United States Steel Corporation Reports 2013 Fourth Quarter And Full-Year Results -- Total reportable segment and Other Businesses income from operations of $146 million

-- Net loss of $122 million, or $0.84 per diluted share; adjusted net income of $38 million or $0.27 per diluted share, excluding non-cash restructuring and other charges of $302 million, or $2.09 per diluted share, and a favorable tax-related item of $142 million, or $0.98 per diluted share

-- Shipments of 4.9 million tons and net sales of $4.3 billion

-- Total liquidity of $2.3 billion, including $604 million of cash

-- Full-year total reportable segment and Other Businesses income from operations of $400 million

PITTSBURGH, Jan. 27, 2014 /PRNewswire/ -- United States Steel Corporation (NYSE:  X) reported a fourth quarter 2013 net loss of $122 million, or $0.84 per diluted share, compared to a third quarter 2013 net loss of $1,791 million, or $12.38 per diluted share, and fourth quarter 2012 net loss of $50 million, or $0.35 per diluted share.  Adjusted net income for the fourth quarter of 2013 was $38 million, or $0.27 per diluted share, excluding after-tax non-cash restructuring and other charges primarily related to the shut down of the iron and steelmaking facilities at Hamilton Works of $302 million, or $2.09 per diluted share, and a favorable tax-related item of $142 million, or $0.98 per diluted share.  Adjusted net loss for the third quarter of 2013 was $20 million, or $0.14 per diluted share, excluding an after-tax non-cash goodwill impairment charge of $1.8 billion, or $12.24 per diluted share.  Adjusted net loss for the fourth quarter of 2012 was $59 million, or $0.41 per diluted share, excluding a favorable settlement of $9 million, or $0.06 per diluted share, related to a supplier contract dispute.

For the full-year 2013, U. S. Steel reported a net loss of $2,064 million, or $14.27 per diluted share, which included a net loss of $2.1 billion primarily due to a non-cash goodwill impairment charge and non-cash restructuring and other charges.  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. 

 

Earnings Highlights




(Dollars in millions, except per share amounts)

4Q 2013

3Q 2013

4Q 2012

2013

2012

Net Sales

$

4,269


$

4,131


$

4,487


$

17,424


$

19,328


Segment income (loss) from operations






Flat-rolled

$

87


$

82


$

11


$

105


$

400


U. S. Steel Europe

12


(32)


7


28


34


Tubular

32


49


32


190


366


Other Businesses

15


14


9


77


55


Total reportable segment and Other Businesses income from

operations

$

146


$

113


$

59


$

400


$

855


Postretirement benefit expense

(56)


(55)


(69)


(221)


(297)


Other items not allocated to segments

(319)


(1,760)


15


(2,079)


(311)


Income (loss) from operations

$

(229)


$

(1,702)


$

5


$

(1,900)


$

247


Net interest and other financial costs

75


85


64


332


241


Income tax (benefit) provision

(182)


4


(8)


(168)


131


Less: Net loss attributable to the noncontrolling interests



(1)



(1)


Net loss attributable to United States Steel Corporation

$

(122)


$

(1,791)


$

(50)


$

(2,064)


$

(124)


-Per basic share

$

(0.84)


$

(12.38)


$

(0.35)


$

(14.27)


$

(0.86)


-Per diluted share

$

(0.84)


$

(12.38)


$

(0.35)


$

(14.27)


$

(0.86)


 

Commenting on results, U. S. Steel CEO Mario Longhi said, "We are on a multi-year journey to earn the right to grow by improving our balance sheet and achieving sustainable profitability.  Our fourth quarter results reflect our early efforts on this journey as all segments were profitable and in total, we had an overall improvement in operating results compared to the third quarter." 

The $146 million, or $30 per ton, of reportable segment and Other Businesses income from operations for the fourth quarter of 2013 compares to income from operations of $113 million, or $24 per ton, in the third quarter of 2013 and income from operations of $59 million, or $11 per ton, in the fourth quarter of 2012.

Other items not allocated to segments in the fourth quarter of 2013 consisted of non-cash restructuring and other charges of $248 million, or $1.71 per diluted share; an adjustment to our preliminary non-cash goodwill impairment charge of $23 million, or $0.16 per diluted share; a $32 million, or $0.22 per diluted share, environmental remediation charge and a non-cash charge to write-off an equity investment of $16 million, or $0.11 per diluted share.

For the full-year 2013, we recorded a tax benefit of $168 million on our pre-tax loss of $2,232 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; however, it does include a tax benefit of $142 million associated with the tax provision recorded in other comprehensive income related to the year-end pension revaluation.  In addition, essentially no tax benefit was recorded on the $1.8 billion goodwill impairment charge.

As of December 31, 2013, U. S. Steel had $604 million of cash and $2.3 billion of total liquidity. 

Reportable Segments and Other Businesses 

Fourth quarter results for our Flat-rolled segment were comparable to the third quarter.  Average spot and market-based contract prices were higher in the fourth quarter; however, a higher percentage of hot rolled shipments resulted in average realized prices that were comparable to the third quarter.  A decrease in raw materials and other costs were offset by an increase of approximately $45 million for facility repairs and maintenance costs due primarily to a blast furnace reline at Gary Works and a planned blast furnace maintenance project at Fairfield Works.

Results for our European segment improved in the fourth quarter and returned to profitability due to higher shipments and lower facility repairs and maintenance costs as a blast furnace outage was completed in the third quarter.  Average realized euro-based prices for the majority of our products remained relatively unchanged in the fourth quarter; however, overall average realized prices in the fourth quarter declined compared to the third quarter due to a higher level of hot-rolled shipments. 

Fourth quarter results for our Tubular segment decreased compared to the third quarter due primarily to lower shipments and average realized prices as end users decreased drilling activity in order to operate within their 2013 capital budgets and imports persisted at high levels for which a trade case is pending. Inventory management by our customers was also a factor as we approached year-end.

Outlook

Commenting on U. S. Steel's outlook for the first quarter, Longhi said, "We are encouraged by our early progress on the Carnegie Way.  We expect total reportable segment and Other Businesses income from operations to increase moderately compared to the fourth quarter."

We expect first quarter results for our Flat-rolled segment to increase primarily due to higher average realized prices and shipments as well as reduced repairs and maintenance costs.  Average realized prices and shipments are expected to increase as a result of higher contract and spot market prices and improving end user demand after the fourth quarter holiday down time.  Repairs and maintenance costs are projected to decrease as compared to the fourth quarter due to the completion of the projects at Gary Works and Fairfield Works.  We will also have reduced idled facility costs after the shut down of the iron and steelmaking facilities at Hamilton Works.  Raw materials costs, primarily for purchased scrap, and energy costs are expected to increase.

We expect first quarter results for our European segment to be comparable to the fourth quarter as the benefits of increased average realized prices are offset by an increase in raw materials costs, primarily for iron ore, and other operating costs.  Average realized prices are expected to increase compared to the fourth quarter due to a more favorable product mix and an anticipated gradual recovery in the spot market while shipments are expected to remain comparable.

First quarter results for our Tubular segment are expected to decrease as the benefits of reduced operating costs and increased shipments are more than offset by a decrease in average realized prices and an increase in substrate costs.  Average realized prices are projected to decrease primarily due to pricing pressures from continuing high import levels and increased domestic supply.  Shipments are expected to increase as drilling activity begins to improve.

*****

This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices.  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 CO2 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, as an additional measurement to enhance the understanding of our operating performance and facilitate a comparison with that of 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 December 31, 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 fourth quarter earnings on Tuesday, January 28, at 4:00 p.m. Eastern.  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


Year Ended




Dec. 31


Sept. 30


Dec. 31


December 31,

(Dollars in millions, except per share amounts)

2013


2013


2012


2013


2012

NET SALES


$

4,269



$

4,131



$

4,487



$

17,424



$

19,328














OPERATING EXPENSES (INCOME):











Cost of sales (excludes items shown below)

3,911



3,749



4,216



16,016



17,630



Selling, general and administrative expenses

161



153



142



610



654



Depreciation, depletion and amortization

170



173



171



684



661



Income from investees

(9)



(26)



(28)



(40)



(144)



Impairment of goodwill

23



1,783





1,806





Restructuring and other charges

248







248





Net (gain) loss on disposal of assets





(12)





296



Other (income) expense, net

(6)



1



(7)





(16)
















Total operating expenses

4,498



5,833



4,482



19,324



19,081














(LOSS) INCOME FROM OPERATIONS

(229)



(1,702)



5



(1,900)



247


Net interest and other financial costs

75



85



64



332



241














(LOSS) INCOME BEFORE INCOME TAXES











AND NONCONTROLLING INTERESTS

(304)



(1,787)



(59)



(2,232)



6


Income tax (benefit) provision

(182)



4



(8)



(168)



131














Net loss

(122)



(1,791)



(51)



(2,064)



(125)



Less: Net loss attributable to the











noncontrolling interests





(1)





(1)


NET LOSS ATTRIBUTABLE TO











UNITED STATES STEEL CORPORATION

$

(122)



$

(1,791)



$

(50)



$

(2,064)



$

(124)


























COMMON STOCK DATA:






















Net loss per share attributable to










United States Steel Corporation shareholders:











-Basic


$

(0.84)



$

(12.38)



$

(0.35)



$

(14.27)



$

(0.86)



-Diluted


$

(0.84)



$

(12.38)



$

(0.35)



$

(14.27)



$

(0.86)














Weighted average shares, in thousands











-Basic


144,740



144,727



144,351



144,578



144,237



-Diluted


144,740



144,727



144,351



144,578



144,237














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)


2013


2012

Cash (used in) provided by operating activities:





Net loss


$

(2,064)



$

(125)



Depreciation, depletion and amortization

684



661



Impairment of goodwill


1,806





Non-cash restructuring and other charges

248





Pensions and other postretirement benefits

(28)



(181)



Deferred income taxes

(232)



74



Net loss on disposal of assets



296



Working capital changes

(148)



326



Income taxes receivable/payable

55



17



Currency remeasurement loss (gain)

7



(15)



Other operating activities

86



82




Total


414



1,135









Cash (used in) provided by investing activities:





Capital expenditures


(477)



(723)



Acquisition of intangible assets


(12)





Disposal of assets


3



155



Other investing activities


93



(34)




Total


(393)



(602)









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

575



485



Repayment of long-term debt


(542)



(319)



Dividends paid


(29)



(29)




Total


4



(373)









Effect of exchange rate changes on cash

9



2









Net increase in cash and cash equivalents

34



162


Cash and cash equivalents at beginning of the year

570



408









Cash and cash equivalents at end of the period

$

604



$

570


 

 

 

UNITED STATES STEEL CORPORATION

CONDENSED BALANCE SHEET (Unaudited)










Dec. 31


Dec. 31

(Dollars in millions)


2013


2012

Cash and cash equivalents

$

604



$

570


Receivables, net

1,984



2,090


Inventories

2,688



2,503


Other current assets

482



333



Total current assets

5,758



5,496


Property, plant and equipment, net

5,922



6,408


Investments and long-term receivables, net

621



609


Goodwill and intangible assets, net

275



2,075


Other assets

247



629









Total assets


$

12,823



$

15,217








Accounts payable

$

1,754



$

1,800


Payroll and benefits payable

974



977


Short-term debt and current maturities of long-term debt

323



2


Other current liabilities

262



211



Total current liabilities

3,313



2,990


Long-term debt, less unamortized discount

3,616



3,936


Employee benefits

2,064



4,416


Other long-term liabilities

851



397


United States Steel Corporation stockholders' equity

2,978



3,477


Noncontrolling interests

1



1









Total liabilities and stockholders' equity

$

12,823



$

15,217


 

 

 

UNITED STATES STEEL CORPORATION

PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)














Quarter Ended


Year Ended



Dec. 31


Sept. 30


Dec. 31


December 31,

(Dollars in millions)

2013


2013


2012


2013


2012

INCOME (LOSS) FROM OPERATIONS











Flat-rolled

$

87



$

82



$

11



$

105



$

400



U. S. Steel Europe

12



(32)



7



28



34

(a)


Tubular

32



49



32



190



366



Other Businesses

15



14



9



77



55













Reportable Segment and Other Businesses Income
from Operations

146



113



59



400



855



Postretirement benefit expense

(56)



(55)



(69)



(221)



(297)



Other items not allocated to segments:











  Impairment of goodwill

(23)



(1,783)





(1,806)





  Restructuring and other charges

(248)







(248)





  Environmental remediation charge

(32)







(32)





  Write-off of equity investment

(16)







(16)





  Supplier contract dispute settlement



23



15



23



15



  Loss on sale of U. S. Steel Serbia









(399)



  Gain on sale of transportation assets









89



  Property tax settlements









19



  Labor agreement lump sum payments









(35)














Total (Loss) Income from Operations

$

(229)



$

(1,702)



$

5



$

(1,900)



$

247













CAPITAL EXPENDITURES











Flat-rolled

$

101



$

72



$

141



$

349



$

625



U. S. Steel Europe

8



14



17



40



38



Tubular

27



19



17



69



42



Other Businesses

13



2



12



19



18














Total

$

149



$

107



$

187



$

477



$

723


(a) Year ended December 31, 2012, includes income from operations for USSK of $51 million.

 

 

 

UNITED STATES STEEL CORPORATION


PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)



















Quarter Ended



Year Ended






Dec. 31


Sept. 30


Dec. 31


December 31,






2013


2013


2012


2013


2012

OPERATING STATISTICS











Average realized price: ($/net ton) (a)












Flat-rolled

750



752



721



735



750




U. S. Steel Europe

692



714



718



706



742




  USSK

692



714



718



706



743




Tubular

1,509



1,543



1,624



1,530



1,687



Steel Shipments: (a) (b)












Flat-rolled

3,470



3,428



3,924



14,644



15,974




U. S. Steel Europe

1,029



861



905



4,000



3,816




Tubular

414



459



407



1,757



1,886





Total Steel Shipments

4,913



4,748



5,236



20,401



21,676

















  USSK Steel Shipments

1,029



861



905



4,000



3,743
















Intersegment Shipments: (b)












Flat-rolled to Tubular

363



450



393



1,699



1,803




U. S. Steel Europe to Flat-rolled









249



Raw Steel Production: (b)












Flat-rolled

4,474



4,261



4,686



17,867



19,116




U. S. Steel Europe

1,205



1,032



969



4,598



4,522




  USSK

1,205



1,032



969



4,598



4,434



Raw Steel Capability Utilization: (c)












Flat-rolled

73

%


70

%


77

%


74

%


78

%



    Flat-rolled U.S. Facilities (d)

80

%


87

%


84

%


86

%


86

%



U. S. Steel Europe

96

%


82

%


77

%


92

%


87

%



  USSK

96

%


82

%


77

%


92

%


88

%

(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.  On December 31, 2013, U. S. Steel permanently shut down its iron and steelmaking facilities at Hamilton Works reducing Flat-rolled's annual steel capacity to 22.0 million 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



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