United States Steel Corporation · NYSE:X
United States Steel — Q1 2020 Earnings Presentation
23 slides from United States Steel's earnings presentation, May 1, 2020
Slide 1: First Quarter 2020 Earnings Call
First Quarter 2020 Earnings Call David Burritt President and Chief Executive Officer Christie Breves Senior Vice President and Chief Financial Officer Rich Fruehauf Senior Vice President, Chief Strategy and Development Officer Kevin Lewis Vice President, Investor Relations and Corporate FP&A May 1,
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 first 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 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: Comprehensive response to COVID-19
Comprehensive response to COVID-19 1 Protecting lives and livelihoods Guided by our S.T.E.E.L. Principles 2 Prioritizing cash and liquidity Sufficient balance sheet strength to navigate the current environment 3 “Best of both” strategy remains the future Demonstrating flexibility to be prepared to i
Slide 5: Protecting lives and livelihoods
Protecting lives and livelihoods Following and exceeding CDC1 COVID-19 guidelines Examples include: Distributed additional cleaning supplies throughout plants Regular cleaning frequency of high-traffic areas, surfaces and common areas Installed additional wash stations and added hand sanitizer to en
Slide 6: Prioritizing cash and liquidity: sufficient balance sheet strength
Prioritizing cash and liquidity sufficient balance sheet strength Total Liquidity as of March 31, 2020 8% 1% 17% $800 million $1.8B precautionary ABL draw Liquidity 74% $1.4 billion Cash ($1,350M) secured debt capacity U.S. ABL ($300M) USSK Facilities ($152M) UPI ABL ($13M) 6
Slide 7: Prioritizing cash and liquidity: better-positioned for current market dynamics
Prioritizing cash and liquidity better-positioned for current market dynamics Reshaped More efficient footprint focused on cost or Footprint capability advantages Improved No material notes Balance Sheet maturities until 2025 Improved cash Efficiencies and cost improvements and performance industry-
Slide 8: "Best of both" strategy remains the future
“Best of both” strategy remains the future ✓ World competitive positioning in strategic, high-margin end markets ✓ Unparalleled product platform to serve customers 1 ✓ Big River will unlock value across our entire footprint Transforms business to drive long term cash flow through industry cycles 1 F
Slide 9: Swift and meaningful actions
Swift and meaningful actions Taking action … … to fortify the … to align our … to demonstrate balance sheet operating footprint flexibility 9
Slide 10: Swift and meaningful actions: operations update
Swift and meaningful actions operations update Keetac OPERATIONS Minntac Indefinitely idled In operation ADJUSTMENTS Great Lakes1 Gary 3 of 3 BFs indefinitely idled 3 of 4 BFs idled ~65% Lorain Mon Valley North American Indefinitely idled3 1 of 2 BFs idled Flat-rolled of raw steel Granite City capac
Slide 11: Strategic projects status
Strategic projects status Strategic Projects Status Details On track to complete in the second EAF at Tubular half of 2020 Endless Casting and Project delayed for an indeterminate Rolling at Mon Valley period of time Remaining upgrades delayed for an Gary Hot Strip Mill indeterminate period of time
Slide 12: Monetizing excess iron ore pellets
Monetizing excess iron ore pellets $100M $500M $2.4B Cash in 2020 Incremental cash opportunity Implied value Option for Stelco to purchase Additional $500 million Validates value of 25% stake in Minntac until received if option is competitive advantage January 31, 2027 exercised Executing on our str
Slide 13: More resilient compared to prior downturns
More resilient compared to prior downturns ✓ Focused footprint ✓ Improved EBITDA margins ✓ Significant improvement in cash conversion ✓ Long-term debt maturities ✓ Improved pension & OPEB funded status ✓ Sufficient liquidity position 1 Estimated 3rd party shipments for Flat-rolled and U. S. Steel Eu
Slide 14: $500 million cash savings
$500 million cash savings Actions taken to ensure Focused on cash strategy execution and liquidity Protecting the lives and ✓ livelihoods of our employees Daily cash calls North American Flat-rolled ✓ footprint actions ~$500 Plant control towers million ✓ Tubular footprint actions Primarily from foo
Slide 15: Sufficient cash and liquidity
Sufficient cash and liquidity Sufficient liquidity Sufficient liquidity on balance sheet • $1.8 billion of total liquidity ✓ ➢ Includes $1.4B of cash • $100 million of additional cash ✓ Low cost of debt <6.5% through Minntac agreement • $1.4 billion of secured capacity ✓ No near-term debt maturities
Slide 16: Taking action to ensure "best of both" strategy execution
Taking action to ensure “best of both” strategy execution Annual dividend $35M Dividend reduced $7M ~$28M annual savings 2019 2020E Shares repurchased ($M) $88M Share repurchase Program ~$88M cancelled program cancelled total savings 2019 Current Annual capex $950M $750M Capex reduction ~$200M 2020E
Slide 17: First quarter 2020 financial highlights
First quarter 2020 financial highlights Flat-rolled Segment EBITDA1 $ Millions $86 • Total first quarter adjusted EBITDA1 of $42 $64 million, ahead of our guidance on March 20 EBITDA1 4Q 2019 1Q 2020 Margin: 2% 4% • Quarter performance ~$34 million U. S. Steel Europe Segment EBITDA1 $ Millions bette
Slide 18: Recap
Recap • Protecting lives and livelihoods • Prioritizing cash and liquidity • “Best of both” strategy remains the future • Swift and meaningful actions 18
Slide 19: Q & A
Q & A
Slide 20: Do your part to keep our facilities safe
K- GHA DO YOUR PART TO KEEP OUR FACILITIES SAFE! KEEP 6 FEET OF DISTANCE BETWEEN ALL PEOPLE United States Steel
Slide 21: Reconciliation of segment EBITDA
Reconciliation of segment EBITDA Segment EBITDA – Flat-rolled 4Q 2019 1Q 2020 ($ millions) Segment earnings before interest and income taxes ($79) ($35) Depreciation 121 121 Flat-rolled Segment EBITDA $42 $86 Segment EBITDA – U. S. Steel Europe 4Q 2019 1Q 2020 ($ millions) Segment earnings before in
Slide 22: Reconciliation of adjusted EBITDA
Reconciliation of adjusted EBITDA ($ millions) 4Q 2019 1Q 2020 Reported net earnings attributable to U. S. Steel ($680) ($391) Income tax provision 233 (19) Net interest and other financial costs 71 35 Reported earnings before interest and income taxes ($376) ($375) Depreciation, depletion and amort
Slide 23: 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