United States Steel Corporation · NYSE:X
United States Steel — Q1 2024 Earnings Presentation
42 slides from United States Steel's earnings presentation, May 2, 2024
Slide 1: Earnings First Quarter 2024
1 EARNINGS FIRST QUARTER 2024 May 2, 2024
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS This presentation contains information regarding the Company and NSC that may constitute “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 and other securities laws, that are subject to risks and uncertaintie
Slide 3: Explanation of Use of Non-GAAP Measures
3 EXPLANATION OF USE OF NON-GAAP MEASURES We present adjusted net earnings, adjusted net earnings margin, adjusted net earnings per diluted share, earnings before interest, income taxes, depreciation and amortization (EBITDA), adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures,
Slide 4: Summary: Advancing Towards Our Best for All Future
4 SUMMARY: ADVANCING TOWARDS OUR BEST FOR ALL® FUTURE Current Landscape Progressing towards closing the transaction with Nippon Steel Corporation (NSC) Advancing Big River 2 (BR2) and BRS dual coating line (CGL2) on-track Challenges Harnessing mega trends Successfully navigating a dynamic steel indu
Slide 5: NSC & U. S. Steel: Progressing Towards Deal Closing
5 NSC & U. S. STEEL: PROGRESSING TOWARDS DEAL CLOSING Merger approved by shareholders Progressing towards regulatory approval ~99% of shareholder votes cast were in favor of the deal Both antitrust and CFIUS review are underway Expected closing in second half of 2024 Advancing towards creating the “
Slide 6: NSC & U. S. Steel: Best Steelmaker with World-Leading Capabilities
6 NSC & U. S. STEEL: BEST STEELMAKER WITH WORLD-LEADING CAPABILITIES BEST FOR EMPLOYEES BEST FOR CUSTOMERS BEST FOR COMMUNITIES BEST FOR INVESTORS +
Slide 7: NSC & U. S. Steel: Best for Employees
7 NSC & U. S. STEEL: BEST FOR EMPLOYEES Investing more in USW facilities NSC has committed to investing an additional $1.4 billion in capital expenditures into facilities covered by the current basic labor agreement (BLA) with the United Steelworkers (USW), above and beyond what is required Re-evalu
Slide 8: NSC & U. S. Steel: Best for Customers
8 NSC & U. S. STEEL: BEST FOR CUSTOMERS Expanded capabilities, innovation and a global platform Sharing NSC’s and U. S. Steel’s world-leading technologies and manufacturing capabilities for the benefit of customers Accelerating decarbonization goals Collaborating on alternative technologies in decar
Slide 9: NSC & U. S. Steel: Best for Communities
9 NSC & U. S. STEEL: BEST FOR COMMUNITIES Driving the global steel industry towards carbon neutrality Advancing NSC’s breakthrough technologies to progress towards carbon neutrality: (1) hydrogen injection in BFs; (2) hydrogen use in DRI; and (3) high-grade steel through large size EAFs Growing U. S
Slide 10: NSC & U. S. Steel: Best for Investors
10 NSC & U. S. STEEL: BEST FOR INVESTORS Maximizing stockholder value $55 per share transaction price, all-cash deal; ~$15 billion total enterprise value Significant premium for stockholders +40% premium to U. S. Steel’s closing stock price on December 15, 2023; +142% premium to the undisturbed pric
Slide 11: CGL2: Another On-Time and On-Budget Project
11 CGL2: ANOTHER ON-TIME AND ON-BUDGET PROJECT Note: CGL = Continuous galvanizing line. CGL2 is a dual coating line with both Galvalume® and Galvanized capabilities. CGL2 hot commissioned in April 2024
Slide 12: CGL2: Enhancing the Mini Mill Segment's Earnings Profile
12 CGL2: ENHANCING THE MINI MILL SEGMENT’S EARNINGS PROFILE Expected incremental run-rate, through-cycle EBITDA Improving our product mix in strategic markets 2024E 2025E 2026E ~$10 - $15M ~$55M ~$60M BRS dual coating line (CGL2) Capacity by output mix 75% 25% Galvalume® Galvanize ~325k Tons of fini
Slide 13: BR2: On-Track for Second Half 2024 Start-Up
13 BR2: ON-TRACK FOR SECOND HALF 2024 START-UP Note: DR = Direct Reduced; NGO = Non-grain Oriented. CGL2 COMPLETE NGO COMPLETE GARY PIG COMPLETE DR PELLET COMPLETE On track for second half 2024 start-up BR2 ON TRACK
Slide 14: BR2: Progress Update
14 BR2: PROGRESS UPDATE Electric Arc Furnaces steelmaking Endless Strip Production roughing mill PLTCM1 entry section 1 PLTCM = Pickle Line Tandem Cold Mill
Slide 15: Entergy Arkansas Solar Project
15 ENTERGY ARKANSAS SOLAR PROJECT 2,100 acre site to help BR2 lower its Scope 2 emissions and provide BR2 with up to 40% of its electricity needs from a renewable source of energy Entergy Arkansas Solar Project scheduled for start-up in September 2024. “Entergy is partnering with U. S. Steel to deve
Slide 16: Q1 2024 Financial Performance: Summary
16 Q1 2024 FINANCIAL PERFORMANCE: SUMMARY $414M Adjusted EBITDA Performance ~10% EBITDA margin First quarter performance $171M Reported Net Earnings $0.68 per diluted share Note: For reconciliation of non-GAAP amounts, see Appendix. $206M Adjusted Net Earnings $0.82 per diluted share $4.5B Liquidity
Slide 17: Q1 2024 Financial Performance: Each Segment Contributing
17 Q1 2024 FINANCIAL PERFORMANCE: EACH SEGMENT CONTRIBUTING Sizeable contributions from each operating segment Million Adjusted EBITDA $414 N. American Flat-Rolled Segment Captured higher spot prices and benefited from higher automotive fixed priced contracts; well-balanced, diverse end-market expos
Slide 18: Q2 2024 Outlook: $425 to $475 Million Adjusted EBITDA
18 Q2 2024 OUTLOOK: $425 TO $475 MILLION ADJUSTED EBITDA North American Flat-Rolled Mini Mill U. S. Steel Europe Tubular Raw Materials Favorable impact expected from lower coal costs Operating Costs No material change expected Commercial Favorable impact expected from seasonally higher pellet sales;
Slide 19: 2024 First Quarter Update
19 2024 F I R S T Q U A R T E R U P D A T E
Slide 20: Financial Updates
20 FINANCIAL UPDATES Reported Net Earnings (Loss) Adjusted Net Earnings Segment EBIT1 Adjusted EBITDA2 Profit Margin: 4% 10% 7% (2%) 4% $ Millions $ Millions $ Millions $ Millions 4% 10% 8% 4% 5% 5% 12% 8% 2% 5% Adjusted EBITDA Margin:2 10% 16% 13% 8% 10% Segment EBIT Margin:1 Note: For reconciliati
Slide 21: Key Operating Statistics Trends by Segment
21 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 Q1 2023 2,393 2,278
Slide 22: EBITDA Trends by Segment
22 EBITDA TRENDS BY SEGMENT EBITDA Margin: 5% 12% 13% 5% 6% 8% 22% 13% 12% 21% (1%) 9% 1% 0% 5% EBITDA Margin: 48% 42% 32% 38% 25% EBITDA Margin: Note: For reconciliation of non-GAAP amounts, see Appendix. 1 Q4 2023 North American Flat-Rolled segment includes the impact of construction and related s
Slide 23: Flat-Rolled Segment EBITDA Change Analysis
23 $ Millions, Q4 2023 vs. Q1 2024 FLAT-ROLLED SEGMENT EBITDA CHANGE ANALYSIS Commercial The favorable impact is primarily the result of higher average realized prices, which was partially offset by lower shipment volumes. Raw Materials The change is not material. Operating Costs The unfavorable imp
Slide 24: Mini Mill Segment EBITDA Change Analysis
24 $ Millions, Q4 2023 vs. Q1 2024 MINI MILL SEGMENT EBITDA CHANGE ANALYSIS Commercial The favorable impact is primarily the result of higher average realized prices, which was partially offset by lower shipment volumes. Raw Materials The favorable impact is primarily the result of lower metallics u
Slide 25: U. S. Steel Europe Segment EBITDA Change Analysis
25 $3 $46 $51 $9 Q4 2023 Commercial $0 Raw Materials ($17) Operating Costs Other Q1 2024 $ Millions, Q4 2023 vs. Q1 2024 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 impact is
Slide 26: Tubular Segment EBITDA Change Analysis
26 $ Millions, Q4 2023 vs. Q1 2024 TUBULAR SEGMENT EBITDA CHANGE ANALYSIS Commercial The unfavorable impact is primarily the result of lower average realized prices. Raw Materials The change is not material. Operating Costs The favorable impact is primarily the result of fewer costs for purchased pr
Slide 27: Minntac M I N I M I L L T U B U L
27 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 28: Cash and Liquidity
28 CASH AND LIQUIDITY Note: For reconciliation of non-GAAP amounts, see Appendix. 1 TTM = Trailing twelve months $138 $4,090 $3,505 $2,100 $1,891 FY 2020 FY 2021 FY 2022 FY 2023 TTM Q1 20241 $1,985 $2,522 $3,504 $2,948 $2,221 FY 2020 FY 2021 FY 2022 FY 2023 Q1 2024 $3,153 $4,971 $5,925 $5,174 $4,495
Slide 29: Appendix
29 APPENDIX
Slide 30: Supplemental Information: 2023 Shipments by Product Mix
30 SUPPLEMENTAL INFORMATION HRC (30%) CRC (40%) Coated (25%) Tin (5%) HRC (60%) CRC (15%) Coated (25%) HRC (60%) CRC (10%) Coated (20%) Tin (10%) Seamless (100%) Flat-Rolled Mini Mill1 U. S. Steel Europe Tubular 2023 Shipments by product mix 1 Mini Mill segment product mix, once Big River 2 (BR2) is
Slide 31: Supplemental Information: 2023 Revenue by Product Mix
31 SUPPLEMENTAL INFORMATION HRC (20%) CRC (40%) Coated (30%) Other (5%) HRC (55%) CRC (15%) Coated (30%) HRC (45%) CRC (10%) Coated (35%) Tubular / Other (5%) Tubular Product (100%) Flat-Rolled Mini Mill U. S. Steel Europe Tubular 2023 Revenue by product mix Semi-finished (5%) Semi-finished (5%)
Slide 32: Supplemental Information: 2023 Shipments by Major Market
32 SUPPLEMENTAL INFORMATION Service Centers (17%) Converters (25%) Auto (33%) Construction (10%) Oil & Gas (94%) Flat-Rolled Mini Mill U. S. Steel Europe Tubular 2023 Shipments by major market Packaging (7%) Appliance & Electrical (5%) Other (3%) Service Centers (46%) Converters (30%) Auto (1%) Cons
Slide 33: Supplemental Information: 2023 Contract / Spot Mix by Segment
33 SUPPLEMENTAL INFORMATION Firm (23%) Market based quarterly (29%) Market based monthly (15%) Spot (33%) Firm (6%) Cost based (9%) Market based quarterly (5%) Market based monthly (38%) Spot (42%) Firm (31%) Cost based (2%) Market based quarterly (2%) Market based monthly (10%) Spot (55%) Program (
Slide 34: Supplemental Information: Blast Furnace Cost Structure
34 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 35: Supplemental Information: Electric Arc Furnace Cost Structure
35 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 36: Reconciliation Table
36 RECONCILIATION TABLE Flat-Rolled ($ millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Segment earnings (loss) before interest and income taxes ($7) $231 $225 ($31) $34 Depreciation 147 146 153 159 122 Flat-Rolled Segment EBITDA $140 $377 $378 $128 $156 Segment EBIT Margin1 (0%) 8% 8% (1%) 1% Segm
Slide 37: Supplemental Information: Big River Steel LLC Summary Table
37 SUPPLEMENTAL INFORMATION Big River Steel LLC1 Summary Table Customer Sales Intersegment Sales Net Sales EBIT2 $579M $125M $704M $118M Income Statement $ Millions Q1 2024 Cash and cash equivalents Total Assets 2029 Senior secured notes Environmental revenue bonds Financial leases and all other obl
Slide 38: Reconciliation Table: Net Debt
38 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 YE 2023YE 2022YE 2021YE 2020 $192 $4,695 $28 $3,863 $63 $3,914 $142 $4,080 Total Debt $4,222$3,977$3,891$4,887 Less: Cash and cash eq
Slide 39: Reconciliation Table: Adjusted Net Earnings
39 RECONCILIATION TABLE Adjusted Net Earnings 1 The tax impact of the adjusted items in the first quarter of 2024 is calculated using a blended tax rate of 24%. The tax impact of adjusted items in 2023 is calculated for U.S. domestic items using a blended tax rate of 24% and for USSE items 21%. $167
Slide 40: Reconciliation Table: Adjusted EBITDA
40 RECONCILIATION TABLE $ Millions Adjusted EBITDA Adjusted EBITDA Q4 2023Q3 2023Q2 2023Q1 2023 $330$578$804$427 Reported net earnings attributable to U. S. Steel Income tax expense Net interest and other financial costs Reported earning before interest and income taxes Depreciation, depletion and a
Slide 41: Investor Relations
41 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 42: United States Steel Corporation
ss) United States Steel Corporation