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U. S. Steel Delivers Strong First Quarter 2023; Best for All® Strategy On-Track

  • First quarter 2023 net earnings of $199 million, or $0.78 per diluted share
  • First quarter 2023 adjusted net earnings of $195 million, or $0.77 per diluted share
  • First quarter 2023 adjusted EBITDA of $427 million

United States Steel Corporation (NYSE: X) reported first quarter 2023 net earnings of $199 million, or $0.78 per diluted share. Adjusted net earnings was $195 million, or $0.77 per diluted share and excludes stock-based compensation expense of $8 million, net of taxes, or $0.03 per diluted share that had previously been reported in the North American Flat-Rolled segment and other one-time items detailed in the reconciliation of adjusted net earnings table. The exclusion of stock-based compensation expense was not contemplated at the time of our March 16, 2023 guidance press release. This compares to first quarter 2022 net earnings of $882 million, or $3.02 per diluted share. Adjusted net earnings for the first quarter 2022 was $910 million, or $3.11 per diluted share and excluded the impact of one-time items detailed in the reconciliation of adjusted net earnings table.

Commenting on the first quarter's performance, U. S. Steel President and Chief Executive Officer David B. Burritt said, “We delivered another strong quarter. Each of our operating segments exceeded expectations. We generated positive investable free cash flow of $25 million before supporting $582 million of high return strategic capital expenditures and continued direct returns in the quarter.”

Burritt continued, “Our focus on being the best partner for our customers through best operations has amplified the benefits of an improved market and more market share gains that we expect to continue through 2023. This momentum is expected to deliver even stronger second quarter results from higher steel prices."

Burritt concluded, “In spite of inflationary pressures, we are pleased to report our strategic projects are on-track to meet or improve upon key milestones each quarter and deliver returns well above our weighted average cost of capital. We’ve begun cold commissioning critical components of our new non-grain oriented electrical steel line at Big River Steel to produce the first coil as planned later this summer. Big River 2, our new mini mill with even more capabilities, and our new galvanize/GALVALUME® line, remain on-track for 2024. Together, with our current Big River Steel footprint, we are creating the next generation of sustainable mini mill steelmaking in the U.S. and transforming our business model to generate more consistent cash flow to continue capability building and higher returns for our investors.”

Earnings Highlights

 

Three Months Ended March 31,

(Dollars in millions, except per share amounts)

2023

 

2022

Net Sales

$

4,470

 

 

$

5,234

 

Segment earnings (loss) before interest and income taxes

 

 

 

Flat-Rolled

$

(7

)

 

$

529

 

Mini Mill

 

12

 

 

 

278

 

U. S. Steel Europe

 

(34

)

 

 

264

 

Tubular

 

232

 

 

 

77

 

Other

 

3

 

 

 

7

 

Total segment earnings before interest and income taxes

$

206

 

 

$

1,155

 

Other items not allocated to segments

 

(17

)

 

 

(37

)

Earnings before interest and income taxes

$

189

 

 

$

1,118

 

Net interest and other financial benefits

 

(61

)

 

 

(10

)

Income tax expense

 

51

 

 

 

246

 

Net earnings

$

199

 

 

$

882

 

Earnings per diluted share

$

0.78

 

 

$

3.02

 

 

 

 

 

Adjusted net earnings (a)

$

195

 

 

$

910

 

Adjusted net earnings per diluted share (a)

$

0.77

 

 

$

3.11

 

Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (b)

$

427

 

 

$

1,353

 

(a) Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of these amounts. The prior year was retroactively adjusted to reflect the reclassification of stock-based compensation expense.

*****

The Company will conduct a conference call on the first quarter earnings on Friday, April 28, 2023, at 8:30 a.m. Eastern. To listen to the webcast of the conference call and to access the Company's slide presentation, visit the U. S. Steel website, www.ussteel.com, and click on the “Investors” section. Replay will be available on the website after 10:30 a.m. on April 28, 2023.

 

UNITED STATES STEEL CORPORATION

PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)

 

Three Months Ended March 31,

 

2023

 

2022

OPERATING STATISTICS

 

 

 

Average realized price: ($/net ton unless otherwise noted) (a)

 

 

 

Flat-Rolled

 

1,012

 

 

 

1,368

 

Mini Mill

 

794

 

 

 

1,372

 

U. S. Steel Europe

 

909

 

 

 

1,109

 

U. S. Steel Europe (€/net ton)

 

847

 

 

 

988

 

Tubular

 

3,757

 

 

 

2,349

 

 

 

 

 

Steel shipments (thousands of net tons): (a)

 

 

 

Flat-Rolled

 

2,278

 

 

 

1,947

 

Mini Mill

 

659

 

 

 

507

 

U. S. Steel Europe

 

883

 

 

 

1,110

 

Tubular

 

131

 

 

 

128

 

Total steel shipments

 

3,951

 

 

 

3,692

 

 

 

 

 

Intersegment steel (unless otherwise noted) shipments (thousands of net tons):

 

 

 

Mini Mill to Flat-Rolled

 

83

 

 

 

89

 

Flat-Rolled to Mini Mill (pig iron)

 

29

 

 

 

 

 

 

 

 

Raw steel production (thousands of net tons):

 

 

 

Flat-Rolled

 

2,393

 

 

 

2,205

 

Mini Mill

 

759

 

 

 

601

 

U. S. Steel Europe

 

1,092

 

 

 

1,088

 

Tubular

 

171

 

 

 

156

 

 

 

 

 

Raw steel capability utilization: (b)

 

 

 

Flat-Rolled

 

74

%

 

 

68

%

Mini Mill

 

93

%

 

 

74

%

U. S. Steel Europe

 

89

%

 

 

88

%

Tubular

 

77

%

 

 

70

%

 

 

 

 

CAPITAL EXPENDITURES (dollars in millions)

 

 

 

Flat-Rolled

 

139

 

 

 

117

 

Mini Mill

 

563

 

 

 

211

 

U. S. Steel Europe

 

26

 

 

 

17

 

Tubular

 

12

 

 

 

4

 

Other Businesses

 

 

 

 

 

Total

$

740

 

 

$

349

 

(a) Excludes intersegment shipments.

(b) Based on annual raw steel production capability of 13.2 million net tons for Flat-Rolled, 3.3 million for Mini Mill, 5.0 million net tons for U. S. Steel Europe and 0.9 million for Tubular.

 

UNITED STATES STEEL CORPORATION

CONDENSED STATEMENT OF OPERATIONS (Unaudited)

 

Three Months Ended March 31,

(Dollars in millions, except per share amounts)

2023

 

2022

Net Sales

$

4,470

 

 

$

5,234

 

 

 

 

 

Operating expenses (income):

 

 

 

Cost of sales

 

3,953

 

 

 

3,823

 

Selling, general and administrative expenses

 

99

 

 

 

117

 

Depreciation, depletion and amortization

 

221

 

 

 

198

 

Loss (earnings) from investees

 

13

 

 

 

(36

)

Asset impairment charges

 

4

 

 

 

6

 

Restructuring and other charges

 

1

 

 

 

17

 

Net gains on sale of assets

 

(2

)

 

 

(2

)

Other gains, net

 

(8

)

 

 

(7

)

Total operating expenses

 

4,281

 

 

 

4,116

 

 

 

 

 

Earnings before interest and income taxes

 

189

 

 

 

1,118

 

Net interest and other financial benefits

 

(61

)

 

 

(10

)

 

 

 

 

Earnings before income taxes

 

250

 

 

 

1,128

 

Income tax expense

 

51

 

 

 

246

 

 

 

 

 

Net earnings

 

199

 

 

 

882

 

Less: Net earnings attributable to noncontrolling interests

 

 

 

 

 

Net earnings attributable to United States Steel Corporation

$

199

 

 

$

882

 

 

 

 

 

COMMON STOCK DATA:

 

 

 

Net earnings per share attributable to United States Steel Corporation Stockholders

 

 

 

Basic

$

0.87

 

 

$

3.37

 

Diluted

$

0.78

 

 

$

3.02

 

Weighted average shares, in thousands

 

 

 

Basic

 

227,332

 

 

 

261,453

 

Diluted

 

257,447

 

 

 

293,267

 

Dividends paid per common share

$

0.05

 

 

$

0.05

 

 

UNITED STATES STEEL CORPORATION

CONDENSED CASH FLOW STATEMENT (Unaudited)

 

Three Months Ended March 31,

(Dollars in millions)

2023

 

2022

Increase (decrease) in cash, cash equivalents and restricted cash

Operating activities:

 

 

 

Net earnings

$

199

 

 

$

882

 

Depreciation, depletion and amortization

 

221

 

 

 

198

 

Restructuring and other charges

 

1

 

 

 

17

 

Pensions and other postretirement benefits

 

(41

)

 

 

(60

)

Deferred income taxes

 

38

 

 

 

121

 

Working capital changes

 

(47

)

 

 

(462

)

Income taxes receivable/payable

 

10

 

 

 

140

 

Other operating activities

 

(200

)

 

 

(65

)

Net cash provided by operating activities

 

181

 

 

 

771

 

 

 

 

 

Investing activities:

 

 

 

Capital expenditures

 

(740

)

 

 

(349

)

Proceeds from sale of assets

 

2

 

 

 

4

 

Other investing activities

 

 

 

 

(7

)

Net cash used in investing activities

 

(738

)

 

 

(352

)

 

 

 

 

Financing activities:

 

 

 

Issuance of long-term debt, net of financing costs

 

 

 

 

4

 

Repayment of long-term debt

 

(10

)

 

 

(6

)

Common stock repurchased

 

(75

)

 

 

(123

)

Proceeds from government incentives

 

 

 

 

82

 

Other financing activities

 

(32

)

 

 

(28

)

Net cash used in financing activities

 

(117

)

 

 

(71

)

 

 

 

 

Effect of exchange rate changes on cash

 

8

 

 

 

(7

)

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

 

(666

)

 

 

341

 

Cash, cash equivalents and restricted cash at beginning of year

 

3,539

 

 

 

2,600

 

 

 

 

 

Cash, cash equivalents and restricted cash at end of period

$

2,873

 

 

$

2,941

 

 

UNITED STATES STEEL CORPORATION

CONDENSED BALANCE SHEET (Unaudited)

 

March 31,

 

December 31,

(Dollars in millions)

2023

 

2022

Cash and cash equivalents

$

2,837

 

$

3,504

Receivables, net

 

1,808

 

 

 

1,635

 

Inventories

 

2,541

 

 

 

2,359

 

Other current assets

 

362

 

 

 

368

 

Total current assets

 

7,548

 

 

 

7,866

 

 

 

 

 

Operating lease assets

 

134

 

 

 

146

 

Property, plant and equipment, net

 

8,875

 

 

 

8,492

 

Investments and long-term receivables, net

 

830

 

 

 

840

 

Intangible, net

 

467

 

 

 

478

 

Goodwill

 

920

 

 

 

920

 

Other noncurrent assets

 

766

 

 

 

716

 

 

 

 

 

Total assets

$

19,540

 

 

$

19,458

 

 

 

 

 

Accounts payable and other accrued liabilities

 

3,175

 

 

 

3,016

 

Payroll and benefits payable

 

388

 

 

 

493

 

Short-term debt and current maturities of long-term debt

 

91

 

 

 

63

 

Other current liabilities

 

361

 

 

 

387

 

Total current liabilities

 

4,015

 

 

 

3,959

 

 

 

 

 

Noncurrent operating lease liabilities

 

95

 

 

 

105

 

Long-term debt, less unamortized discount and debt issuance costs

 

3,901

 

 

 

3,914

 

Employee benefits

 

146

 

 

 

209

 

Deferred income tax liabilities

 

479

 

 

 

456

 

Other long-term liabilities

 

509

 

 

 

504

 

United States Steel Corporation stockholders' equity

 

10,302

 

 

 

10,218

 

Noncontrolling interests

 

93

 

 

 

93

 

 

 

 

 

Total liabilities and stockholders' equity

$

19,540

 

 

$

19,458

 

 

UNITED STATES STEEL CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED NET EARNINGS

 

Three Months Ended March 31,

(In millions of dollars)

2023

 

2022

Net earnings and diluted net earnings per share attributable to United States Steel Corporation, as reported

$

199

 

$

0.78

$

882

 

$

3.02

Restructuring and other charges

 

1

 

 

 

17

 

 

Stock-based compensation expense (a)

 

11

 

 

 

16

 

 

VEBA asset surplus adjustment

 

(22

)

 

 

 

 

Other charges, net

 

5

 

 

 

4

 

 

Adjusted pre-tax net earnings to United States Steel Corporation

 

194

 

 

 

919

 

 

Tax impact of adjusted items (b)

 

1

 

 

 

(9

)

 

Adjusted net earnings and diluted net earnings per share attributable to United States Steel Corporation

$

195

 

$

0.77

 

$

910

 

$

3.11

 

Weight average diluted ordinary shares outstanding, in millions

 

257.4

 

 

 

293.3

 

 

(a) The prior year was retroactively adjusted to reflect the reclassification of stock-based compensation expense. The adjustment was $8 million and $12 million, net of taxes, for the three months ended March 31, 2023 and 2022, respectively.

(b) The tax impact of adjusted items for the three months ended March 31, 2023 is calculated using a blended tax rate of 24%. The tax impact of adjusted items for the three months ended March 31, 2022 is calculated using a blended tax rate of 25%.

Note: The reported net earnings attributable to U. S. Steel for the three months ended March 31, 2022 includes an income tax benefit of $7 million from the reversal of net valuation allowances. The item was presented as an adjustment to arrive at adjusted net earnings attributable to U. S. Steel in the prior period presentation. The reconciliation for the three months ended March 31, 2022 presented above has been recast to reflect the removal of the adjustment in accordance with Securities and Exchange Commission guidance.

 

UNITED STATES STEEL CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED EBITDA

 

Three Months Ended March 31,

(Dollars in millions)

2023

 

2022

Reconciliation to Adjusted EBITDA

 

 

 

Net earnings attributable to United States Steel Corporation

$

199

 

 

$

882

 

Income tax expense

 

51

 

 

 

246

 

Net interest and other financial benefits

 

(61

)

 

 

(10

)

Depreciation, depletion and amortization expense

 

221

 

 

 

198

 

EBITDA

 

410

 

 

 

1,316

 

Restructuring and other charges

 

1

 

 

 

17

 

Stock-based compensation expense (a)

 

11

 

 

 

16

 

Other charges, net

 

5

 

 

 

4

 

Adjusted EBITDA

$

427

 

 

$

1,353

 

(a) The prior year was retroactively adjusted to reflect the reclassification of stock-based compensation expense.

 

UNITED STATES STEEL CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF PAST TWELVE MONTHS OF FREE AND INVESTABLE CASH FLOW

 

2nd

 

3rd

 

4th

 

1st

 

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total of the

(Dollars in millions)

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2023

 

 

Four Quarters

Net cash provided by operating activities

$

905

 

 

$

1,074

 

 

$

755

 

 

$

181

 

 

$

2,915

 

Net cash used in investing activities

 

(250

)

 

 

(463

)

 

 

(614

)

 

 

(738

)

 

 

(2,065

)

Free cash flow

 

655

 

 

 

611

 

 

 

141

 

 

 

(557

)

 

 

850

 

Strategic capital expenditures

 

171

 

 

 

330

 

 

 

479

 

 

 

582

 

 

$

1,562

 

Investable free cash flow

$

826

 

 

$

941

 

 

$

620

 

 

$

25

 

 

$

2,412

 

We present adjusted net earnings, adjusted net earnings per diluted share, earnings before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA, which are non-GAAP measures, as additional measurements to enhance the understanding of our operating performance. We believe that EBITDA, considered along with net earnings, is a relevant indicator of trends relating to our operating performance and provides management and investors with additional information for comparison of our operating results to the operating results of other companies.

Adjusted net earnings and adjusted net earnings per diluted share are non-GAAP measures that exclude the effects of items that include: restructuring and other charges, stock-based compensation expense, VEBA asset surplus adjustment, tax impact of adjusted items and other charges, net (Adjustment Items). Adjusted EBITDA is also a non-GAAP measure that excludes the effects of certain Adjustment Items. We present adjusted net earnings, adjusted net earnings per diluted share and adjusted EBITDA to enhance the understanding of our ongoing operating performance and established trends affecting our core operations by excluding the effects of events that can obscure underlying trends. U. S. Steel's management considers adjusted net earnings, adjusted net earnings per diluted share and adjusted EBITDA as alternative measures of operating performance and not alternative measures of the Company's liquidity. U. S. Steel’s management considers adjusted net earnings, adjusted net earnings per diluted share and adjusted EBITDA useful to investors by facilitating a comparison of our operating performance to the operating performance of our competitors. Additionally, the presentation of adjusted net earnings, adjusted net earnings per diluted share and adjusted EBITDA provides insight into management’s view and assessment of the Company’s ongoing operating performance because management does not consider the Adjustment Items when evaluating the Company’s financial performance. Adjusted net earnings, adjusted net earnings per diluted share and adjusted EBITDA should not be considered a substitute for net earnings, earnings per diluted share or other financial measures as computed in accordance with U.S. GAAP and is not necessarily comparable to similarly titled measures used by other companies.

We also present free cash flow, a non-GAAP measure of cash generated from operations after any investing activity and investable free cash flow, a non-GAAP measure of cash generated from operations, after any investing activity adjusted for strategic capital expenditures. We believe that free and investable cash flow provides further insight into the Company's overall utilization of cash. A condensed consolidated statement of operations (unaudited), condensed consolidated cash flow statement (unaudited), condensed consolidated balance sheet (unaudited) and preliminary supplemental statistics (unaudited) for U. S. Steel are attached.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,” “should,” “plan,” “goal,” “future,” “will,” “may,” and similar expressions or by using future dates in connection with any discussion of, among other things, the construction or operation of new or existing facilities or operating capabilities, the timing, size and form of share repurchase transactions, operating or financial performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational cash improvements, changes in the global economic environment, including supply and demand conditions, inflation, interest rates, supply chain disruptions and changes in prices for our products, international trade duties and other aspects of international trade policy, statements regarding our future strategies, products and innovations, statements regarding our greenhouse gas emissions reduction goals, statements regarding existing or new regulations and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, the risks and uncertainties described in “Item 1A. Risk Factors” in our Annual report on Form 10-K for the year ended December 31, 2022 and those described from time to time in our future reports filed with the Securities and Exchange Commission.

References to “U. S. Steel,” “the Company,” “we,” “us,” and “our” refer to United States Steel Corporation and its consolidated subsidiaries, and references to “Big River Steel” refer to Big River Steel Holdings LLC and its direct and indirect subsidiaries unless otherwise indicated by the context.

Founded in 1901, United States Steel Corporation is a leading steel producer. With an unwavering focus on safety, the Company’s customer-centric Best for All® strategy is advancing a more secure, sustainable future for U. S. Steel and its stakeholders. With a renewed emphasis on innovation, U. S. Steel serves the automotive, construction, appliance, energy, containers, and packaging industries with high value-added steel products such as U. S. Steel’s proprietary XG3® advanced high-strength steel. The Company also maintains competitively advantaged iron ore production and has an annual raw steelmaking capability of 22.4 million net tons. U. S. Steel is headquartered in Pittsburgh, Pennsylvania, with world-class operations across the United States and in Central Europe. For more information, please visit www.ussteel.com.

Contacts

Arista Joyner

Manager

Corporate Communications

T - (412) 433-3994

E - AEjoyner@uss.com

Kevin Lewis

Vice President

Finance

T - (412) 433-6935

E - KLewis@uss.com

 

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