- Full-year 2019 net loss of
$642 million , or$3.75 per diluted share; fourth quarter 2019 net loss of$680 million , or$4.00 per diluted share. Includes$609 million and$567 million of restructuring charges and tax valuation allowance for full year and fourth quarter 2019, respectively. - Full-year 2019 adjusted net earnings of
$15 million , or$0.09 per diluted share; fourth quarter 2019 adjusted net loss of$109 million , or$0.64 per diluted share. - Full-year 2019 adjusted EBITDA of
$711 million ; fourth quarter 2019 adjusted EBITDA of$4 million . - Transition to our world-competitive, "best of both" business model supported by significant actions taken in 2019: achieved
$75 million of run-rate fixed cost reductions, adjusted capital spending to prioritize strategic investments, raised$1.1 billion of incremental capital to support nimble strategy execution and closed on our 49.9% investment in BigRiver Steel .
Fourth quarter 2019 net loss of
Earnings Highlights | |||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||
(Dollars in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
$ | 2,824 | $ | 3,691 | $ | 12,937 | $ | 14,178 | ||||||||
Segment (loss) earnings before interest and income taxes | |||||||||||||||
Flat-Rolled | $ | (79 | ) | $ | 328 | $ | 196 | $ | 883 | ||||||
U. S. Steel | (30 | ) | 62 | (57 | ) | 359 | |||||||||
Tubular | (46 | ) | (3 | ) | (67 | ) | (58 | ) | |||||||
Other Businesses | (3 | ) | 11 | 23 | 55 | ||||||||||
Total segment (loss) earnings before interest and income taxes | $ | (158 | ) | $ | 398 | $ | 95 | $ | 1,239 | ||||||
Other items not allocated to segments | (218 | ) | (85 | ) | (325 | ) | (115 | ) | |||||||
(Loss) earnings before interest and income taxes | $ | (376 | ) | $ | 313 | $ | (230 | ) | $ | 1,124 | |||||
Net interest and other financial costs | 71 | 60 | 222 | 312 | |||||||||||
Income tax provision (benefit) | 233 | (339 | ) | 190 | (303 | ) | |||||||||
Net (loss) earnings | $ | (680 | ) | $ | 592 | $ | (642 | ) | $ | 1,115 | |||||
(Loss) earnings per diluted share | $ | (4.00 | ) | $ | 3.34 | $ | (3.75 | ) | $ | 6.25 | |||||
Adjusted net (loss) earnings (a) | $ | (109 | ) | $ | 324 | $ | 15 | $ | 957 | ||||||
Adjusted net (loss) earnings per diluted share (a) | $ | (0.64 | ) | $ | 1.82 | $ | 0.09 | $ | 5.36 | ||||||
Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (a) | $ | 4 | $ | 535 | $ | 711 | $ | 1,760 |
(a) Please refer to the non-GAAP Financial Measures section of this document for the reconciliation of these amounts.
“We are pleased to deliver better than expected results to end the year and are excited to turn the page to 2020 where we will continue to transition the business towards our future," said U. S. Steel President and Chief Executive Officer
Burritt continued, “We will take another step towards our world-competitive, 'best of both' strategy this year as we complete two important strategic projects … the electric arc furnace at Tubular and our XG3 AHSS investment at our PRO-TEC joint venture. These projects will be yet another proof point to the market that our strategy will deliver cost and capability differentiation that is valuable to our customers, stockholders and employees. I have never been more confident in our strategy and that our investments in
The Company currently expects the first quarter of 2020 to be the trough for the year due to the normal seasonality of our mining operations and lower first quarter shipments in Flat-rolled as the Company prepares for the April blast furnace outage at Gary Works. Big
The Company will conduct a conference call on the fourth quarter and full-year 2019 earnings on
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited) | ||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
OPERATING STATISTICS | ||||||||||||||||
Average realized price: ($/net ton unless otherwise noted)(a) | ||||||||||||||||
Flat-Rolled | 699 | 823 | 753 | 811 | ||||||||||||
U. S. Steel Europe | 622 | 686 | 652 | 693 | ||||||||||||
U. S. Steel Europe (€/net ton) | 562 | 601 | 582 | 586 | ||||||||||||
Tubular | 1,298 | 1,488 | 1,450 | 1,483 | ||||||||||||
Steel shipments (thousands of net tons):(a) | ||||||||||||||||
Flat-Rolled | 2,517 | 2,733 | 10,700 | 10,510 | ||||||||||||
U. S. Steel Europe | 757 | 1,073 | 3,590 | 4,457 | ||||||||||||
Tubular | 193 | 216 | 769 | 780 | ||||||||||||
Total Steel Shipments | 3,467 | 4,022 | 15,059 | 15,747 | ||||||||||||
Intersegment steel (unless otherwise noted) shipments (thousands of net tons): | ||||||||||||||||
Flat-Rolled to Tubular | 46 | 66 | 258 | 224 | ||||||||||||
Flat-Rolled to U. S. Steel | — | — | 424 | — | ||||||||||||
U. S. Steel Europe to Flat-Rolled | — | — | — | 22 | ||||||||||||
Raw steel production (thousands of net tons): | ||||||||||||||||
Flat-Rolled | 2,567 | 3,334 | 11,409 | 11,893 | ||||||||||||
U. S. Steel Europe | 773 | 1,213 | 3,903 | 5,023 | ||||||||||||
Raw steel capability utilization:(b) | ||||||||||||||||
Flat-Rolled | 60 | % | 78 | % | 67 | % | 70 | % | ||||||||
U. S. Steel | 61 | % | 96 | % | 78 | % | 100 | % | ||||||||
CAPITAL EXPENDITURES (dollars in millions) | ||||||||||||||||
Flat-Rolled | $ | 179 | $ | 289 | $ | 943 | $ | 820 | ||||||||
U. S. Steel Europe | 42 | 41 | 153 | 104 | ||||||||||||
Tubular | 48 | 12 | 145 | 45 | ||||||||||||
Other Businesses | 5 | 13 | 11 | 32 | ||||||||||||
Total | $ | 274 | $ | 355 | $ | 1,252 | $ | 1,001 | ||||||||
(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 |
CONDENSED STATEMENT OF OPERATIONS (Unaudited) | ||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||
(Dollars in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
$ | 2,824 | $ | 3,691 | $ | 12,937 | $ | 14,178 | |||||||||
Operating expenses (income): | ||||||||||||||||
Cost of sales (excludes items shown below) | 2,781 | 3,204 | 12,082 | 12,305 | ||||||||||||
Selling, general and administrative expenses | 66 | 85 | 289 | 336 | ||||||||||||
Depreciation, depletion and amortization | 162 | 137 | 616 | 521 | ||||||||||||
Earnings from investees | (11 | ) | (22 | ) | (79 | ) | (61 | ) | ||||||||
Gain on equity investee transactions | — | (20 | ) | — | (38 | ) | ||||||||||
Restructuring charges | 221 | — | 275 | — | ||||||||||||
Net gain on disposal of assets | (4 | ) | (3 | ) | (1 | ) | (6 | ) | ||||||||
Other income, net | (15 | ) | (3 | ) | (15 | ) | (3 | ) | ||||||||
Total operating expenses | 3,200 | 3,378 | 13,167 | 13,054 | ||||||||||||
(LOSS) EARNINGS BEFORE INTEREST AND INCOME TAXES | (376 | ) | 313 | (230 | ) | 1,124 | ||||||||||
Net interest and other financial costs | 71 | 60 | 222 | 312 | ||||||||||||
(LOSS) EARNINGS BEFORE INCOME TAXES | (447 | ) | 253 | (452 | ) | 812 | ||||||||||
Income tax provision (benefit) | 233 | (339 | ) | 190 | (303 | ) | ||||||||||
Net (loss) earnings | (680 | ) | 592 | (642 | ) | 1,115 | ||||||||||
Less: Net earnings (loss) attributable to noncontrolling interests | — | — | — | — | ||||||||||||
NET (LOSS) EARNINGS ATTRIBUTABLE TO | $ | (680 | ) | $ | 592 | $ | (642 | ) | $ | 1,115 | ||||||
COMMON STOCK DATA: | ||||||||||||||||
Net (loss) earnings per share attributable to | ||||||||||||||||
| ||||||||||||||||
Basic | $ | (4.00 | ) | $ | 3.36 | $ | (3.75 | ) | $ | 6.31 | ||||||
Diluted | $ | (4.00 | ) | $ | 3.34 | $ | (3.75 | ) | $ | 6.25 | ||||||
Weighted average shares, in thousands | ||||||||||||||||
Basic | 170,041 | 176,091 | 171,418 | 176,633 | ||||||||||||
Diluted | 170,041 | 177,649 | 171,418 | 178,461 | ||||||||||||
Dividends paid per common share | $ | 0.05 | $ | 0.05 | $ | 0.20 | $ | 0.20 |
CONDENSED CASH FLOW STATEMENT (Unaudited) | ||||||||||
Year Ended | ||||||||||
(Dollars in millions) | 2019 | 2018 | ||||||||
Cash provided by (used in) operating activities: | ||||||||||
Net (loss) earnings | $ | (642 | ) | $ | 1,115 | |||||
Depreciation, depletion and amortization | 616 | 521 | ||||||||
Gain on equity investee transactions | — | (38 | ) | |||||||
Restructuring charges | 275 | — | ||||||||
Loss on debt extinguishment | — | 98 | ||||||||
Pensions and other post-employment benefits | 101 | 77 | ||||||||
Deferred income taxes | 215 | (329 | ) | |||||||
Net gain on disposal of assets | (1 | ) | (6 | ) | ||||||
Working capital changes | 276 | (404 | ) | |||||||
Income taxes receivable/payable | 13 | (8 | ) | |||||||
Other operating activities | (171 | ) | (88 | ) | ||||||
Total | 682 | 938 | ||||||||
Cash used in investing activities: | ||||||||||
Capital expenditures | (1,252 | ) | (1,001 | ) | ||||||
Investment in Big | (710 | ) | — | |||||||
Disposal of assets | 4 | 10 | ||||||||
Proceeds from sale of ownership interests in equity investees | — | 30 | ||||||||
Other investing activities | — | (2 | ) | |||||||
Total | (1,958 | ) | (963 | ) | ||||||
Cash provided by (used in) financing activities: | ||||||||||
Revolving credit facilities - borrowings, net of financing costs | 860 | 228 | ||||||||
Revolving credit facilities - repayments | (100 | ) | — | |||||||
Issuance of long-term debt, net of financing costs | 702 | 640 | ||||||||
Repayment of long-term debt | (155 | ) | (1,299 | ) | ||||||
Common stock repurchased | (88 | ) | (75 | ) | ||||||
Receipts from exercise of stock options | — | 35 | ||||||||
Taxes paid for equity compensation plans | (7 | ) | (8 | ) | ||||||
Dividends paid | (35 | ) | (36 | ) | ||||||
Total | 1,177 | (515 | ) | |||||||
Effect of exchange rate changes on cash | (2 | ) | (17 | ) | ||||||
Net decrease in cash, cash equivalents and restricted cash | (101 | ) | (557 | ) | ||||||
Cash, cash equivalents and restricted cash at beginning of the year | 1,040 | 1,597 | ||||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 939 | $ | 1,040 |
CONDENSED BALANCE SHEET (Unaudited) | |||||||||
(Dollars in millions) | 2019 | 2018 | |||||||
Cash and cash equivalents | $ | 749 | $ | 1,000 | |||||
Receivables, net | 1,177 | 1,659 | |||||||
Inventories | 1,785 | 2,092 | |||||||
Other current assets | 102 | 79 | |||||||
Total current assets | 3,813 | 4,830 | |||||||
Operating lease assets | 230 | — | |||||||
Property, plant and equipment, net | 5,447 | 4,865 | |||||||
Investments and long-term receivables, net | 1,466 | 513 | |||||||
Intangible assets, net | 150 | 158 | |||||||
Deferred income tax benefits | 7 | 445 | |||||||
Other noncurrent assets | 530 | 171 | |||||||
Total assets | $ | 11,643 | $ | 10,982 | |||||
Accounts payable and other accrued liabilities | 2,054 | 2,535 | |||||||
Payroll and benefits payable | 383 | 440 | |||||||
Short-term debt and current maturities of long-term debt | 14 | 65 | |||||||
Other current liabilities | 221 | 157 | |||||||
Total current liabilities | 2,672 | 3,197 | |||||||
Noncurrent operating lease liabilities | 177 | — | |||||||
Long-term debt, less unamortized discount and debt issuance costs | 3,627 | 2,316 | |||||||
Employee benefits | 532 | 980 | |||||||
Other long-term liabilities | 554 | 286 | |||||||
4,080 | 4,202 | ||||||||
Noncontrolling interests | 1 | 1 | |||||||
Total liabilities and stockholders' equity | $ | 11,643 | $ | 10,982 |
NON-GAAP FINANCIAL MEASURES | |||||||||||||||||
RECONCILIATION OF ADJUSTED NET (LOSS) EARNINGS | |||||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||||
(Dollars in millions, except per share amounts) (a) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
Reconciliation to adjusted net (loss) earnings attributable to | |||||||||||||||||
Net (loss) earnings attributable to | $ | (680 | ) | $ | 592 | $ | (642 | ) | $ | 1,115 | |||||||
(3 | ) | — | 41 | — | |||||||||||||
Restructuring charges | 221 | — | 263 | — | |||||||||||||
Big | 7 | — | 7 | — | |||||||||||||
— | 88 | — | 81 | ||||||||||||||
Tax valuation allowance | 346 | (374 | ) | 346 | (374 | ) | |||||||||||
Gain on equity investee transactions | — | (20 | ) | — | (38 | ) | |||||||||||
Loss on debt extinguishment and related costs | — | 21 | — | 101 | |||||||||||||
Granite City Works restart costs | — | 17 | — | 80 | |||||||||||||
Granite City Works temporary idling charges | — | — | — | (8 | ) | ||||||||||||
Total adjustments | 571 | (268 | ) | 657 | (158 | ) | |||||||||||
Adjusted net (loss) earnings attributable to | $ | (109 | ) | $ | 324 | $ | 15 | $ | 957 | ||||||||
Reconciliation to adjusted diluted net (loss) earnings per share | |||||||||||||||||
Diluted net (loss) earnings per share | $ | (4.00 | ) | $ | 3.34 | $ | (3.75 | ) | $ | 6.25 | |||||||
(0.02 | ) | — | 0.23 | — | |||||||||||||
Restructuring charges | 1.30 | — | 1.53 | — | |||||||||||||
Big | 0.04 | — | 0.04 | — | |||||||||||||
— | 0.49 | — | 0.45 | ||||||||||||||
Tax valuation allowance | 2.04 | (2.11 | ) | 2.04 | (2.11 | ) | |||||||||||
Gain on equity investee transactions | — | (0.11 | ) | — | (0.21 | ) | |||||||||||
Loss on debt extinguishment and related costs | — | 0.12 | — | 0.57 | |||||||||||||
Granite City Works restart costs | — | 0.09 | — | 0.45 | |||||||||||||
Granite City Works temporary idling charges | — | — | — | (0.04 | ) | ||||||||||||
Total adjustments | 3.36 | (1.52 | ) | 3.84 | (0.89 | ) | |||||||||||
Adjusted diluted net (loss) earnings per share | $ | (0.64 | ) | $ | 1.82 | $ | 0.09 | $ | 5.36 | ||||||||
(a) The adjustments included in this table for the nine months ended |
NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
RECONCILIATION OF ADJUSTED EBITDA | ||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||
(Dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Reconciliation to Adjusted EBITDA | ||||||||||||||||
Net (loss) earnings attributable to | $ | (680 | ) | $ | 592 | $ | (642 | ) | $ | 1,115 | ||||||
Income tax provision (benefit) | 233 | (339 | ) | 190 | (303 | ) | ||||||||||
Net interest and other financial costs | 71 | 60 | 222 | 312 | ||||||||||||
Depreciation, depletion and amortization expense | 162 | 137 | 616 | 521 | ||||||||||||
EBITDA | (214 | ) | 450 | 386 | 1,645 | |||||||||||
(3 | ) | — | 50 | — | ||||||||||||
Restructuring charges | 221 | — | 275 | — | ||||||||||||
— | 88 | — | 81 | |||||||||||||
Gain on equity investee transactions | — | (20 | ) | — | (38 | ) | ||||||||||
Granite City Works restart costs | — | 17 | — | 80 | ||||||||||||
Granite City Works temporary idling charges | — | — | — | (8 | ) | |||||||||||
Adjusted EBITDA | $ | 4 | $ | 535 | $ | 711 | $ | 1,760 |
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 financial effects of items such as restructuring charges, the
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,” “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 changes, share of sales and earnings per share changes, 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
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