United States Steel Corporation · NYSE:X
United States Steel — Merger or Acquisition (October 2019)
18 slides from United States Steel's merger presentation, Oct 1, 2019
Slide 1: 49.9% Minority Interest in Big River with Clear Path to Consolidation
49.9% Minority Interest in Big River with Clear Path to Consolidation www.ussteel.com October 1, 2019 David Burritt President and Chief Executive Officer Kevin Bradley Executive Vice President and Chief Financial Officer Rich Fruehauf Senior Vice President, Strategic Planning and Corporate Developme
Slide 2: Forward-looking Statements
Forward - looking Statements These slides are being provided to assist readers in understanding the planned investment in Big River Steel and other strate gic and financial actions by United States Steel Corporation. These slides contain "forward - looking statements" within the meaning of Section 2
Slide 3: Transaction Overview
2019 ~$60M • Strategic investment in Big River Steel with clear path to consolidation • Significant next step in our strategy to create a world competitive “Best of Both” footprint • This transaction minimizes the risk of operational and financial execution while maximizing the potential for value c
Slide 4: Transaction Details
49.9% Minority Interest Minority interest in Big River for approximately $700 million $2.325B Enterprise Value Implied enterprise value, including the expected completion of Phase II - A expansion, which is fully funded and under construction Fully Funded Committed financing to support the transacti
Slide 5: Getting Where We Were Going … Faster
Portfolio Moves ▪ Big River Steel 4 5 To Be ▪ The “best of both” integrated and mini mill business models ▪ Improved competitiveness and through cycle cash flow 6 As - Is ▪ Reshaped footprint ▪ Transformed balance sheet ▪ Executing technology and capability driven strategy 1 Financial Strategy Portf
Slide 6: Big River Overview: Technological Leadership
Technological Leadership Electric Arc Furnaces of mini mills combined with RH degassers from the integrated model to incorporate the benefits of each Advanced Manufacturing Capabilities Artificial intelligence and automation integration resulting in higher productivity per employee Flexibility is a
Slide 7: Big River Aligns with our Critical Success Factors
x Highly variable cost structure with low fixed cost base x Minimal sustaining capex requirements x Enhanced earnings predictability through the cycle Move Up the Talent Curve Win in Strategic Markets Move Down the Cost Curve x Strategic location to serve growing southern U.S. and Mexico x Strengthe
Slide 8: Collaboration Through a Joint Venture
Big River contributes U. S. Steel contributes Operating agreements x Most technologically advanced mill in North America x Management / operations team with entrepreneurial culture x Low cost structure x Research & Development (R&D) x Intellectual Property (IP) x Relationships with key customers in
Slide 9: Positioned to Achieve Capital and Operational Cash Improvements
Portfolio Moves Positioned to Achieve Capital and Operational Cash Improvements 9 Rescope Asset Revitalization ̶ Invest where we have a cost or capability advantage, including the Gary hot strip mill Reduce Fixed Costs ̶ Redesign and optimize our current business model ̶ Center North American Flat -
Slide 10: To Be: "Best of Both" Integrated and Mini Mill
x Competitive positioning in strategic, high - margin end markets x Unparalleled product platform to serve customers x Big River will unlock value across our entire footprint To Be “Best of Both” Integrated and Mini Mill 10 Transforms business to drive long term cash flow through industry cycles * F
Slide 11: Transforming our North American Footprint
1 1 Downstream Finishing Number of Blast Furnaces / BOF X All tons represent Raw Steel Capacity Great Lakes 2 2 Gary 2 4 7.5 MNT Granite City 2 2.8 MNT PRO - TEC Mon Valley 2 2.9 MNT Fairfield Upgraded hot strip mill Endless Casting & Rolling AHSS Capable New CGL 3.8 MNT Co - generation facility Exp
Slide 12: Getting Where We Were Going … Faster
Portfolio Moves ▪ Big River Steel 4 5 To Be ▪ The “best of both” integrated and mini mill business models ▪ Improved competitiveness and through cycle cash flow 6 As - Is ▪ Reshaped footprint ▪ Transformed balance sheet ▪ Executing technology and capability driven strategy 1 Financial Strategy Portf
Slide 13: Funding Sources to Support Strategic Investments
~$920M 2020 ~$610M ~$90M ~$690M 2022 2021 2019 ~$2.3B Investments 1 by year 1 Includes EAF, Dynamo Line, Endless Casting and Rolling, and Big River Step I 2 ~ $1,280M is variable rate based on exposure to EURIBOR / LIBOR; calculation assumes rates as of September 2019 USSK Revolver ~$300M ~$700+M ~$
Slide 14: Accounting Treatment of Joint Venture
Income Statement Balance Sheet Cash Flow Statement U. S. Steel’s portion of JV results reflected as “Earnings from investees” above the EBIT 1 line Big River debt is not consolidated with or guaranteed by U.S. Steel Our portion of the non - cash JV results reflected as “ Equity investee earnings, ne
Slide 15: Recap
Recap • We fully intend to consolidate Big River • Ultimately, three market - leading, differentiated and technologically advanced North American Flat - rolled assets • A mutually beneficial partnership 15
Slide 16: Q & A
Q & A
Slide 17: CEO Closing Remarks
2019 ~$60M • This transaction is a major step forward in executing our strategy to transform our business • Together with our previously announced strategic investments, we are building on what we have and investing in what we don’t • Our investment is getting us to where we were going faster • We a
Slide 18: 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
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