Quantcast
Last updated on April 16, 2014 at 6:17 EDT

United States Steel Corporation Reports 2012 Fourth Quarter And Full-year Results

January 29, 2013

PITTSBURGH, Jan. 29, 2013 /PRNewswire-FirstCall/ — United States Steel Corporation (NYSE: X) reported a fourth quarter 2012 net loss of $50 million, or $0.35 per diluted share, compared to third quarter 2012 net income of $44 million, or $0.28 per diluted share, and a fourth quarter 2011 net loss of $211 million, or $1.46 per diluted share. For full-year 2012, U. S. Steel reported a net loss of $124 million, or $0.86 per diluted share, which included a net loss of $353 million primarily due to the sale of U. S. Steel Serbia. For full-year 2011, U. S. Steel reported a net loss of $53 million, or $0.37 per diluted share, which included an $11 million after-tax environmental remediation charge. Net loss for the fourth quarter 2012 included a $9 million, or $0.06 per diluted share, favorable settlement related to a supplier contract dispute. Net income for the third quarter 2012 included a $22 million, or $0.13 per diluted share, after-tax charge for employee lump sum payments as provided in the new labor agreement. Net loss for the fourth quarter 2011 included $51 million, or $0.35 per diluted share, of net foreign currency losses and an $11 million, or $0.08 per diluted share, after-tax environmental remediation charge.

                                                                                Earnings Highlights

    (Dollars in millions, except per share amounts)                                                 4Q 2012          3Q 2012         4Q 2011              2012     2011
    ----------------------------------------------                                                  -------          -------         -------              ----     ----
    Net Sales                                                                                                 $4,487          $4,652           $4,819  $19,328  $19,884
    ---------                                                                                                 ------          ------           ------  -------  -------
    Segment income (loss) from operations
                                          Flat-rolled                                                          $11             $29             $(72)    $400     $469
                                                                                                                                 ---
                                          U. S. Steel Europe                                                     7              27              (89)      34     (162)
                                                                                                                                 ---
                                          Tubular                                                               32             102              119      366      316
                                                                                                                               ---
                                          Other Businesses                                                       9              13               16       55       46
                                          ----------------                                                     ---             ---              ---      ---      ---
    Total reportable segment and Other Businesses income (loss) from operations                                $59            $171             $(26)    $855     $669
                                                                                                                              ----
    Postretirement benefit expense                                                                             (69)            (74)             (99)    (297)    (386)
                                                                                                                               ---
    Other items not allocated to segments                                                                       15             (35)             (18)    (311)     (18)
    -------------------------------------                                                                      ---             ---              ---     ----      ---
    Income (loss) from operations                                                                               $5             $62            $(143)    $247     $265
    -----------------------------                                                                              ---             ---            -----     ----     ----
    Net interest and other financial costs                                                                      64              45              102      241      238
    --------------------------------------                                                                     ---             ---              ---      ---      ---
    Income tax (benefit) provision                                                                              (8)            (27)             (34)     131       80
    ------------------------------                                                                             ---             ---              ---      ---      ---
    Less: Net loss attributable to the noncontrolling interests                                                 (1)              -                -       (1)       -
    -----------------------------------------------------------                                                ---             ---              ---      ---      ---
    Net (loss) income attributable to United States Steel Corporation                                         $(50)            $44            $(211)   $(124)    $(53)
    -----------------------------------------------------------------                                         ----             ---            -----    -----     ----
    -Per basic share                                                                                        $(0.35)          $0.30           $(1.46)  $(0.86)  $(0.37)
    ----------------                                                                                        ------           -----           ------   ------   ------
    -Per diluted share                                                                                      $(0.35)          $0.28           $(1.46)  $(0.86)  $(0.37)
    ------------------                                                                                      ------           -----           ------   ------   ------

Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, “For the third consecutive quarter all three of our reportable segments had positive operating results despite the uncertain global economic environment. Lower drilling and project line pipe activity, as well as continued high import levels, significantly reduced our Tubular segment’s results. For our Flat-rolled segment, our profitability was negatively affected by the uncertain domestic fiscal situation as well as continued high levels of flat-rolled steel imports.”

The company reported a fourth quarter 2012 reportable segment and Other Businesses income from operations of $59 million, or $11 per ton, compared to income of $171 million, or $32 per ton, in the third quarter of 2012 and a loss of $26 million, or $5 per ton, in the fourth quarter of 2011. For the year 2012, reportable segment and Other Businesses income from operations was $855 million versus $669 million for the year 2011.

For the full year 2012, we recorded a tax provision of $131 million on our pre-tax income of $6 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. In addition, no material tax benefit was recorded on the $399 million loss on the sale of U. S. Steel Serbia in 2012.

As of December 31, 2012, U. S. Steel had $570 million of cash and $2.4 billion of total liquidity compared to $408 million of cash and $1.8 billion of total liquidity at December 31, 2011. In 2012 net debt as reflected on the balance sheet was reduced by approximately $450 million as cash from operations in excess of capital spending was used to repay borrowings on our credit facilities and increase cash on hand.

Reportable Segments and Other Businesses

Flat-rolled fourth quarter results remained positive but decreased from the third quarter due to lower average realized prices and shipments, partially offset by lower operating costs. Average realized prices and shipments were lower compared to the third quarter, as cautious purchasing patterns continued in light of the uncertain global economic outlook and the domestic fiscal situation and compressed mill lead times. Operating costs decreased due to lower raw materials and repairs and maintenance costs partially offset by higher natural gas costs.

Fourth quarter results for our European segment remained positive but lower than the third quarter. Average realized prices decreased reflecting lower spot market and quarterly contract pricing, while shipments remained comparable to the third quarter. Operating costs decreased compared to the third quarter primarily due to lower raw materials costs partially offset by higher energy costs.

Fourth quarter results for our Tubular segment were well below third quarter results. Average realized prices and shipments decreased as end users reduced drilling activity and project line pipe purchases were delayed. Inventory management and continued high import levels also adversely affected order rates as we approached year-end. Operating costs increased due to lower production levels.

Outlook

Commenting on U. S. Steel’s outlook for the first quarter, Surma said, “We continue to be challenged by uncertain global economic and steel market conditions. We expect a slight improvement in the European and Tubular segment operating results with Flat-rolled segment results expected to be near breakeven. Total reportable segment and Other Businesses operating results are expected to be comparable to the fourth quarter.”

We expect Flat-rolled segment results to be near breakeven in the first quarter. Steel buyers in North America continued to exhibit caution early in the year, but recent increases in our daily order entry rates suggest increased spot market demand as the quarter progresses. We expect higher shipments in the first quarter than the fourth quarter with increases across many of our industry segments. Average spot prices are expected to be higher than the fourth quarter as recently announced price increases take effect. Lower prices for market-based contracts, which tend to lag the spot market, are expected to offset the higher spot market prices with overall first quarter average realized prices for the Flat-rolled segment being comparable to the fourth quarter. Raw materials costs are expected to decrease slightly as lower coal prices are partially offset by higher scrap prices. Total operating costs are expected to be slightly higher compared to the fourth quarter.

First quarter results for our European segment are projected to improve compared to the fourth quarter due to a significant increase in shipments. Despite continued economic challenges, shipments are anticipated to increase due to additional contract volume and improving spot market activity caused by service center and distributor restocking. Average realized prices are expected to decrease due to a higher mix of hot-rolled shipments as well as the effect of lower firm contract prices, which are partially offset by increasing spot market prices. Iron ore costs are projected to increase in the first quarter.

We expect first quarter results for our Tubular segment to improve compared to the fourth quarter due to decreased operating costs and a slight increase in shipments as drilling activity begins to improve. Average realized prices are expected to be slightly lower as compared to the fourth quarter, while operating costs are expected to decrease due to reduced repairs and maintenance costs and improved operating efficiencies.

*****

This release contains forward-looking statements with respect to market conditions, operating costs, shipments, prices, capital spending, and employee benefit costs and payments. 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; (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(2) 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. 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 December 31, 2011, 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 fourth quarter earnings on Tuesday, January 29, at 3 p.m. EST. To listen to the webcast of the conference call, visit the U. S. Steel website, www.ussteel.com, and click on “Overview” then “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                                               Year Ended
                                                                                                                                             -------------                                               ----------
                                                                                                                                         Dec. 31                                   Sept. 30                                   Dec. 31                                   Dec. 31                        Dec. 31
    (Dollars in millions)                                                                                                                                2012                                      2012                                       2011                                      2012                           2011
    --------------------                                                                                                                                 ----                                      ----                                       ----                                      ----                           ----

    NET SALES                                                                                                                                          $4,487                                    $4,652                                     $4,819                                   $19,328                        $19,884

    OPERATING EXPENSES (INCOME):
                                      Cost of sales (excludes items shown
                                      below)                                                                                                          4,216                                     4,311                                      4,647                                    17,630                         18,326
                                      Selling, general and administrative
                                      expenses                                                                                                          142                                       166                                        183                                       654                            733
                                     Depreciation, depletion and amortization                                                                           171                                       163                                        169                                       661                            681
                                     Income from investees                                                                                              (28)                                      (48)                                       (19)                                     (144)                           (85)
                                     Net (gain) loss on disposal of assets                                                                              (12)                                       (1)                                       (15)                                      296                            (25)
                                     Other income, net                                                                                                   (7)                                       (1)                                        (3)                                      (16)                           (11)
                                     -----------                                                                                                                                                                                                                                       ---

                                     Total operating expenses                                                                                         4,482                                     4,590                                      4,962                                    19,081                         19,619
                                                                                                                                                      -----                                     -----                                      -----                                    ------                         ------

    INCOME (LOSS) FROM OPERATIONS                                                                                                                         5                                        62                                       (143)                                      247                            265
    Net interest and other financial costs                                                                                                               64                                        45                                        102                                       241                            238
                                                                                                                                                        ---                                       ---                                        ---                                       ---                            ---

    (LOSS) INCOME BEFORE INCOME TAXES AND
                                     NONCONTROLLING INTERESTS                                                                                           (59)                                       17                                       (245)                                        6                             27
    Income tax (benefit) provision                                                                                                                       (8)                                      (27)                                       (34)                                      131                             80
                                                                                                                                                        ---                                       ---                                        ---                                       ---                            ---

    Net (loss) income                                                                                                                                   (51)                                       44                                       (211)                                     (125)                           (53)
                                     Less: Net loss attributable to the
                                     noncontrolling interests                                                                                            (1)                                        -                                          -                                        (1)                             -
                                     -----------                                                                                                                                                                                                                                       ---
    NET (LOSS) INCOME ATTRIBUTABLE TO UNITED STATES
                                     STEEL CORPORATION                                                                                                 $(50)                                      $44                                      $(211)                                    $(124)                          $(53)
                                     =================                                                                                                                                                                                                                               =====

    COMMON STOCK DATA:
    ------------------

    Net (loss) income per share attributable to United
    States Steel Corporation shareholders:
                                     -Basic                                                                                                          $(0.35)                                    $0.30                                     $(1.46)                                   $(0.86)                        $(0.37)
                                     -Diluted                                                                                                        $(0.35)                                    $0.28                                     $(1.46)                                   $(0.86)                        $(0.37)

    Weighted average shares, in thousands
                                     -Basic                                                                                                         144,351                                   144,350                                    144,071                                   144,237                        143,967
                                     -Diluted                                                                                                       144,351                                   171,673                                    144,071                                   144,237                        143,967

    Dividends paid per common share                                                                                                                   $0.05                                     $0.05                                      $0.05                                     $0.20                          $0.20

                                                   UNITED STATES STEEL CORPORATION
                                                   CASH FLOW STATEMENT (Unaudited)
                                                    ------------------------------

                                                                                         Year Ended
                                                                                         December 31
                                                                                         -----------
    (Dollars in millions)                                                                          2012                           2011
    --------------------                                                                           ----                           ----

    Cash provided by (used in) operating activities:
                           Net loss                                           $(125)                        $(53)
                            Depreciation,
                            depletion and
                            amortization                       661                                  681
                            Pensions and other
                            postretirement
                            benefits                          (181)                                 (24)
                            Deferred income
                            taxes                                                74                          (68)
                            Net loss (gain) on
                            disposal of assets                 296                                  (25)
                            Working capital
                            changes                                             326                         (552)
                            Income taxes
                            receivable/payable                  17                                  133
                            Currency remeasurement
                            (gain) loss                        (15)                                  40
                            Other operating
                            activities                                           82                           36

                           Total                                              1,135                          168
                                                                              -----                          ---

    Cash (used in) provided by investing activities:
                            Capital
                            expenditures                                       (723)                        (848)
                            Disposal of
                            assets                                              155                           41
                            Other investing
                            activities                                          (34)                          (6)

                           Total                                               (602)                        (813)
                                                                               ----                         ----

    Cash provided by (used in) financing activities:
                            Revolving
                            credit                   borrowings
                            facilities               -                          523                        4,715
                                                     -
                                                     repayments                (653)                     (4,570)
                            Receivables Purchase
                            Agreement (payments)
                            proceeds                          (380)                                 380
                            Issuance of long-term
                            debt, net of
                            refinancing costs                  485                                  193
                            Repayment of
                            long-term debt                                     (319)                        (216)
                            Common stock
                            issued                                                -                            3
                           Dividends paid                                       (29)                         (29)
                            Other financing
                            activities                                            -                            1

                           Total                                               (373)                         477
                                                                               ----                          ---

    Effect of exchange rate changes on cash                                                           2                             (2)
                                                                                                    ---                            ---

    Net increase (decrease) in cash and cash equivalents                                            162                           (170)
    Cash and cash equivalents at beginning of the year                                              408                            578

    Cash and cash equivalents at end of the year                                                   $570                           $408
                                                                                                   ====                           ====

                              UNITED STATES STEEL CORPORATION
                            CONDENSED BALANCE SHEET (Unaudited)

                                                  Dec. 31              Dec. 31
    (Dollars in millions)                                  2012                 2011
    --------------------                                   ----                 ----

    Cash and cash
     equivalents                                           $570                 $408
    Receivables, net                                      2,090                2,046
    Receivables sold to
     third party conduits                                   -                  380
    Inventories                                         2,503                2,775
    Other current assets                                  211                  165
                                                          ---                  ---
              Total current
              assets               5,374                         5,774
    Property, plant and
     equipment, net                                     6,408                6,579
    Investment and long-
     term receivables, net                                609                  683
    Goodwill and
     intangible assets,
     net                                                2,075                2,045
    Other assets                                          773                  992
                                                          ---                  ---

             Total assets                             $15,239              $16,073

    Accounts payable and
     other accrued
     liabilities                                       $1,800               $2,063
    Payroll and benefits
     payable                                              977                1,003
    Short-term debt and
     current maturities of
     long-term debt                                         2                   20
    Borrowings under
     Receivables Purchase
     Agreement                                              -                  380
    Other current
     liabilities                                          211                  183
                                                          ---                  ---
              Total current
              liabilities          2,990                         3,649
    Long-term debt, less
     unamortized discount                               3,936                3,828
    Employee benefits                                   4,416                4,600
    Other long-term
     liabilities                                          419                  495
    United States Steel
     Corporation
     stockholders' equity                               3,476                3,500
    Noncontrolling
     interests                                              2                    1
                                                          ---                  ---

              Total
              liabilities
              and
              stockholders'
              equity             $15,239                       $16,073
              =============

                                                                                                                                                     UNITED STATES STEEL CORPORATION
                                                                                                                                             PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)

                                                                                                                                                                                 Quarter Ended                                   Year Ended
                                                                                                                                                                                 -------------                                   ----------
                                                                                                                                                                              Dec. 31                         Sept. 30                            Dec. 31                                Dec. 31                                Dec. 31
    (Dollars in millions)                                                                                                                                                               2012                             2012                               2011                                   2012                                   2011
    --------------------                                                                                                                                                                ----                             ----                               ----                                   ----                                   ----

    INCOME (LOSS) FROM OPERATIONS
                                 Flat-rolled                                                                                                                      $11                             $29                                $(72)                                  $400                                   $469
                                 U. S. Steel Europe                                                                                                                 7                              27                                 (89)           (a)                      34            (a)                    (162)           (a)
                                 Tubular                                                                                                                                                  32                              102                                119                                    366                                    316
                                 Other Businesses                                                                                                                   9                              13                                  16                                     55                                     46
                                                                                                                                                                  ---

    Reportable Segment and Other Businesses (Loss) Income                                                                                                                                 59                              171                                (26)                                   855                                    669
    from Operations
                                 Postretirement benefit expenses                                                                                                  (69)                            (74)                                (99)                                  (297)                                  (386)
                                 Other items not allocated to segments:
                                 Loss on sale of U. S. Steel Serbia                                                                                                 -                               -                                   -                                   (399)                                     -
                                 Gain on sale of transportation assets                                                                                              -                               -                                   -                                     89                                      -
                                 Supplier contract dispute settlement                                                                                              15                               -                                   -                                     15                                      -
                                 Property tax settlements                                                                                                           -                               -                                   -                                     19                                      -
                                 Labor agreement lump sum payments                                                                                                  -                             (35)                                  -                                    (35)                                     -
                                 Environmental remediation charge                                                                                                   -                               -                                 (18)                                     -                                    (18)
                                                                                                                                                                  ---                             ---                                 ---                                    ---                                    ---

                                                                         Total Income (Loss) from Operations                                                                              $5                              $62                              $(143)                                  $247                                   $265

    CAPITAL EXPENDITURES
                                 Flat-rolled                                                                                                                     $141                             $89                                $189                                   $625                                   $616
                                 U. S. Steel Europe                                                                                                                17                              15                                  16                                     38                                    109
                                 Tubular                                                                                                                                                  17                               17                                 10                                     42                                    104
                                 Other Businesses                                                                                                                  12                               8                                   7                                     18                                     19
                                                                                                                                                                  ---

                                                                         Total                                                                                                          $187                             $129                               $222                                   $723                                   $848

                                  (a) Includes income from operations for USSK of $51 million and $44 million for the years ended December 31,
                                  2012 and 2011, respectively.  Includes a loss from operations for USSK of ($22) million for the quarter ended
                                  December 31, 2011.

                                                                                                                        UNITED STATES STEEL CORPORATION
                                                                                                                PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)

                                                                                                                                     Quarter Ended                                     Year Ended
                                                                                                                                     -------------                                     ----------
                                                                                                                                Dec. 31                             Sept. 30                             Dec. 31                              Dec. 31                 Dec. 31
                                                                                                                                          2012                                 2012                                2011                                 2012                     2011
                                                                                                                                          ----                                 ----                                ----                                 ----                     ----

    OPERATING STATISTICS
                                  Average realized price: ($/net
                                  ton) (a)
                                 Flat-rolled                                                                        721                                 741                                  741                                 750                     759
                                 U. S. Steel Europe                                                                 718                                 731                                  770                                 742                     845
                                    USSK                                                                            718                                 731                                  783                                 743                     862
                                 Tubular                                                                          1,624                               1,676                                1,711                               1,687                   1,612
                                 Steel Shipments: (a) (b)
                                 Flat-rolled                                                                      3,924                               3,972                                3,784                              15,974                  15,509
                                 U. S. Steel Europe                                                                 905                                 911                                1,153                               3,816                   4,932
                                 Tubular                                                                            407                                 457                                  482                               1,886                   1,812
                                                                                                                    ---                                 ---                                  ---                               -----                   -----
                                                                     Total Steel Shipments                                               5,236                                5,340                               5,419                               21,676                   22,253

                                    USSK                                                                            905                                 911                                  908                               3,743                   3,690

                                 Intersegment Shipments: (b)
                                 Flat-rolled to Tubular                                                             393                                 456                                  431                               1,803                   1,770
                                  U. S. Steel Europe to
                                  Flat-rolled                                                                         -                                 128                                    -                                 249                      71
                                 Raw Steel Production : (b)
                                 Flat-rolled                                                                      4,686                               4,699                                4,593                              19,116                  18,600
                                 U. S. Steel Europe                                                                 969                               1,140                                1,211                               4,522                   5,640
                                    USSK                                                                            969                               1,140                                  945                               4,434                   4,201
                                  Raw Steel Capability Utilization:
                                  (c)
                                 Flat-rolled                                                                         77%                                 77%                                  75%                                 78%                     77%
                                 U. S. Steel Europe                                                                  77%                                 90%                                  65%                                 87%                     76%
                                    USSK                                                                             77%                                 90%                                  75%                                 88%                     84%

                                 (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 7.4 million tons
                                       for U. S. Steel Europe.  Subsequent to the sale of USSS on January 31, 2012, annual raw
                                        steel production
                                       capability for USSE is 5.0 million net tons.

SOURCE United States Steel Corporation


Source: PR Newswire