UNITED STATES STEEL CORPORATION PITTSBURGH, July 28, 2015 /PRNewswire/ -- United States Steel Corporation (NYSE: X) reported a second quarter 2015 net loss of $261 million, or $1.79 per diluted share, which included a $136 million, or $0.93 per diluted share, non-cash write-down of our retained interest in U. S. Steel Canada (USSC) and a net loss of $10 million, or $0.07 per diluted share, related to non-cash restructuring and other charges. This compared to a second quarter 2014 net loss of $18 million, or $0.12 per diluted share, and a first quarter 2015 net loss of $75 million, or $0.52 per diluted share.
For a description of the non-generally accepted accounting principles (non-GAAP) measures and a reconciliation to net earnings (loss) attributable to U. S. Steel and earnings (loss) before interest and income taxes (EBIT) see the Non-GAAP Financial Measures section.
Earnings Highlights
-------------------
(Dollars in
millions, except
per share
amounts) 2Q 2015 1Q 2015 2Q 2014
Net Sales $2,900 $3,272 $4,400
------
Segment (loss)
earnings before
interest and
income taxes
(EBIT)
Flat-Rolled $(64) $(67) $30
U. S. Steel Europe 20 37 38
Tubular (66) 1 47
Other Businesses 6 8 17
---
Total Segment EBIT $(104) $(21) $132
Postretirement
benefit expense (14) (13) (32)
Other items not
allocated to
segments (274) (153) (65)
EBIT $(392) $(187) $35
Net interest and
other financial
costs 55 62 64
---
Income tax benefit (186) (174) (11)
------------------ ----
Less: Net earnings
attributable to
the
noncontrolling
interests - - -
Net loss
attributable to
United States
Steel Corporation $(261) $(75) $(18)
------------------ -----
-Loss per basic
share $(1.79) $(0.52) $(0.12)
------
-Loss per diluted
share $(1.79) $(0.52) $(0.12)
----------------- ------ ------ ------
Commenting on results, U. S. Steel President and Chief Executive Officer Mario Longhi said, "We've taken aggressive and decisive actions to address the extremely challenging conditions we continue to face in North America. Our Carnegie Way efforts, combined with short-term cost improvements, have helped to partially offset the continued depressed volumes and low prices in both the tubular and flat-rolled markets as well as the negative impact of tremendously high levels of imports. U.S. trade laws have been strengthened by the signing of the Trade Adjustment Assistance bill, which will improve the means by which domestic companies may seek relief from unfairly traded imports. We are also maintaining our customer focus and our flexibility to respond as market conditions change."
Segment loss before interest and income taxes was $104 million, or $27 per ton, for the second quarter of 2015 compared to segment loss before interest and income taxes of $21 million, or $5 per ton, in the first quarter of 2015 and segment earnings before interest and income taxes of $132 million, or $26 per ton, in the second quarter of 2014.
During the second quarter of 2015, management continued to assess the recoverability of our retained interest in USSC and as a result of this assessment, we recorded a $255 million non-cash, pre-tax charge to write-down our retained interest in USSC. Further information will be provided in our Form 10-Q.
For the second quarter 2015, we recorded a tax benefit of $186 million on our pre-tax loss of $447 million. The tax provision reflects a benefit for percentage depletion in excess of cost depletion for iron ore that we produce and consume or sell.
Despite the significantly challenging market conditions, we maintained positive operating cash flow of $215 million for the six months ended June 30, 2015. As of June 30, U. S. Steel had $1.2 billion of cash and $2.7 billion of total liquidity compared to cash and total liquidity of $1.4 billion and $3.1 billion, respectively, at December 31, 2014.
Segment Analysis
Second quarter results for our Flat-Rolled segment were comparable to the first quarter despite the adverse impact of significant and increasing volumes of unfairly traded sheet imports in addition to elevated import activity caused by the continued strength of the U.S. dollar, which have served to drastically depress both spot and contract prices in the second quarter. The earnings power of our Carnegie Way efforts, combined with our aggressive actions to reduce operating costs in alignment with our low utilization levels enabled us to offset the effect of lower average realized prices, which declined by more than $70 per ton in the second quarter.
European segment results remained positive but decreased compared to the first quarter. Planned maintenance outages in the second quarter resulted in reduced shipments and higher repairs and maintenance costs. These negative effects were partially offset by a slight increase in averaged realized euro-based prices and a reduction in raw materials costs.
Second quarter results for our Tubular segment decreased significantly as compared to the first quarter primarily due to considerably lower shipments. Shipments continue to be adversely impacted by reduced drilling activity caused by low crude oil prices and the near record levels of tubular imports, much of which we believe are unfairly traded. The decrease in results is also attributable to operating inefficiencies as a result of reduced production levels.
2015 Outlook
We currently expect commercial conditions to improve in the second half of 2015 from the conditions we experienced in the first half, as supply chain inventories continue to rebalance, primarily in our flat-rolled markets. Based on increasing benefits from our Carnegie Way transformation and our aggressive efforts to reduce operating costs to align them with our utilization levels, we currently expect to be within our full-year adjusted EBIT of $115 million to $315 million, or full-year adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) of $700 million to $900 million, guidance range for 2015. While we continue to find additional short term cost reductions and generate additional Carnegie Way benefits, if the current pace of commercial improvement in our markets does not increase, we would expect to be near the low end of the range. Consistent with our Carnegie Way transformation process, we are focused on converting as much of the short term cost reductions as possible into permanent improvements in our cost structure.
*****
We present adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, EBITDA and Adjusted EBITDA, which are non-GAAP measures, as additional measurements to enhance the understanding of our operating performance and facilitate a comparison with that of our competitors.
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.
The company will conduct a conference call on second quarter earnings on Wednesday, July 29, at 8:30 a.m. Eastern Daylight. To listen to the webcast of the conference call, visit the U. S. Steel website, www.ussteel.com, and click on "Current Information" under the "Investors" section.
For more information on U. S. Steel, visit our website at www.ussteel.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains information that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, we have identified such forward-looking statements by using the words "believe," "expect," "intend," "estimate," "anticipate," "project," "target", "forecast", "aim," "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" and "Supplementary Data - Disclosures About Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2014, and those described from time to time in our future reports filed with the Securities and Exchange Commission.
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
----------------------------------
Quarter Ended Six Months Ended
------------- ----------------
June 30 March 31 June 30 June 30,
(Dollars in millions, except per share amounts) 2015 2015 2014 2015 2014
---------------------------------------------- ---- ---- ---- ---- ----
NET SALES $2,900 $3,272 $4,400 $6,172 $8,848
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items
shown below) 2,792 3,066 4,097 5,858 8,135
Selling, general and
administrative expenses 107 102 143 209 281
Depreciation, depletion and
amortization 138 144 165 282 331
Earnings from investees (17) (6) (57) (23) (53)
Loss on write-down of
retained interest in USSC 255 - - 255 -
Restructuring and other
charges 19 153 18 172 18
Net gain on disposal of assets (1) - (1) (1) (21)
Other income, net (1) - - (1) -
------------
Total operating expenses 3,292 3,459 4,365 6,751 8,691
------------
(LOSS) EARNINGS BEFORE INTEREST AND INCOME TAXES (EBIT) (392) (187) 35 (579) 157
Net interest and other financial costs 55 62 64 117 133
--- --- --- --- ---
(LOSS) EARNINGS BEFORE INCOME
TAXES (447) (249) (29) (696) 24
Income tax benefit (186) (174) (11) (360) (10)
---- ---- --- ---- ---
Net (loss) earnings (261) (75) (18) (336) 34
Less: Net earnings
attributable to the
noncontrolling interests - - - - -
------------
NET (LOSS) EARNINGS ATTRIBUTABLE TO
UNITED STATES STEEL
CORPORATION $(261) $(75) $(18) $(336) $34
==========
COMMON STOCK DATA:
------------------
Net (loss) earnings per share attributable to
United States Steel Corporation stockholders:
Basic $(1.79) $(0.52) $(0.12) $(2.31) $0.23
Diluted $(1.79) $(0.52) $(0.12) $(2.31) $0.23
Weighted average shares, in thousands
Basic 145,962 145,733 144,884 145,848 144,821
Diluted 145,962 145,733 144,884 145,848 146,144
Dividends paid per common share $0.05 $0.05 $0.05 $0.10 $0.10
------------------------------- ----- ----- ----- ----- -----
UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
------------------------------
Six Months Ended
June 30,
--------
(Dollars in millions) 2015 2014
-------------------- ---- ----
Cash provided by (used in) operating activities:
Net (loss)
earnings $(336) $34
Depreciation,
depletion and
amortization 282 331
Loss on write-
down of retained
interest in USSC 255 -
Restructuring and
other charges 172 18
Pensions and
other
postretirement
benefits (24) (59)
Deferred income
taxes (345) 16
Net gain on
disposal of
assets (1) (21)
Working capital
changes 226 833
Income taxes
receivable/
payable 18 153
Other operating
activities (32) 48
----
Total 215 1,353
--- -----
Cash (used in) provided by investing activities:
Capital
expenditures (276) (186)
Acquisitions (25) -
Disposal of
assets 1 26
Other
investing
activities 5 13
Total (295) (147)
---- ----
Cash (used in) provided by financing activities:
Repayment of
long-term
debt (18) (322)
Receipts from
exercise of
stock options 1 1
Dividends
paid (15) (15)
Total (32) (336)
--- ----
Effect of exchange rate changes on
cash (32) (3)
--- ---
Net (decrease) increase in cash and
cash equivalents (144) 867
Cash and cash equivalents at beginning
of the year 1,354 604
----- ---
Cash and cash equivalents at end of
the period $1,210 $1,471
----------------------------------- ------ ------
UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
----------------------------------
June 30 Dec. 31
(Dollars
in
millions) 2015 2014
---------------- ---- ----
Cash and
cash
equivalents $1,210 $1,354
Receivables,
net 1,497 1,942
Inventories 2,330 2,496
Other
current
assets 399 639
--- ---
Total current
assets 5,436 6,431
Property,
plant
and
equipment,
net 4,431 4,574
Investments
and
long-
term
receivables,
net 672 939
Intangible
assets,
net 200 204
Other
assets 474 166
--- ---
Total assets $11,213 $12,314
Accounts
payable $1,811 $2,001
Payroll
and
benefits
payable 879 1,003
Short-
term
debt
and
current
maturities
of
long-
term
debt 362 378
Other
current
liabilities 190 187
--- ---
Total current
liabilities 3,242 3,569
Long-
term
debt,
less
unamortized
discount 3,124 3,120
Employee
benefits 952 1,117
Other
long-
term
liabilities 414 708
United
States
Steel
Corporation
stockholders'
equity 3,480 3,799
Noncontrolling
interests 1 1
--- ---
Total
liabilities
and
stockholders'
equity $11,213 $12,314
------------- ------- -------
UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES (Unaudited)
We present EBITDA, adjusted EBITDA, adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share, which are non-GAAP measures, as an additional measurement to enhance the understanding of our operating performance and facilitate a comparison with that of our competitors. EBITDA is defined as earnings (loss) before interest, income taxes, depreciation and amortization. Adjusted EBITDA and adjusted net earnings (loss) are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with GAAP and are not necessarily comparable to similarly titled measures used by other companies.
RECONCILIATION OF ADJUSTED EBITDA
---------------------------------
Quarter Ended
-------------
June 30 March 31 June 30
(Dollars in millions) 2015 2015 2014
-------------------- ---- ---- ----
Reconciliation to (loss) earnings before
interest and income taxes (EBIT)
Adjusted EBITDA $20 $110 $265
Loss on write-down of retained
interest in USSC (255) - -
Loss on shutdown of coke
production facilities - (153) -
Restructuring and other charges
(a) (19) - -
Impairment of carbon alloy
facilities - - -
Write-off of pre-engineering
costs - - -
Gain on sale of real estate
assets - - -
Litigation reserves - - (70)
Loss on assets held for sale - - (14)
Curtailment gain - - 19
---
EBITDA (254) (43) 200
Depreciation, depletion and
amortization expense (138) (144) (165)
-----
EBIT, as reported $(392) $(187) $35
----------------- ----- ----- ---
(a) Consists primarily of employee related costs, including costs for severance, supplemental unemployment benefits and continuation of health care
benefits.
UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES (Unaudited)
RECONCILIATION OF ADJUSTED NET LOSS
-----------------------------------
Quarter Ended
-------------
June 30 March 31 June 30
(Dollars in millions,
except per share amounts) 2015 2015 2014
-------------------------- ---- ---- ----
Reconciliation to net loss attributable to
United States Steel Corporation
Adjusted net (loss) earnings
attributable to United States
Steel Corporation $(115) $(10) $25
Loss on write-down of retained
interest in USSC (136) - -
Loss on shutdown of coke
production facilities - (65) -
Restructuring and other charges
(a) (10) - -
Litigation reserves - - (46)
Loss on assets held for sale - - (9)
Curtailment gain - - 12
Total Adjustments (146) (65) (43)
-----
Net loss attributable to United
States Steel Corporation, as
reported $(261) $(75) $(18)
---
Reconciliation to diluted net loss per
share
Adjusted diluted net (loss)
earnings per share $(0.79) $(0.07) $0.17
Loss on write-down of retained
interest in USSC (0.93) - -
Loss on shutdown of coke
production facilities - (0.45) -
Restructuring and other charges
(a) (0.07) - -
Litigation reserves - - (0.31)
Loss on assets held for sale - - (0.06)
Curtailment gain - - 0.08
Total adjustments (1.00) (0.45) (0.29)
------
Diluted net loss per share, as
reported $(1.79) $(0.52) $(0.12)
------------------------------- ------ ------ ------
(a) Consists primarily of employee related costs, including costs for severance, supplemental unemployment benefits and continuation of health care benefits.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
----------------------------------------------
Quarter Ended Six Months Ended
------------- ----------------
June 30 March 31 June 30 June 30,
(Dollars in millions) 2015 2015 2014 2015 2014
-------------------- ---- ---- ---- ---- ----
SEGMENT EARNINGS (LOSS) BEFORE INTEREST AND
INCOME TAXES (EBIT)
Flat-Rolled $(64) $(67) $30 $(131) $115
U. S. Steel Europe 20 37 38 57 70
Tubular (66) 1 47 (65) 71
Other Businesses 6 8 17 14 30
---
Total Segment EBIT (104) (21) 132 (125) 286
Postretirement benefit expense (14) (13) (32) (27) (64)
Other items not allocated to
segments:
Loss on write-down of retained
interest in USSC (255) - - (255) -
Loss on shutdown of coke production
facilities - (153) - (153) -
Restructuring and other charges (19) - - (19) -
Litigation reserves - - (70) - (70)
Loss on assets held for sale - - (14) - (14)
Curtailment gain - - 19 - 19
---
EBIT $(392) $(187) $35 $(579) $157
===
CAPITAL EXPENDITURES
Flat-Rolled $56 $132 $47 $188 $102
U. S. Steel Europe 24 21 17 45 35
Tubular 24 16 31 40 47
Other Businesses - 3 1 3 2
---
Total $104 $172 $96 $276 (a) $186 (a)
----- ---- ---- --- ---- --- ---- ---
(a) Excludes the (decrease) increase in accrued capital expenditures of $(18) million and $4 million for the six months ended June 30, 2015, and 2014, respectively.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
----------------------------------------------
Quarter Ended Six Months Ended
------------- ----------------
June 30 March 31 June 30 June 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
OPERATING STATISTICS
Average realized
price: (a)
Flat-Rolled
($/net ton) 695 768 774 731 767
Flat-Rolled
U.S.
Facilities
($/net ton)
(b) 695 768 788 731 781
U. S. Steel
Europe ($/net
ton) 533 530 691 532 700
U. S. Steel
Europe (euro/
net ton) 483 471 504 476 511
Tubular ($/net
ton) 1,651 1,637 1,479 1,641 1,479
Steel Shipments: (a)
(c)
Flat-Rolled 2,712 2,617 3,527 5,329 7,201
Flat-Rolled
U.S.
Facilities (b) 2,712 2,617 3,006 5,329 6,121
U. S. Steel
Europe 1,091 1,264 1,053 2,355 2,084
Tubular 92 220 449 312 868
Total Steel Shipments 3,895 4,101 5,029 7,996 10,153
===== ===== ===== ===== ======
Intersegment
Shipments: (c)
Flat-Rolled to
Tubular 96 149 457 245 892
U. S. Steel
Europe to
Flat-Rolled - - 75 - 75
Raw Steel
Production: (c)
Flat-Rolled 2,808 2,868 4,132 5,676 8,623
Flat-Rolled
U.S.
Facilities (b) 2,808 2,868 3,528 5,676 7,421
U. S. Steel
Europe 1,200 1,283 1,223 2,483 2,364
Raw Steel Capability
Utilization: (d)
Flat-Rolled 58% 60% 75% 59% 79%
Flat-Rolled
U.S.
Facilities (e) 58% 60% 73% 59% 77%
U. S. Steel
Europe 96% 104% 98% 100% 95%
------------ --- --- --- --- ---
(a) Excludes intersegment shipments.
(b) Excludes U. S. Steel Canada for all periods presented.
(c) Thousands of net tons.
(d) Based on annual raw steel production capability of 19.4 million net tons for Flat-Rolled and 5.0 million net tons for U. S. Steel Europe. Prior to the CCAA filing and deconsolidation of U. S. Steel
Canada, on September 16, 2014 annual raw steel production capability for Flat-Rolled was 22.0 million net tons.
(e) AISI capability utilization rates include our U.S. facilities (Gary Works, Great Lakes Works, Mon Valley Works, Granite City Works and Fairfield Works).
( )
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SOURCE United States Steel Corporation
