X
$20.70
United States Steel
$.18
.88%
Earnings Details
3rd Quarter September 2018
Thursday, November 1, 2018 4:15:00 PM
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Summary

United States Steel Beats but Guides Lower

United States Steel (X) reported 3rd Quarter September 2018 earnings of $1.79 per share on revenue of $3.7 billion. The consensus earnings estimate was $1.79 per share on revenue of $3.7 billion. The Earnings Whisper number was $1.77 per share. Revenue grew 14.8% on a year-over-year basis.

The company said it now expects 2018 Adjusted EBITDA of approximately $1.80 billion. The company's previous guidance was Adjusted EBITDA of $1.85 billion to $1.90 billion for the year ending December 31, 2018.

United States Steel Corp is an integrated steel producer of flat-rolled and tubular products with production operations in North America and Europe.

Results
Reported Earnings
$1.79
Earnings Whisper
$1.77
Consensus Estimate
$1.79
Reported Revenue
$3.73 Bil
Revenue Estimate
$3.71 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

United States Steel Corporation Reports Third Quarter 2018 Results

  • Net earnings of $291 million, or $1.62 per diluted share
  • Adjusted net earnings of $321 million, or $1.79 per diluted share
  • Adjusted EBITDA of $526 million

PITTSBURGH, Nov. 01, 2018 (GLOBE NEWSWIRE) -- United States Steel Corporation (NYSE: X) reported third quarter 2018 net earnings of $291 million, or $1.62 per diluted share.  Adjusted net earnings were $321 million, or $1.79 per diluted share.  This compares to third quarter 2017 net earnings of $147 million, or $0.83 per diluted share.  Adjusted net earnings for third quarter 2017 were $161 million, or $0.92 per diluted share.

Earnings Highlights
 
 Quarter Ended Nine Months Ended
 September 30, September 30,
(Dollars in millions, except per share amounts)20182017 20182017
Net Sales$3,729 $3,248  $10,487 $9,117 
Segment earnings (loss) before interest and income taxes     
  Flat-Rolled$305 $161  $562 $293 
  U. S. Steel Europe72 73  297 215 
  Tubular7 (7) (55)(93)
  Other Businesses16 12  44 34 
Total segment earnings before interest and income taxes$400 $239  $848 $449 
Other items not allocated to segments(27)21  (37)58 
Earnings before interest and income taxes$373 $260  $811 $507 
Net interest and other financial costs59 113  252 276 
Income tax provision23   36 3 
Net earnings$291 $147  $523 $228 
Earnings per diluted share$1.62 $0.83  $2.92 $1.29 
      
Adjusted net earnings (a)$321 $161  $640 $205 
Adjusted net earnings per diluted share (a)$1.79 $0.92  $3.58 $1.17 
Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (a)$526 $357  $1,232 $825 

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

Commenting on U. S. Steel's results, President and Chief Executive Officer David B. Burritt said, "Our third quarter results were in line with our expectations, with a significant improvement in earnings from our Flat-rolled segment and a return to profitability for our Tubular segment."

2018 Guidance

Commenting on U. S. Steel's guidance for 2018, Burritt said, "Market conditions remain solid, with stable end-user steel consumption.  We experienced lower customer order rates for an extended period, driven by falling spot and index prices. However, we expect continued strength in steel demand will support favorable market conditions as we enter 2019."

We expect results for our Flat-rolled segment to continue to improve primarily due to increased shipments and lower maintenance and outage costs, partially offset by lower average realized prices. Despite a softening in the energy tubulars market, we expect Tubular to continue to improve primarily due to increased shipments, partially offset by lower average realized prices. We expect results for our European segment to decrease primarily due to inventory revaluation adjustments related to raw material price volatility.

We currently expect fourth quarter 2018 adjusted EBITDA to be approximately $575 million, which would result in full-year 2018 adjusted EBITDA of approximately $1.8 billion.

The Company will conduct a conference call on third quarter 2018 earnings on Friday, November 2, at 8:30 a.m. Eastern Daylight.  To listen to the webcast of the conference call, and to access the company's slide presentation and prepared remarks, visit the U. S. Steel website, www.ussteel.com, and click on the “Investors” section. Replays of the conference call will be available on the website after 10:30 a.m. on November 2.

Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of Guidance net earnings to consolidated Guidance adjusted EBITDA.

UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
           
    Quarter Ended Nine Months Ended
    September 30, September 30,
    2018 2017 2018 2017
OPERATING STATISTICS       
 Average realized price: (a)       
  Flat-Rolled ($/net ton)859 728 807 730
  U. S. Steel Europe ($/net ton)669 639 695 617
    U. S. Steel Europe (euro/net ton)575 544 582 554
  Tubular ($/net ton)1,602 1,433 1,477 1,268
 Steel Shipments (thousands of net tons): (a)       
  Flat-Rolled2,659 2,544 7,777 7,445
  U. S. Steel Europe1,101 1,067 3,384 3,333
  Tubular184 185 564 509
   Total Steel Shipments3,944 3,796 11,725 11,287
           
 Intersegment Shipments (thousands of net tons):       
  Flat-Rolled to Tubular26 43  158 137
  U. S. Steel Europe to Flat-Rolled—  —  22 47
 Raw Steel Production (thousands of net tons):       
  Flat-Rolled2,933 2,821 8,558 8,247
  U. S. Steel Europe1,210 1,235 3,810 3,778
 Raw Steel Capability Utilization: (b)       
  Flat-Rolled68% 66% 67% 65%
  U. S. Steel Europe96% 98% 102%  101%
           
CAPITAL EXPENDITURES       
 Flat-Rolled$213  $134 $531  $206 
 U. S. Steel Europe25  28 63  62 
 Tubular 8 33  19 
 Other Businesses18  1 19  
           
    Total$265  $171 $646  $291 

 (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 Nine Months Ended
   September 30, September 30,
(Dollars in millions, except per share amounts)2018 2017 2018 2017
NET SALES $3,729  $3,248  $10,487  $9,117 
          
OPERATING EXPENSES (INCOME):       
 Cost of sales (excludes items shown below)3,172  2,828  9,101  8,110 
 Selling, general and administrative expenses81  75  251  223 
 Depreciation, depletion and amortization126  118  384  376 
 Earnings from investees(17) (9) (39) (29)
 Gain associated with retained interest in U. S. Steel Canada Inc.      (72)
 Gain on equity investee transactions  (21) (18) (21)
 Restructuring and other charges  (2)   30 
 Net gain on disposal of assets(5) (1) (3) (2)
 Other income, net(1)     (5)
          
   Total operating expenses3,356  2,988  9,676  8,610 
          
EARNINGS BEFORE INTEREST AND INCOME TAXES373  260  811  507 
Net interest and other financial costs (a)59  113  252  276 
          
 EARNINGS BEFORE INCOME TAXES314  147  559  231 
Income tax provision (benefit)23    36  3 
          
Net earnings291  147  523  228 
 Less: Net earnings (loss) attributable to noncontrolling interests       
NET EARNINGS ATTRIBUTABLE TO       
 UNITED STATES STEEL CORPORATION$291  $147  $523  $228 
          
COMMON STOCK DATA:       
          
Net earnings per share attributable to       
  United States Steel Corporation stockholders:       
 Basic $1.64  $0.84  $2.96  $1.30 
 Diluted $1.62  $0.83  $2.92  $1.29 
Weighted average shares, in thousands       
 Basic 177,250  175,003  176,815  174,684 
 Diluted 179,126  176,484  178,734  176,336 
Dividends paid per common share$0.05  $0.05  $0.15  $0.15 

(a) Includes $19 million and $15 million for the three months ended September 30, 2018 and 2017, respectively, and $53 million and $47 million for the nine months ended September 30, 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)
       
    Nine Months Ended
    September 30,
(Dollars in millions) 2018 2017
Cash provided by (used in) operating activities:   
 Net earnings $523  $228 
 Depreciation, depletion and amortization384  376 
 Gain associated with retained interest in U. S. Steel Canada Inc.  (72)
 Gain on equity investee transactions(18) (21)
 Restructuring and other charges  30 
 Loss on debt extinguishment77  32 
 Pensions and other postretirement benefits57  42 
 Deferred income taxes1  7 
 Net gain on disposal of assets(3) (2)
 Working capital changes(283) (216)
 Income taxes receivable/payable53  15 
 Other operating activities(69) 127 
  Total 722  546 
       
Cash used in investing activities:   
 Capital expenditures (646) (291)
 Proceeds from sale of ownership interest in equity investee  105 
 Disposal of assets 10   
 Other investing activities (1) (3)
  Total (637) (189)
       
Cash provided by (used in) financing activities:   
 Issuance of long-term debt, net of financing costs 640  737 
 Repayment of long-term debt (922) (906)
 Receipts from exercise of stock options 34  14 
 Dividends paid (27) (26)
 Taxes paid for equity compensation plans (9) (10)
  Total (284) (191)
       
Effect of exchange rate changes on cash(13) 15 
       
Net (decrease) increase in cash, cash equivalents and restricted cash(212) 181 
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)$1,385  $1,736 

(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)
      
   Sept. 30 Dec. 31
(Dollars in millions) 2018 2017
Cash and cash equivalents$1,344  $1,553 
Receivables, net1,673  1,379 
Inventories1,950  1,738 
Other current assets101  85 
 Total current assets5,068  4,755 
Property, plant and equipment, net4,643  4,280 
Investments and long-term receivables, net508  480 
Intangible assets, net160  167 
Other assets190  180 
      
 Total assets $10,569  $9,862 
      
Accounts payable and other accrued liabilities$2,525  $2,170 
Payroll and benefits payable425  347 
Short-term debt and current maturities of long-term debt4  3 
Other current liabilities182  201 
 Total current liabilities3,136  2,721 
Long-term debt, less unamortized discount and debt issuance costs2,498  2,700 
Employee benefits666  759 
Other long-term liabilities327  361 
United States Steel Corporation stockholders' equity3,941  3,320 
Noncontrolling interests1  1 
      
 Total liabilities and stockholders' equity$10,569  $9,862 


  UNITED STATES STEEL CORPORATION
  NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED EBITDA
         
  Quarter Ended Nine Months Ended
  September 30, September 30,
(Dollars in millions)2018 2017 2018 2017
Reconciliation to Adjusted EBITDA       
 Net earnings attributable to United States Steel Corporation$291  $147  $523  $228 
 Income tax provision23    36  3 
 Net interest and other financial costs59  113  252  276 
 Depreciation, depletion and amortization expense126  118  384  376 
 EBITDA499  378  1,195  883 
 Gain on equity investee transactions  (21) (18) (21)
 Granite City Works restart costs27    63   
 Granite City Works adjustment to temporary idling charges    (8)  
 Gain associated with retained interest in U. S. Steel Canada Inc.      (72)
 Loss on shutdown of certain tubular assets      35 
 Adjusted EBITDA$526  $357  $1,232  $825 


UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED NET EARNINGS
         
  Quarter Ended Nine Months Ended
  September 30, September 30,
(Dollars in millions, except per share amounts) (a)2018 2017 2018 2017
Reconciliation to adjusted net earnings (loss) attributable to United States Steel Corporation       
 Net earnings attributable to United States Steel Corporation$291  $147  $523  $228 
 Gain on equity investee transactions  (21) (18) (21)
 Granite City Works restart costs27    63   
 Granite City Works adjustment to temporary idling charges    (8)  
 Loss on debt extinguishment and other related costs3  35  80  35 
 Gain associated with retained interest in U. S. Steel Canada Inc.      (72)
 Loss on shutdown of certain tubular assets      35 
   Total adjustments30  14  117  (23)
 Adjusted net earnings attributable to United States Steel Corporation$321  $161  $640  $205 
         
Reconciliation to adjusted diluted net earnings (loss) per share       
 Diluted net earnings per share$1.62  $0.83  $2.92  $1.29 
 Gain on equity investee transactions  (0.11) (0.10) (0.11)
 Granite City Works restart costs0.15    0.35   
 Granite City Works adjustment to temporary idling charges    (0.04)  
 Loss on debt extinguishment and other related costs0.02  0.20  0.45  0.20 
 Gain associated with retained interest in U. S. Steel Canada Inc.      (0.41)
 Loss on shutdown of certain tubular assets      0.20 
   Total adjustments0.17  0.09  0.66  (0.12)
 Adjusted diluted net earnings per share$1.79  $0.92  $3.58  $1.17 

(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.

UNITED STATES STEEL CORPORATION
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE (a)
  Quarter EndedYear Ended
  Dec. 31Dec. 31
(Dollars in millions)20182018
Reconciliation to Projected Adjusted EBITDA Included in Guidance  
 Projected net earnings attributable to United States Steel Corporation included in Guidance$349 $872 
 Estimated income tax expense30 66 
 Estimated net interest and other financial costs75 327 
 Estimated depreciation, depletion and amortization136 520 
 Gain on equity investee transactions(20)(38)
 Granite City Works restart costs5 68 
 Granite City Works adjustment to temporary idling charges (8)
 Projected adjusted EBITDA included in Guidance$575 $1,807 

(a) Note: projected adjusted EBITDA included in Guidance excludes one-time costs resulting from the future ratification of a new collective bargaining agreement.

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.  EBITDA is also used by analysts to refine and improve the accuracy of their financial models that utilize enterprise value.

Adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share are non-GAAP measures that exclude the effects of gains (losses) on the sale of ownership interests in equity investees, facility restart costs, gains (losses) associated with our retained interest in U. S. Steel Canada Inc., restructuring charges, significant temporary idling charges and debt extinguishment and other related costs that are not part of the Company's core operations.  Adjusted EBITDA is also a non-GAAP measure that excludes the effects of gains (losses) on the sale of ownership interests in equity investees, facility restart costs, gains (losses) associated with our retained interest in U. S. Steel Canada Inc., restructuring charges and significant temporary idling charges.  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 gains (losses) on the sale of ownership interests in equity investees, facility restart costs, gains (losses) associated with our retained interest in U. S. Steel Canada Inc., restructuring charges, significant temporary idling charges and debt extinguishment and other related costs 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 annual 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 Reports 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.

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

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Source: United States Steel Corporation