United States Steel Corporation Reports 2013 Second Quarter Results -- Second quarter total reportable segment and Other Businesses income from operations of $47 million -- Second quarter net loss of $78 million, or $0.54 per diluted share -- Second quarter shipments of 5.2 million tons and net sales of $4.4 billion -- Strong liquidity position with $767 million of cash and $2.5 billion of total liquidity PR Newswire PITTSBURGH, July 29, 2013 PITTSBURGH, July29, 2013 /PRNewswire/ --United States Steel Corporation (NYSE:X) reported a second quarter 2013 net loss of $78 million, or $0.54 per diluted share, compared to a first quarter 2013 net loss of $73million, or $0.51 per diluted share, and second quarter 2012 net income of $101 million, or $0.62 per diluted share. Adjusted net loss for the first quarter 2013 was $51 million, or $0.35 per diluted share, excluding an after-tax charge of $22 million, or $0.16 per diluted share, related to repurchases of $542 million principal amount of our 4.00% Senior Convertible Notes due 2014. Adjusted net income for the second quarter 2012 was $112 million, or $0.69 per diluted share, excluding an $11 million after-tax early redemption premium on our $300 million 5.65% Senior Notes due 2013. Earnings Highlights (Dollars in millions, except per share amounts) 2Q 2013 1Q 2013 2Q 2012 Net Sales $ 4,429 $ 4,595 $ 5,017 Segment income (loss) from operations Flat-rolled $ (51) $ (13) $ 177 U. S. Steel Europe 10 38 34 Tubular 45 64 103 Other Businesses 43 5 16 Total reportable segment and Other Businesses income $ 47 $ 94 $ 330 from operations Postretirement benefit expense (54) (56) (77) Other items not allocated to segments — — — Income (loss) from operations $ (7) $ 38 $ 253 Net interest and other financial costs 68 104 82 Income tax provision 3 7 70 Less: Net loss attributable to the noncontrolling — — — interests Net (loss) income attributable to United States $ (78) $ (73) $ 101 Steel Corporation -Per basic share $ (0.54) $ (0.51) $ 0.70 -Per diluted share $ (0.54) $ (0.51) $ 0.62 Commenting on results, U.S.Steel Chairman and CEO JohnP.Surma said, "Total reportable segment and Other Businesses operating results of $47 million reflect the effects of the ongoing lockout at our Lake Erie Works and a deceleration in global economic growth during the quarter.Our plants operated well even with increased repairs and maintenance costs." The $47 million, or $9 per ton, of reportable segment and Other Businesses income from operations for the second quarter of 2013 compares to income from operations of $94 million, or $17 per ton, in the first quarter of 2013 and income from operations of $330 million, or $61 per ton, in the second quarter of 2012. Net interest and other financial costs in the first quarter of 2013 includes a $34 million pre-tax charge related to repurchases of $542 million principal amount of our 4.00% Senior Convertible Notes due 2014. For the second quarter 2013, we recorded a tax provision of $3 million on our pre-tax loss of $75 million. The tax provision does not reflect any tax benefit for pre-tax losses in Canada, which is a jurisdiction where we have recorded a full valuation allowance on deferred tax assets. As of June30, 2013, U. S. Steel had $767 million of cash and $2.5 billion of total liquidity. Reportable Segments and Other Businesses Flat-rolled segment results were lower than the first quarter primarily due to increased operating costs and decreased shipments. Operating costs increased due to higher repairs and maintenance costs as well as higher natural gas costs partially offset by lower raw materials costs. Repairs and maintenance costs were approximately $30 million higher than the first quarter due to maintenance projects at Gary Works and Lake Erie Works. Shipments decreased from the first quarter primarily due to the maintenance projects and the continuing lockout at our Lake Erie Works that began on April 28, 2013. Average realized prices, including the effect of a more favorable product mix, were comparable to the first quarter. We incurred approximately $70 million in idle facility carrying costs at our Hamilton and Lake Erie operations in the second quarter. Second quarter results for our European segment declined compared to the first quarter due to higher iron ore costs and lower average realized euro-based prices. A general price deterioration in the spot market occurred during the second quarterdue tothe completion of the service center and distributor restocking experienced in the first quarter. Total shipments were comparable to the first quarter. Second quarter results for our Tubular segment were lower than the first quarter. Total shipments were higher due primarily to increased participation with our strategic program customers. Average realized prices decreased reflecting lower prices for line pipe product, continued elevated levels of imports and OCTG mix effects. Operating profit from Other Businesses increased primarily due to a gain of approximately $30 million from a real estate sale that occurred in the second quarter. Outlook Commenting on U. S. Steel's outlook for the third quarter, Surma said, "Results for our Flat-rolled and Tubular segments are projected to improve compared to the second quarter; however, we expect lower results from our European segment due to a planned blast furnace outage in the third quarter. Operating results for our Other Businesses are expected to decrease compared to the second quarter to near breakeven. Total reportable segment and Other Businesses results are expected to be comparable to the second quarter." We expect our Flat-rolled segment results from operations to improve based on an increase in average realized prices, lower raw materials costs, and lower repairs and maintenance costs partially offset by reduced shipments. Average realized prices are expected to increase compared to the second quarter due to increased spot market prices as well as a more favorable product mix. Shipments are projected to decrease significantly due to a blast furnace outage at our Great Lakes Works and the Lake Erie Works labor dispute. The represented employees at Lake Erie Works are scheduled to vote on the company's contract offer on July 31, 2013. If the contract is approved, we plan to restart operations as soon as possible. This outlook does not include any effects of a restart of Lake Erie Works. Third quarter results for our European segment are projected to decrease compared to the second quarter. A scheduled blast furnace outage will result in significantly lower shipments and increased facility repairs and maintenance costs. Average realized euro-based prices are expected to be lower compared to the second quarter as decreases in spot and contract market prices are partially offset by the positive effect of a higher percentage of value-added shipments. Raw materials costs are expected to be lower in the third quarter due primarily to lower iron costs. We expect third quarter results for our Tubular segment to improve compared to the second quarter. Shipments are expected to increase to support anticipated drilling activity and average realized prices are projected to be comparable. Operating costs are expected to decrease due to operating efficiencies related to higher production volumes. On July 1, 2013, U. S. Steel entered into a supplier contract dispute settlement agreement. As a result of the agreement, U. S. Steel expects to record a pre-tax gain of $23 million as an item not allocated to segments in the third quarter of 2013. We expect a minimal tax provision/benefit in the third quarter primarily due to the full valuation allowance on deferred tax assets in Canada. ***** This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. Although we believe that we are experiencing a gradual economic recovery, there are signs of continued economic issues, including the European sovereign debt and domestic fiscal situations. U. S. Steel cannot control or predict the impact. Other more normal factors that could affect market conditions, costs, shipments and prices for both North American and European operations include: (a) foreign currency fluctuations and related activities; (b) global product demand, prices and mix; (c) global and company steel production levels; (d) plant operating performance; (e) natural gas, electricity, raw materials and transportation prices, usage and availability; (f) international trade developments, including court decisions, legislation and agency decisions on petitions and sunset reviews; (g) the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; (h) changes in environmental, tax, pension and other laws; (i) the terms of collective bargaining agreements, including the resolution of the Lake Erie Works contract; (j) employee strikes or other labor issues; and (k) U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies, including those related to CO emissions, climate change and shale gas development. Economic conditions and political factors in Europe and Canada that may affect U. S. Steel Europe's and U. S. Steel Canada's results include, but are not limited to: (l) taxation; (m) nationalization; (n) inflation; (o) fiscal instability; (p) political issues; (q) regulatory actions; and (r) quotas, tariffs, and other protectionist measures. We present adjusted net income and adjusted net income per diluted share, which are non-GAAP measures, to better enable investors and others to assess our results and compare them with our competitors. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward-looking statements have been included in U. S. Steel's Annual Report on Form 10-K for the year ended December31, 2012, and in subsequent filings for U.S.Steel. 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 Tuesday, July 30, at 2:30 p.m. EDT. 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. 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 2013 2013 2012 2013 2012 per share amounts) NET SALES $ 4,429 $ 4,595 $ 5,017 $ 9,024 $ 10,189 OPERATING EXPENSES (INCOME): Cost of sales (excludes 4,114 4,242 4,485 8,356 9,118 items shown below) Selling, general and 151 145 165 296 331 administrative expenses Depreciation, depletion and 170 171 164 341 327 amortization Loss (income) from investees 3 (8) (44) (5) (68) Net (gain) loss on disposal (1) 1 — — 309 of assets Other (income) expense, net (1) 6 (6) 5 (8) Total operating 4,436 4,557 4,764 8,993 10,009 expenses (LOSS) INCOME FROM OPERATIONS (7) 38 253 31 180 Net interest and other 68 104 82 172 132 financial costs (LOSS) INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (75) (66) 171 (141) 48 Income tax provision 3 7 70 10 166 Net (loss) income (78) (73) 101 (151) (118) Less: Net loss attributable to the noncontrolling interests — — — — — NET (LOSS) INCOME ATTRIBUTABLE TO UNITED STATES STEEL $ (78) $ (73) $ 101 $ (151) $ (118) CORPORATION COMMON STOCK DATA: Net (loss) income per share attributable to United States Steel Corporation shareholders: -Basic $ (0.54) $ (0.51) $ 0.70 $ (1.05) $ (0.82) -Diluted $ (0.54) $ (0.51) $ 0.62 $ (1.05) $ (0.82) Weighted average shares, in thousands -Basic 144,485 144,353 144,176 144,419 144,123 -Diluted 144,485 144,353 171,416 144,419 144,123 Dividends paid per common $ 0.05 $ 0.05 $ 0.05 $ 0.10 $ 0.10 share UNITED STATES STEEL CORPORATION CASH FLOW STATEMENT (Unaudited) Six Months Ended June 30 (Dollars in millions) 2013 2012 Cash (used in) provided by operating activities: Net loss $ (151) $ (118) Depreciation, depletion and amortization 341 327 Pensions and other postretirement benefits 10 (111) Deferred income taxes (2) 107 Net loss on disposal of assets — 309 Working capital changes 162 282 Income taxes receivable/payable (3) 22 Currency remeasurement loss 21 6 Other operating activities 6 37 Total 384 861 Cash (used in) provided by investing activities: Capital expenditures (221) (397) Acquisition of intangible assets (12) — Disposal of assets 1 133 Other investing activities 28 9 Total (204) (255) Cash provided by (used in) financing activities: Revolving credit facilities - borrowings — 523 - repayments — (653) Receivables Purchase Agreement payments — (380) Issuance of long-term debt, net of financing costs 576 392 Repayment of long-term debt (542) (315) Dividends paid (14) (14) Total 20 (447) Effect of exchange rate changes on cash (3) (2) Net increase in cash and cash equivalents 197 157 Cash and cash equivalents at beginning of the year 570 408 Cash and cash equivalents at end of the period $ 767 $ 565 UNITED STATES STEEL CORPORATION CONDENSED BALANCE SHEET (Unaudited) June 30 Dec. 31 (Dollars in millions) 2013 2012 Cash and cash equivalents $ 767 $ 570 Receivables, net 2,142 2,090 Inventories 2,269 2,503 Other current assets 238 211 Total current assets 5,416 5,374 Property, plant and equipment, net 6,156 6,408 Investments and long-term receivables, net 621 609 Goodwill and intangible assets, net 2,067 2,075 Other assets 604 751 Total assets 14,864 $ 15,217 Accounts payable 1,743 $ 1,800 Payroll and benefits payable 950 977 Short-term debt and current maturities of long-term debt 322 2 Other current liabilities 253 211 Total current liabilities 3,268 2,990 Long-term debt, less unamortized discount 3,611 3,936 Employee benefits 4,122 4,416 Other long-term liabilities 389 397 United States Steel Corporation stockholders' equity 3,473 3,477 Noncontrolling interests 1 1 Total liabilities and stockholders' equity $ 14,864 $ 15,217 UNITED STATES STEEL CORPORATION PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited) Quarter Ended Six Months Ended June 30 March 31 June 30 June 30 (Dollars in millions) 2013 2013 2012 2013 2012 INCOME (LOSS) FROM OPERATIONS Flat-rolled $ (51) $ (13) $ 177 $ (64) $ 360 U. S. Steel Europe 10 38 34 48 — ^(a) Tubular 45 64 103 109 232 Other Businesses 43 5 16 48 33 Reportable Segment and Other Businesses Income 47 94 330 141 625 from Operations Postretirement benefit (54) (56) (77) (110) (154) expense Other items not allocated to segments: Loss on sale of U. S. Steel — — — — (399) Serbia Gain on sale of — — — — 89 transportation assets Property tax settlements — — — — 19 Total Income (Loss) from $ (7) $ 38 $ 253 $ 31 $ 180 Operations CAPITAL EXPENDITURES Flat-rolled $ 80 $ 96 $ 186 $ 176 $ 367 U. S. Steel Europe 8 10 7 18 9 Tubular 15 8 14 23 18 Other Businesses 2 2 1 4 3 Total $ 105 $ 116 $ 208 $ 221 $ 397 ^(a) Includes income from operations for USSK of $17 million for the six months ended June 30, 2012. UNITED STATES STEEL CORPORATION PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited) Quarter Ended Six Months Ended June 30 March 31 June 30 June 30 2013 2013 2012 2013 2012 OPERATING STATISTICS Average realized price: ($/net ton) ^(a) Flat-rolled 725 719 772 722 768 U. S. Steel Europe 702 718 767 710 757 USSK 702 718 767 710 761 Tubular 1,510 1,556 1,706 1,532 1,717 Steel Shipments: ^(a) (b) Flat-rolled 3,728 4,018 3,986 7,746 8,078 U. S. Steel Europe 1,062 1,048 955 2,110 2,000 Tubular 456 428 493 884 1,022 Total Steel Shipments 5,246 5,494 5,434 10,740 11,100 USSK 1,062 1,048 955 2,110 1,927 Intersegment Shipments: ^(b) Flat-rolled to Tubular 445 441 460 886 959 U. S. Steel Europe to — — 44 — 121 Flat-rolled Raw Steel Production : ^(b) Flat-rolled 4,212 4,920 4,688 9,132 9,731 U. S. Steel Europe 1,158 1,203 1,173 2,361 2,413 USSK 1,158 1,203 1,173 2,361 2,325 Raw Steel Capability Utilization: ^(c) Flat-rolled 70% 82% 77% 76% 80% Flat-rolled U.S. 87% 90% 84% 89% 88% Facilities ^(d) U. S. Steel Europe 93% 98% 94% 95% 89% USSK 93% 98% 94% 95% 93% ^(a) Excludes intersegment shipments. ^(b) Thousands of net tons. ^(c) Based on annual raw steel production capability of 24.3 million net tons for Flat-rolled and 5.0 million net tons for U. S.Steel Europe (USSE). Prior to the sale of USSS on January 31, 2012, annual raw steel production capability for USSE was 7.4 million net tons. ^(d) AISI capability utilization rates include our U.S. facilities (Gary Works, Great Lakes Works, Mon Valley Works, Granite City Works and Fairfield Works). SOURCE United States Steel Corporation Website: http://www.ussteel.com Contact: Media - Courtney Boone, (412) 433-6791, Investors/Analysts - Dan Lesnak, (412) 433-1184
United States Steel Corporation Reports 2013 Second Quarter Results
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