 ’15 ’16 $0.1 ’19’18’17 ’20 ’21 $0.2 ’22 ’23E ’24E $3.5 $3.0 $1.0 $0.9 ’15 – ’19 Average FCF: ($0.1B) ’21 – ’24E Average
Slide 14: Balanced Capital Allocation Framework
14 BALANCED CAPITAL ALLOCATION FRAMEWORK Safe, efficient and well- capitalized asset base Completed strategic projects1 Cash from Operations Strong balance sheet Advance strategic projects Maintain $0.05/sh dividend Excess Cash Transformed balance sheet Elevated cash balances to fund strategic inves
Slide 15: Q&A
15 Q&A
Slide 16: U. S. Steel and DuPont Launched COASTALUME Product
16 2023 T H I R D Q U A R T E R U P D A T E U. S. Steel and DuPont™ Launched COASTALUME™ Product, North America’s First GALVALUME® Solution Engineered and Warrantied for Coastal Environments
Slide 17: Improving on Record Safety Performance
17 IMPROVING ON RECORD SAFETY PERFORMANCE 0.07 0.06 0.05 0.03 2020 2021 2022 YTD 2023 OSHA Days Away from Work 2 BLS - Iron & Steel: 0.90 Benchmark 1 : Multiple years of record-setting performance 1 Bureau of Labor Statistics – Iron & Steel 2021 data. 2 Occupational Safety and Health Administration
Slide 18: Financial Updates
18 FINANCIAL UPDATES Reported Net Earnings Adjusted Net Earnings Segment EBIT1 Adjusted EBITDA2 Profit Margin: 9% 4% 4% 10% 7% $ Millions $ Millions $ Millions $ Millions 10% 5% 4% 10% 8% 13% 6% 5% 12% 8% Adjusted EBITDA Margin:2 17% 10% 10% 16% 13% Segment EBIT Margin:1 Note: For reconciliation of
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 Q3 2022 2,265 2,176 $
Slide 20: EBITDA Trends by Segment
20 EBITDA TRENDS BY SEGMENT EBITDA Margin: 19% 11% 5% 12% 13% 6% (5%) 8% 22% 13% (1%) (7%) (1%) 9% 1% EBITDA Margin: 39% 44% 48% 42% 32% EBITDA Margin: Note: For reconciliation of non-GAAP amounts, see Appendix. 1 Q3 2023 Mini Mill segment EBITDA includes the impact of $17 million in construction an
Slide 21: Flat-Rolled Segment EBITDA Change Analysis
21 $ Millions, Q2 2023 vs. Q3 2023 FLAT-ROLLED 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 LIFO impacts and lower alloy costs partially offset by higher coal c
Slide 22: Mini Mill Segment EBITDA Change Analysis
22 $ Millions, Q2 2023 vs. Q3 2023 MINI MILL SEGMENT EBITDA CHANGE ANALYSIS Commercial The unfavorable impact is primarily the result of lower average realized prices partially offset by higher volumes. Raw Materials The favorable impact is primarily the result of lower metallics costs. Operating Co
Slide 23: U. S. Steel Europe Segment EBITDA Change Analysis
23 $97 $10 $21 Q2 2023 $31 ($116) Commercial Operating Costs Raw Materials ($23) Other Q3 2023 $ Millions, Q2 2023 vs. Q3 2023 U. S. STEEL EUROPE SEGMENT EBITDA CHANGE ANALYSIS Commercial The unfavorable impact is primarily the result of lower average realized prices. Raw Materials The favorable imp
Slide 24: Tubular Segment EBITDA Change Analysis
24 $ Millions, Q2 2023 vs. Q3 2023 TUBULAR 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 change is not material. $167 $99 $22 Commerci
Slide 25: Global Operating Footprint
25 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 26: Cash and Liquidity
26 CASH AND LIQUIDITY Note: For reconciliation of non-GAAP amounts, see Appendix. $682 $138 $4,090 $3,505 $1,711 FY 2021FY 2019 FY 2020 FY 2022 9M 2023 $749 $1,985 $2,522 $3,504 $3,222 FY 2020 9M 2023FY 2019 FY 2021 FY 2022 $2,284 $3,153 $4,971 $5,925 $5,493 FY 2021FY 2020FY 2019 9M 2023FY 2022 $2,8
Slide 27: Appendix
27 APPENDIX
Slide 28: Supplemental Information: 2022 Shipments by Product Mix
28 SUPPLEMENTAL INFORMATION HRC (30%) CRC (25%) Coated (40%) Tin (5%) HRC (70%) CRC (10%) Coated (20%) HRC (60%) CRC (10%) Coated (20%) Tin (10%) Seamless (100%) Flat-rolled Mini Mill1 U. S. Steel Europe Tubular 2022 Shipments by product mix Note: Product mix is rounded. Hot rolled coil (HRC) includ
Slide 29: Supplemental Information: 2022 Revenue by Product Mix
29 SUPPLEMENTAL INFORMATION HRC (19%) CRC (31%) Coated (36%) Other (13%) HRC (59%) CRC (13%) Coated (28%) HRC (45%) CRC (9%) Coated (38%) Tubular / Other (5%) Tubular Product (99%) Flat-rolled Mini Mill U. S. Steel Europe Tubular 2022 Revenue by product mix Semi-finished (1%) Semi-finished (3%) Othe
Slide 30: Supplemental Information: 2022 Shipments by Major Market
30 SUPPLEMENTAL INFORMATION Service Centers (14%) Converters (29%) Auto (31%) Construction (11%) Oil & Gas (94%) Flat-rolled Mini Mill1 U. S. Steel Europe Tubular 2022 Shipments by major market Packaging (8%) Appliance & Electrical (5%) Other (2%) Service Centers (47%) Converters (34%) Auto (1%) Con
Slide 31: Supplemental Information: Contract / Spot Mix by Segment
31 SUPPLEMENTAL INFORMATION Firm (25%) Cost based (5%) Market based quarterly (28%) Market based monthly (18%) Spot (24%) Firm (5%) Cost based (5%) Market based quarterly (4%) Market based monthly (47%) Spot (39%) Firm (38%) Cost based (2%) Market based quarterly (2%) Market based monthly (6%) Spot
Slide 32: Supplemental Information: Blast Furnace Cost Structure
32 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 33: Supplemental Information: EAF Steelmaking Cost Structure
33 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 34: Reconciliation Table
34 RECONCILIATION TABLE Flat-Rolled ($ millions) Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Segment earnings (loss) before interest and income taxes $518 $171 ($7) $231 $225 Depreciation 126 125 147 146 153 Flat-Rolled Segment EBITDA $644 $296 $140 $377 $378 Segment EBIT Margin1 15% 6% (0%) 8% 8% Segme
Slide 35: Reconciliation Table
35 RECONCILIATION TABLE Flat-Rolled ($ millions) 2015 2016 2017 2018 2019 2020 2021 2022 Segment earnings (loss) before interest and income taxes ($249) $22 $375 $883 $196 ($596) $2,740 $2,008 Depreciation 392 349 352 367 456 496 491 499 Flat-Rolled Segment EBITDA $143 $371 $727 $1,250 $652 ($100) $
Slide 36: Supplemental Information: Big River Steel LLC Summary
36 SUPPLEMENTAL INFORMATION Big River Steel LLC1 Summary Table Customer Sales Intersegment Sales Net Sales EBIT2 $530M $140M $670M $50M Income Statement $ Millions Q3 2023 Cash and cash equivalents Total Assets 2029 Senior secured notes Environmental revenue bonds Financial leases and all other obli
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 9M 2023YE 2022YE 2021YE 2020 $14 $3,627 YE 2019 $192 $4,695 $28 $3,863 $63 $3,914 $98 $4,129 Total Debt $4,227$3,977$3,891$4,887$3,64
Slide 38: Reconciliation Table: Free Cash Flow
38 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 39: Reconciliation Table: Free Cash Flow
39 RECONCILIATION TABLE Net cash provided by operating activities Net cash used in investing activities Free Cash Flow / Investable Free Cash Flow $ millions 2020 $138 (563) Free Cash Flow ($425) Best for All Strategic capital expenditures - Investable Free Cash Flow ($425) Free Cash Flow / Investab
Slide 40: Reconciliation Table: Adjusted Net Earnings
40 RECONCILIATION TABLE $ Millions Adjusted Net Earnings 3 The tax impact of adjusted items for the three months ended September 30, 2022 is calculated using a blended tax rate of 25% for domestic items and 21% for USSE items. The tax impact of adjusted items for the three months ended December 31,
Slide 41: Reconciliation Table: Adjusted EBITDA
41 RECONCILIATION TABLE $ Millions Adjusted EBITDA Adjusted EBITDA Q3 2023Q2 2023Q1 2023Q4 2022Q3 2022 $578$804$427$443$861 $490 154 (30) $614 198 $812 - 23 - 13 - - - - 13 Reported net earnings attributable to U. S. Steel Income tax expense Net interest and other financial costs Reported earning be
Slide 42: Investor Relations
42 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 43: United States Steel Corporation
ss) United States Steel Corporation