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United States Steel Corporation Reports Fourth Quarter and Full-Year 2017 Results

  • Full-year 2017 net earnings of $387 million, or $2.19 per diluted share
  • Full-year 2017 cash flow from operations of $802 million
  • Total liquidity of $3.350 billion, including $1.553 billion of cash
  • Full-year 2017 adjusted EBITDA of $1.087 billion

PITTSBURGH, Jan. 31, 2018 (GLOBE NEWSWIRE) -- United States Steel Corporation (NYSE:X) reported full-year 2017 net earnings of $387 million, or $2.19 per diluted share. Adjusted net earnings were $341 million, or $1.94 per diluted share. This compares to a full-year 2016 net loss of $440 million, or $2.81 per diluted share. Adjusted net loss for 2016 was $250 million, or $1.60 per diluted share.

Fourth quarter 2017 net earnings were $159 million, or $0.90 per diluted share. Adjusted net earnings for the fourth quarter 2017 were $136 million, or $0.76 per diluted share. This compares to a fourth quarter 2016 net loss of $105 million, or $0.61 per diluted share. Fourth quarter 2016 adjusted net earnings were $47 million, or $0.27 per diluted share.

Earnings Highlights
Quarter Ended Year Ended
December 31, December 31,
(Dollars in millions, except per share amounts)20172016 20172016
Net Sales$3,133$2,650 $12,250$10,261
Segment earnings (loss) before interest and income taxes
Flat-Rolled$92$65 $380$(3)
U. S. Steel Europe11263 327185
Tubular(6)(87) (99)(304)
Other Businesses1021 4463
Total segment earnings (loss) before interest and income taxes (a)$208$62 $652$(59)
Postretirement benefit (expense) income(24)26 (66)62
Other items not allocated to segments(36)(152) 22(168)
Earnings (loss) before interest and income taxes$148$(64) $608$(165)
Net interest and other financial costs7843 307251
Income tax (benefit) provision(89)(2) (86)24
Net earnings (loss)$159$(105) $387$(440)
Earnings (loss) per diluted share$0.90$(0.61) $2.19$(2.81)

(a) Fourth quarter and twelve months ended 2017 results include favorable impacts of $139 million and $344 million, respectively, related to our previously disclosed change in accounting method for property, plant and equipment.

Adjusted net earnings (loss) (b)$136$47 $341$(250)
Adjusted earnings (loss) per diluted share (b)$0.76$0.27 $1.94$(1.60)
Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) (b)$309$211 $1,087$510

(b) 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, "We finished the year with three solid quarters as investments in our assets helped to provide more stable operating performance, and results for all three of our reportable segments were in line with our expectations. We made good progress on our asset revitalization program in 2017, achieved the quality and reliability improvements we committed to for 2017, and are confident that we will achieve our 2018 improvement objectives."

We continued to strengthen our balance sheet, with net debt decreasing by over $300 million in 2017 to approximately $1.150 billion. Our total liquidity increased by over $400 million in 2017 and ended the year at approximately $3.350 billion. The improving strength of our balance sheet and total liquidity supports the continued implementation of our asset revitalization program in our Flat-Rolled segment, as well as increasing investment in our Tubular and European businesses.

2018 Outlook

Commenting on U. S. Steel’s outlook for 2018, Burritt said, "Our focus in 2018 remains on improving the fundamental drivers of our business: safety, quality, delivery and cost and we expect the performance momentum from 2017 to continue. We will continue to provide our employees with the support and resources they need to succeed. When our employees succeed, our customers succeed. When our customers succeed, U. S. Steel succeeds."

If market conditions remain at their January 24, 2018 levels, we expect 2018 net earnings of approximately $685 million, or $3.88 per diluted share, and EBITDA of approximately $1.5 billion.

We believe market conditions, which include spot prices, raw material costs, customer demand, import volumes, supply chain inventories, rig counts and energy prices, will change, and as changes occur during the balance of 2018, we expect these changes to be reflected in our net earnings and EBITDA.

*****

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

UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
Quarter Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
OPERATING STATISTICS
Average realized price: (a)
Flat-Rolled ($/net ton)717 692 726 666
U. S. Steel Europe ($/net ton)634 484 622 483
U. S. Steel Europe (euro/net ton)538 449 551 436
Tubular ($/net ton)1,417 1,027 1,253 1,071
Steel Shipments (thousands of net tons): (a)
Flat-Rolled2,442 2,369 9,887 10,094
U. S. Steel Europe1,252 1,261 4,585 4,496
Tubular179 138 688 400
Total Steel Shipments3,873 3,768 15,160 14,990
Intersegment Shipments (thousands of net tons):
Flat-Rolled to Tubular21 158 42
U. S. Steel Europe to Flat-Rolled 47
Raw Steel Production (thousands of net tons):
Flat-Rolled2,575 2,458
10,820 10,706
U. S. Steel Europe 1,314 1,278
5,091 4,967
Raw Steel Capability Utilization: (b)
Flat-Rolled60% 57% 64% 63%
U. S. Steel Europe104% 101% 102% 99%
CAPITAL EXPENDITURES
Flat-Rolled$182 $14 $388 $111
U. S. Steel Europe21 15 83 83
Tubular9 7 28 88
Other Businesses2 2 6 24
Total$214 $38 $505 $306

(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)2017 2016 2017 2016
NET SALES $3,133 $2,650 $12,250 $10,261
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items shown below)2,749 2,430 10,864 9,623
Selling, general and administrative expenses110 49 375 255
Depreciation, depletion and amortization125 123 501 507
Earnings from investees(15) (7) (44) (98)
Gain associated with retained interest in U. S. Steel Canada Inc. (72)
Loss (gain) on equity investee transactions19 (2)
Impairment of intangible assets 14
Restructuring and other charges1 121 31 122
Net (gain) loss on disposal of assets(3) (1) (5) 5
Other income, net(1) (1) (6) (2)
Total operating expenses2,985 2,714 11,642 10,426
EARNINGS (LOSS) BEFORE INTEREST AND INCOME TAXES148 (64) 608 (165)
Net interest and other financial costs78 43 307 251
EARNINGS (LOSS) BEFORE INCOME TAXES
70 (107) 301 (416)
Income tax (benefit) provision(89) (2) (86) 24
Net earnings (loss)159 (105) 387 (440)
Less: Net earnings (loss) attributable to the
noncontrolling interests
NET EARNINGS (LOSS) ATTRIBUTABLE TO
UNITED STATES STEEL CORPORATION$159 $(105) $387 $(440)
COMMON STOCK DATA:
Net earnings (loss) per share attributable to
United States Steel Corporation stockholders:
Basic $0.91 $(0.61) $2.21 $(2.81)
Diluted $0.90 $(0.61) $2.19 $(2.81)
Weighted average shares, in thousands
Basic 175,117 172,975 174,793 156,673
Diluted 177,210 172,975 176,520 156,673
Dividends paid per common share$0.05 $0.05 $0.20 $0.20


UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
Year Ended
December 31,
(Dollars in millions) 2017 2016
Cash provided by operating activities:
Net earnings (loss) $387 $(440)
Depreciation, depletion and amortization501 507
Gain associated with retained interest in U. S. Steel Canada Inc.(72)
Gain on equity investee transactions(2)
Impairment of intangible assets 14
Restructuring and other charges31 122
Loss on debt extinguishment54 22
Pensions and other postretirement benefits(16) (62)
Deferred income taxes(72) 9
Net (gain) loss on disposal of assets(5) 5
Working capital changes20 596
Income taxes receivable/payable(52) 10
Other operating activities28 (52)
Total 802 731
Cash used in investing activities:
Capital expenditures (505) (306)
Disposal of assets 5 12
Proceeds from sale of ownership interest in equity method investees116
Other investing activities (5) (24)
Total (389) (318)
Cash (used in) provided by financing activities:
Issuance of long-term debt, net of financing costs737 958
Repayment of long-term debt (1,104) (1,070)
Settlement of contingent consideration (15)
Common stock issued 482
Receipts from exercise of stock options20 35
Dividends paid (35) (31)
Taxes paid for equity compensation plans (a)(10) (4)
Total (392) 355
Effect of exchange rate changes on cash17 (8)
Net increase in cash and cash equivalents38 760
Cash and cash equivalents at beginning of the year1,515 755
Cash and cash equivalents at end of the period$1,553 $1,515

(a) Effective January 1, 2017, the Company adopted Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (ASU 2016-09). As a result of adopting ASU 2016-09, cash taxes paid by the Company when directly withholding shares for tax withholding purposes have been classified as a cash flow financing activity. The adoption of this component of ASU 2016-09 was applied retrospectively, and the impact is reflected in the cash flow statement for the year ended December 31, 2016 accordingly.

UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
Dec. 31 Dec. 31
(Dollars in millions)2017 2016
Cash and cash equivalents$1,553 $1,515
Receivables, net1,379 1,248
Inventories1,738 1,573
Other current assets85
20
Total current assets4,755 4,356
Property, plant and equipment, net4,280 3,979
Investments and long-term receivables, net480 528
Intangible assets, net167 175
Other assets180
122
Total assets$9,862 $9,160
Accounts payable$2,170 $1,668
Payroll and benefits payable347 400
Short-term debt and current maturities of long-term debt3 50
Other current liabilities201
213
Total current liabilities2,721 2,331
Long-term debt, less unamortized discount and debt issuance costs2,700 2,981
Employee benefits759 1,216
Other long-term liabilities361 357
United States Steel Corporation stockholders' equity3,320 2,274
Noncontrolling interests1 1
Total liabilities and stockholders' equity$9,862 $9,160


UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED EBITDA
Quarter Ended Year Ended
Dec. 31 Dec. 31
(Dollars in millions)2017 2016 2017 2016
Reconciliation to Adjusted EBITDA
Net earnings (loss) attributable to United States Steel Corporation$159 $(105) $387 $(440)
Income tax (benefit) provision(89) (2) (86) 24
Net interest and other financial costs78 43 307 251
Depreciation, depletion and amortization expense125 123 501 507
EBITDA273 59 1,109 342
Gain associated with retained interest in U. S. Steel Canada Inc. (72)
Loss (gain) on equity investee transactions19 12 (2) 12
Loss on shutdown of certain tubular pipe mill assets 126 35 126
Restructuring and other charges and adjustments (4) (2)
Impairment of intangible assets 14
Granite City Works temporary idling charges17 18 17 18
Adjusted EBITDA$309 $211 $1,087 $510


UNITED STATES STEEL CORPORATION
NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF ADJUSTED NET EARNINGS (LOSS)
Quarter Ended(a) Year Ended(a)
December 31, December 31,
(Dollars in millions, except per share amounts)2017 2016 2017 2016
Reconciliation to adjusted net earnings (loss) attributable to United States Steel Corporation
Net earnings (loss) attributable to United States Steel Corporation$159 $(105) $387 $(440)
Gain associated with retained interest in U. S. Steel Canada Inc. (72)
Loss (gain) on equity investee transactions19 12 (2) 12
Loss on shutdown of certain tubular pipe mill assets 126 35 126
Restructuring and other charges and adjustments (4) (2)
Loss on debt extinguishment22 57 22
Effect of tax reform(81) (81)
Impairment of intangible assets 14
Granite City Works temporary idling charges17 18 17 18
Total adjustments(23) 152 (46) 190
Adjusted net earnings (loss) attributable to United States Steel Corporation$136 $47 $341 $(250)
Reconciliation to adjusted diluted net earnings (loss) per share
Diluted net earnings (loss) per share$0.90 $(0.61) $2.19 $(2.81)
Gain associated with retained interest in U. S. Steel Canada Inc. (0.41)
Loss (gain) on equity investee transactions0.10 0.07 (0.01) 0.08
Loss on shutdown of certain tubular pipe mill assets 0.73 0.20 0.80
Restructuring and other charges and adjustments (0.03) (0.01)
Loss on debt extinguishment0.12 0.33 0.14
Effect of tax reform(0.46) (0.46)
Impairment of intangible assets 0.09
Granite City Works temporary idling charges0.10 0.11 0.10 0.11
Total adjustments(0.14) 0.88 (0.25) 1.21
Adjusted diluted net earnings (loss) per share$0.76 $0.27 $1.94 $(1.60)

(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 ANNUAL EBITDA OUTLOOK
Year Ended
Dec. 31
(Dollars in millions)2018
Reconciliation to Projected Annual EBITDA Included in Outlook
Projected net earnings attributable to United States Steel Corporation included in Outlook$685
Estimated income tax expense50
Estimated net interest and other financial costs270
Estimated depreciation, depletion and amortization495
Projected annual EBITDA included in Outlook$1,500


UNITED STATES STEEL CORPORATION
RECONCILIATION OF NET DEBT
Dec. 31Dec. 31
(Dollars in millions)20172016
Reconciliation of net debt
Short-term debt and current maturities of long-term debt$3 $50
Long-term debt, less unamortized discount and debt issuance costs2,700 2,981
Total debt$2,703 $3,031
Less: Cash and cash equivalents1,553 1,515
Net debt$1,150 $1,516

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. Net debt is a non-GAAP measure calculated as total debt less cash and cash equivalents. We believe net debt is a useful measure in calculating enterprise value. Both EBITDA and net debt are 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) associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, impairment charges, significant temporary idling charges, debt extinguishment and other related costs 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 gains (losses) associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, impairment 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) associated with our retained interest in U. S. Steel Canada Inc., gains (losses) on the sale of ownership interests in equity investees, restructuring charges, impairment charges, significant temporary idling charges, debt extinguishment and other related costs and effects of tax reform 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 Outlook. 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.

The Company will conduct a conference call on fourth quarter and full-year 2017 earnings on Thursday, February 1, 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.

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, 2016, 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.

-oOo-

CONTACTS:

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

Source:United States Steel Corporation