U. S. Steel(X) - 2024 Q3 - Quarterly Results

Q3 2024 Financial and Operational Overview A comprehensive review of U.S. Steel's Q3 2024 financial performance and key management insights Overall Performance U.S. Steel experienced a significant year-over-year decline in profitability and earnings per share for Q3 2024 Q3 2024 vs. Q3 2023 Financial Highlights | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Earnings | $119 million | $299 million | | Diluted EPS | $0.48 | $1.20 | | Adjusted Net Earnings | $140 million | $350 million | | Adjusted Diluted EPS | $0.56 | $1.40 | | Adjusted EBITDA | $319 million | $578 million | Management Commentary Management discusses Q3 performance, strategic project milestones, and progress on the Nippon Steel transaction - The North American Flat-Rolled segment benefited from a strong commercial strategy, while the Mini Mill segment's margins were impacted by softening prices and $40 million in one-time start-up costs. USSE earnings were aided by a one-time CO2 allocation adjustment, and Tubular earnings weakened as expected due to lower prices[4] - A major strategic milestone was achieved with the first coil produced at Big River 2 (BR2). Shipments to customers are expected to begin in Q4. This is part of over $4 billion in growth capital investments[4] - The company is progressing towards closing its transaction with Nippon Steel by year-end. Nippon Steel has committed to at least $1.3 billion in investments in the Mon Valley and Gary plants, increasing the total capital commitment to at least $2.7 billion[7] Q4 2024 Outlook Anticipated financial performance and segment-specific expectations for the fourth quarter of 2024 Q4 2024 Guidance The company forecasts Q4 adjusted EBITDA and provides segment-specific performance expectations - Fourth quarter adjusted EBITDA is forecasted to be in the range of $225 million to $275 million[8] - Flat-Rolled: Results expected to decrease slightly due to lower average selling prices - Mini Mill: Results expected to improve, even with $25 million in start-up costs, due to better pricing - Europe (USSE): Results expected to be lower due to the absence of a one-time CO2 credit and weak market conditions - Tubular: Results expected to be largely consistent with Q3[8] Financial Statements and Supplemental Data Detailed financial statements and key operating statistics for the current and prior periods Earnings Highlights and Segment Performance Detailed Q3 2024 segment earnings before interest and income taxes show a sharp year-over-year decrease Segment Earnings Before Interest and Income Taxes (in millions) | Segment | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Flat-Rolled | $106 | $225 | | Mini Mill | $(28) | $42 | | U. S. Steel Europe | $7 | $(13) | | Tubular | $(4) | $87 | | Total Segment EBIT | $84 | $348 | Operating Statistics Key operational metrics indicate a general decline in average realized prices and steel shipments for the first nine months of 2024 Average Realized Price ($/net ton) | Segment | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Flat-Rolled | $1,030 | $1,045 | | Mini Mill | $880 | $898 | | U. S. Steel Europe | $818 | $910 | | Tubular | $2,062 | $3,422 | Total Steel Shipments (thousands of net tons) | Period | Shipments | | :--- | :--- | | Nine Months Ended Sep 30, 2024 | 10,910 | | Nine Months Ended Sep 30, 2023 | 11,700 | - Total capital expenditures for the first nine months of 2024 were $1.782 billion, with the Mini Mill segment accounting for the largest portion at $1.302 billion[10] Condensed Statement of Operations The Q3 2024 income statement reflects a year-over-year decrease in net sales and net earnings Q3 Statement of Operations Highlights (in millions) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Sales | $3,853 | $4,431 | | Earnings before interest and taxes | $48 | $277 | | Net Earnings | $119 | $299 | Condensed Cash Flow Statement Net cash from operating activities significantly decreased for the first nine months of 2024, impacting overall cash position Cash Flow Summary - Nine Months Ended Sep 30 (in millions) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $711 | $1,711 | | Net cash used in investing activities | $(1,784) | $(1,935) | | Net decrease in cash | $(1,173) | $(280) | | Cash at end of period | $1,815 | $3,259 | Condensed Balance Sheet The balance sheet as of September 30, 2024, shows a decrease in cash and an increase in property, plant, and equipment Balance Sheet Highlights (in millions) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,773 | $2,948 | | Total current assets | $5,766 | $6,943 | | Total assets | $20,633 | $20,451 | | Total liabilities | $8,961 | $9,213 | | Total stockholders' equity | $11,671 | $11,140 | Non-GAAP Financial Measures Reconciliations and explanations of non-GAAP financial metrics used to assess the company's performance Reconciliation of Adjusted Net Earnings and EBITDA Reconciliation of GAAP net earnings to adjusted net earnings and adjusted EBITDA for Q3 2024, highlighting key adjustments Q3 2024 Reconciliation of Net Earnings to Adjusted Net Earnings (in millions) | Description | Amount | | :--- | :--- | | Net earnings (GAAP) | $119 | | Adjustments (e.g., restructuring, strategic review costs) | $27 | | Tax impact of adjustments | $(6) | | Adjusted net earnings (Non-GAAP) | $140 | Q3 2024 Reconciliation to Adjusted EBITDA (in millions) | Description | Amount | | :--- | :--- | | Net earnings (GAAP) | $119 | | Add: Taxes, Net Interest, D&A | $164 | | EBITDA | $283 | | Adjustments (e.g., restructuring, strategic review costs) | $36 | | Adjusted EBITDA (Non-GAAP) | $319 | Reconciliation of Free and Investable Cash Flow Reconciliation of free cash flow and investable free cash flow over the trailing twelve months, showing impact of strategic investments Trailing Twelve Months Cash Flow (in millions) | Metric | Total of the Four Quarters | | :--- | :--- | | Net cash provided by operating activities | $1,100 | | Net cash used in investing activities | $(2,417) | | Free cash flow | $(1,317) | | Strategic capital expenditures | $1,707 | | Investable free cash flow | $390 | Explanation of Non-GAAP Measures U.S. Steel explains the rationale for using non-GAAP measures to enhance understanding of operating performance and trends - The company presents non-GAAP measures like adjusted EBITDA to provide a relevant indicator of trends related to operating performance and for comparison with other companies[17] - Adjusted net earnings and adjusted EBITDA exclude items such as restructuring charges, asset impairment, and strategic alternatives review costs to better show ongoing operating performance and established trends[18] - Free cash flow and investable free cash flow are presented to offer further insight into the company's overall utilization of cash[19] Other Information Important disclosures including forward-looking statements and a corporate overview of U.S. Steel Cautionary Note Regarding Forward-Looking Statements A disclaimer on forward-looking statements, emphasizing risks and uncertainties related to future performance and the proposed merger - The report contains forward-looking statements identified by words like "believe," "expect," "will," etc., which are not historical facts but projections about future events[20] - Significant risks and uncertainties could cause actual results to differ, including those related to the consummation of the proposed transaction with Nippon Steel, regulatory approvals, and potential litigation[21] About United States Steel Corporation A corporate overview of U.S. Steel, detailing its history, market position, and operational capabilities - U. S. Steel, founded in 1901, is a leading steel producer with a customer-centric strategy focused on sustainability and innovation[22] - The company serves the automotive, construction, appliance, energy, containers, and packaging industries and has an annual raw steelmaking capability of 25.4 million net tons[22]