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CST: 26/05/2019 12:54:52   

United States Steel Corporation Reports Fourth Quarter and Full-Year 2018 Results

115 Days ago

  • Full-year 2018 net earnings of $1,115 million, or $6.25 per diluted share; full-year adjusted net earnings of $957 million, or $5.36 per diluted share
  • Full-year 2018 adjusted EBITDA of $1.76 billion
  • Returned over $110 million of capital to stockholders in 2018, including $75 million of share repurchases

PITTSBURGH, Jan. 30, 2019 (GLOBE NEWSWIRE) -- United States Steel Corporation (NYSE: X) reported full-year 2018 net earnings of $1,115 million, or $6.25 per diluted share.  Adjusted net earnings were $957 million, or $5.36 per diluted share.  This compares to a full-year 2017 net earnings of $387 million, or $2.19 per diluted share.  Adjusted net earnings for 2017 was $341 million, or $1.94 per diluted share.

Fourth quarter 2018 net earnings were $592 million, or $3.34 per diluted share.  Adjusted net earnings for the fourth quarter 2018 were $324 million, or $1.82 per diluted share. This compares to a fourth quarter 2017 net earnings of $159 million, or $0.90 per diluted share. Fourth quarter 2017 adjusted net earnings were $136 million, or $0.76 per diluted share.

Earnings Highlights
     
  Quarter Ended   Year Ended
    December 31,       December 31,  
(Dollars in millions, except per share amounts)   2018     2017       2018     2017  
Net Sales $ 3,691   $ 3,133     $ 14,178   $ 12,250  
Segment earnings (loss) before interest and income taxes                          
Flat-Rolled $ 328   $ 82     $ 883   $ 375  
U. S. Steel Europe 62   112     359   327  
Tubular (3 ) (6 )   (58 ) (99 )
Other Businesses 11   10     55   44  
Total segment earnings before interest and income taxes $ 398   $ 198     $ 1,239   $ 647  
Other items not allocated to segments (85 ) (36 )   (115 ) 22  
Earnings before interest and income taxes $ 313   $ 162     $ 1,124   $ 669  
Net interest and other financial costs 60   92     312   368  
Income tax benefit (339 ) (89 )   (303 ) (86 )
Net earnings $ 592   $ 159     $ 1,115   $ 387  
Earnings per diluted share $ 3.34   $ 0.90     $ 6.25   $ 2.19  


Adjusted net earnings (a) $ 324   $ 136     $ 957   $ 341  
Adjusted earnings per diluted share (a) $ 1.82   $ 0.76     $ 5.36   $ 1.94  
Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (a) $ 535   $ 323     $ 1,760   $ 1,148  

(a) Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of these amounts.

"We are pleased with both the strong earnings we reported in 2018 and the important progress we made on our strategic objectives," said U. S. Steel President and Chief Executive Officer David B. Burritt.  "We are encouraged by the effectiveness of the investments we are making and remain focused on improving our operating and commercial performance to drive long-term value creation for our stockholders."

The Company currently expects first quarter 2019 adjusted EBITDA to be approximately $225 million, which excludes the expected first quarter impacts of the December 24, 2018 fire at our Clairton coke making facility.

First quarter 2019 EBITDA for the Flat-rolled segment is expected to be higher than first quarter 2018, primarily due to higher average realized selling prices, partially offset by higher raw materials costs.

First quarter 2019 EBITDA for the U. S. Steel Europe segment is expected to be lower than first quarter 2018, primarily due to lower volumes, higher raw materials costs, and an unfavorable change in the U.S. dollar / Euro exchange rate.

First quarter 2019 EBITDA for the Tubular segment is expected to be higher than first quarter 2018, primarily due to higher average realized selling prices and increased volumes, partially offset by higher costs for steel substrate.

The Company will conduct a conference call on fourth quarter and full-year 2018 earnings on Thursday, January 31, at 8:30 a.m. Eastern Standard.  To listen to the webcast of the conference call, visit the U. S. Steel website, www.ussteel.com, and click on the “Investors” section.  For more information on U. S. Steel, visit our website.
Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of Guidance net earnings (loss) to consolidated Guidance EBITDA.


UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
               
  Quarter Ended   Year Ended
  December 31,   December 31,
  2018   2017   2018   2017
OPERATING STATISTICS              
Average realized price: (a)              
Flat-Rolled ($/net ton) 823     717     811     726  
U. S. Steel Europe ($/net ton) 686     634     693     622  
U. S. Steel Europe (euro/net ton) 601     538     586     551  
Tubular ($/net ton) 1,488     1,417     1,483     1,253  
Steel Shipments (thousands of net tons): (a)              
Flat-Rolled 2,733     2,442     10,510     9,887  
U. S. Steel Europe 1,073     1,252     4,457     4,585  
Tubular 216     179     780     688  
Total Steel Shipments 4,022     3,873     15,747     15,160  
               
Intersegment Shipments (thousands of net tons):              
Flat-Rolled to Tubular 66     21     224     158  
U. S. Steel Europe to Flat-Rolled         22     47  
Raw Steel Production (thousands of net tons):              
Flat-Rolled 3,334     2,575     11,893     10,820  
U. S. Steel Europe 1,213     1,314     5,023     5,091  
Raw Steel Capability Utilization: (b)              
Flat-Rolled 78 %   60 %   70 %   64 %
U. S. Steel Europe 96 %   104 %   100 %   102 %
               
CAPITAL EXPENDITURES              
Flat-Rolled $ 289     $   182     $ 820     $ 388  
U. S. Steel Europe 41     21     104     83  
Tubular 12     9     45     28  
Other Businesses 13     2     32     6  
               
Total $ 355     $   214     $ 1,001     $ 505  

(a) Excludes intersegment shipments.
(b) Based on annual raw steel production capability of 17.0 million net tons for Flat-Rolled and 5.0 million net tons for U. S. Steel Europe.

UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
                 
    Quarter Ended   Year Ended
    December 31,   December 31,
(Dollars in millions, except per share amounts) 2018   2017   2018   2017
NET SALES   $ 3,691     $ 3,133     $ 14,178     $ 12,250  
                 
OPERATING EXPENSES (INCOME):              
Cost of sales (excludes items shown below) 3,204     2,748     12,305     10,858  
Selling, general and administrative expenses 85     97     336     320  
Depreciation, depletion and amortization 137     125     521     501  
Earnings from investees (22 )   (15 )   (61 )   (44 )
Gain associated with retained interest in U. S. Steel Canada Inc.             (72 )
(Gain) loss on equity investee transactions (20 )   19     (38 )   (2 )
Restructuring and other charges     1         31  
Net gain on disposal of assets (3 )   (3 )   (6 )   (5 )
Other income, net (3 )   (1 )   (3 )   (6 )
Total operating expenses 3,378     2,971     13,054     11,581  
                 
EARNINGS BEFORE INTEREST AND INCOME TAXES 313     162     1,124     669  
Net interest and other financial costs (a) 60     92     312     368  
                 
EARNINGS BEFORE INCOME TAXES 253     70     812     301  
Income tax benefit (339 )   (89 )   (303 )   (86 )
                 
Net earnings 592     159     1,115     387  
Less: Net earnings (loss) attributable to the noncontrolling interests              
NET EARNINGS ATTRIBUTABLE TO UNITED STATES STEEL CORPORATION $ 592     $ 159     $ 1,115     $ 387  
                 
COMMON STOCK DATA:              
                 
Net earnings per share attributable to              
United States Steel Corporation stockholders:              
Basic   $ 3.36     $ 0.91     $ 6.31     $ 2.21  
Diluted   $ 3.34     $ 0.90     $ 6.25     $ 2.19  
Weighted average shares, in thousands              
Basic   176,091     175,117     176,633     174,793  
Diluted   177,649     177,210     178,461     176,520  
Dividends paid per common share $ 0.05     $ 0.05     $ 0.20     $ 0.20  

(a) Includes $16 million and $14 million for the three months ended December 31, 2018 and 2017, respectively, and $69 million and $61 million for the twelve months ended December 31, 2018 and 2017, respectively, of postretirement benefit expense (other than service cost) related to the retrospective presentation change of net periodic benefit cost of our defined benefit pension and other post-employment benefits as a result of the adoption of Accounting Standards Update 2017-07, Compensation - Retirement Benefits on January 1, 2018.


UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
      Year Ended  
      December 31,  
(Dollars in millions)     2018       2017  
Cash provided by operating activities:                
Net earnings   $ 1,115     $ 387  
Depreciation, depletion and amortization 521     501  
Gain associated with retained interest in U. S. Steel Canada Inc.     (72 )
Gain on equity investee transactions (38 )   (2 )
Restructuring and other charges     31  
Loss on debt extinguishment 98     54  
Pensions and other postretirement benefits 77     (16 )
Deferred income taxes (329 )   (72 )
Net gain on disposal of assets (6 )   (5 )
Working capital changes (404 )   72  
Income taxes receivable/payable (8 )   (52 )
Other operating activities (88 )    
  Total   938     826  
           
Cash used in investing activities:      
Capital expenditures   (1,001 )   (505 )
Disposal of assets   10     5  
Proceeds from sale of ownership interest in equity method investees 30     116  
Other investing activities   (2 )   (2 )
  Total   (963 )   (386 )
           
Cash (used in) provided by financing activities:      
Revolving credit facilities 228      
Issuance of long-term debt, net of financing costs 640     737  
Repayment of long-term debt   (1,299 )   (1,127 )
Common stock repurchased   (75 )    
Receipts from exercise of stock options 35     20  
Taxes paid for equity compensation plans   (8 )   (10 )
Dividends paid (36 )   (35 )
  Total   (515 )   (415 )
           
Effect of exchange rate changes on cash (17 )   17  
           
Net (decrease) increase in cash, cash equivalents and restricted cash (557 )   42  
Cash, cash equivalents and restricted cash at beginning of the year (a) 1,597     1,555  
           
Cash, cash equivalents and restricted cash at end of the period (a) $ 1,040     $ 1,597  

(a) Includes restricted cash in the beginning-of-period and end-of-period amounts as a result of the retrospective adoption of Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash on January 1, 2018.

UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
         
    Dec. 31   Dec. 31
(Dollars in millions)   2018   2017
Cash and cash equivalents $ 1,000     $ 1,553  
Receivables, net 1,659     1,379  
Inventories 2,092     1,738  
Other current assets 79     85  
Total current assets 4,830     4,755  
Property, plant and equipment, net 4,865     4,280  
Investments and long-term receivables, net 513     480  
Intangible assets, net 158     167  
Other assets 616     180  
         
Total assets   $ 10,982     $ 9,862  
         
Accounts payable $ 2,535     $ 2,222  
Payroll and benefits payable 440     347  
Short-term debt and current maturities of long-term debt 65     3  
Other current liabilities 157     201  
Total current liabilities 3,197     2,773  
Long-term debt, less unamortized discount and debt issuance costs 2,316     2,700  
Employee benefits 980     759  
Other long-term liabilities 286     309  
United States Steel Corporation stockholders' equity 4,202     3,320  
Noncontrolling interests 1     1  
         
Total liabilities and stockholders' equity $ 10,982     $ 9,862  


UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE
   
(Dollars in millions) 1Q 2019
Reconciliation to Projected Adjusted EBITDA Included in Guidance
Projected net loss attributable to United States Steel Corporation included in Guidance $ (6 )
Estimated income tax benefit (1 )
Estimated net interest and other financial costs 57  
Estimated depreciation, depletion and amortization 135  
Projected EBITDA included in Guidance $ 185  
Expected first quarter impact of the December 24, 2018 fire at the Clairton coke making facility 40  
Projected adjusted EBITDA included in Guidance $ 225  


UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED EBITDA
               
  Quarter Ended   Year Ended
  Dec. 31   Dec. 31
(Dollars in millions) 2018   2017   2018   2017
Reconciliation to Adjusted EBITDA              
Net earnings attributable to United States Steel Corporation $ 592     $ 159     $ 1,115     $ 387  
Income tax benefit (339 )   (89 )   (303 )   (86 )
Net interest and other financial costs 60     92     312     368  
Depreciation, depletion and amortization expense 137     125     521     501  
EBITDA 450     287     1,645     1,170  
United Steelworkers labor agreement signing bonus and related costs 88         81      
Gain associated with retained interest in U. S. Steel Canada Inc.             (72 )
(Gain) loss on equity investee transactions (20 )   19     (38 )   (2 )
Loss on shutdown of certain tubular pipe mill assets             35  
Granite City Works restart and related costs 17         80      
Granite City Works temporary idling charges     17     (8 )   17  
Adjusted EBITDA $ 535     $ 323     $ 1,760     $ 1,148  

 

UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED NET EARNINGS
               
  Quarter Ended(a)   Year Ended(a)
  December 31,   December 31,
(Dollars in millions, except per share amounts) 2018   2017   2018   2017
Reconciliation to adjusted net earnings attributable to United States Steel Corporation              
Net earnings attributable to United States Steel Corporation $ 592     $ 159     $ 1,115     $ 387  
United Steelworkers labor agreement signing bonus and related costs 88         81      
Reversal of tax valuation allowance (374 )       (374 )    
Gain associated with retained interest in U. S. Steel Canada Inc.             (72 )
(Gain) loss on equity investee transactions (20 )   19     (38 )   (2 )
Loss on shutdown of certain tubular pipe mill assets             35  
Loss on debt extinguishment 21     22     101     57  
Effect of tax reform     (81 )       (81 )
Granite City Works restart and related costs 17         80      
Granite City Works temporary idling charges     17     (8 )   17  
Total adjustments (268 )   (23 )   (158 )   (46 )
Adjusted net earnings attributable to United States Steel Corporation $ 324     $ 136     $ 957     $ 341  
               
Reconciliation to adjusted diluted net earnings per share              
Diluted net earnings per share $ 3.34     $ 0.90     $ 6.25     $ 2.19  
United Steelworkers labor agreement signing bonus and related costs 0.49         0.45      
Reversal of tax valuation allowance (2.11 )       (2.11 )    
Gain associated with retained interest in U. S. Steel Canada Inc.             (0.41 )
(Gain) loss on equity investee transactions (0.11 )   0.10     (0.21 )   (0.01 )
Loss on shutdown of certain tubular pipe mill assets             0.20  
Loss on debt extinguishment 0.12     0.12     0.57     0.33  
Effect of tax reform     (0.46 )       (0.46 )
Granite City Works restart and related costs 0.09         0.45      
Granite City Works temporary idling charges     0.10     (0.04 )   0.10  
Total adjustments (1.52 )   (0.14 )   (0.89 )   (0.25 )
Adjusted diluted net earnings per share $ 1.82     $ 0.76     $ 5.36     $ 1.94  

(a) The adjustments included in this table have been tax effected at a 0% tax rate due to the recognition of a full valuation allowance on our domestic deferred tax assets.

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 enhance the understanding of our operating performance.  We believe that EBITDA, considered along with net earnings (loss), 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 (loss) and adjusted net earnings (loss) per diluted share are non-GAAP measures that exclude the effects of the United Steelworkers (USW) labor agreement signing bonus and related costs, gains associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, significant temporary idling charges, restart and related costs associated with Granite City Works, debt extinguishment and other related costs, the reversal of our tax valuation allowance and effects of tax reform that are not part of the Company's core operations.  Adjusted EBITDA is also a non-GAAP measure that excludes the effects of the USW agreement signing bonus and related costs, gains associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, significant temporary idling charges and restart and related costs associated with Granite City Works.  We present adjusted net earnings (loss), adjusted net earnings (loss) 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 (loss), adjusted net earnings (loss) 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 (loss), adjusted net earnings (loss) 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 (loss), adjusted net earnings (loss) 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 adjusting items when evaluating the Company’s financial performance or in preparing the Company’s financial Guidance.  Adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA should not be considered a substitute for net earnings (loss), earnings (loss) 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.  A consolidated statement of operations (unaudited), 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 27 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,” “will” and similar expressions or by using future dates in connection with any discussion of, among other things, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume growth, share of sales and earnings per share growth, 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, 2017, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and those described from time to time in our future reports filed with the Securities and Exchange Commission.  References to "we," "us," "our," the "Company," and "U. S. Steel," refer to United States Steel Corporation and its consolidated subsidiaries.


2019-003

CONTACTS:  
Media Investors/Analysts
Meghan Cox Dan Lesnak
Manager General Manager
Corporate Communications Investor Relations
T - (412) 433-6777 T - (412) 433-1184
E - mmcox@uss.com E - dtlesnak@uss.com

 

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