United States Steel Corp

Version 1.112 by Md. Touhidul Islam on 2023/02/02 09:10

Contents

United States Steel Corp
Brief Company Overview
Acquisitions and Disposition
Financial Highlights
- Q4'22 Performance Highlights
- Annual Performance Highlights, 2021
Business Overview
- Business Segments
- Products

Brief Company Overview

United States Steel Corporation (NYSE:X) was established in 1901 by Andrew Carnegie, J.P. Morgan, Charles Schwab, and Elbert H. Gary. U. S. Steel produces and sells steel products, including flat-rolled and tubular products, in North America and Europe. Operations in the United States also include iron ore and coke production facilities and real estate operations. Operations in Europe also include coke production facilities. The company has supplied steel for many famous structures in the United States such as, San Francisco-Oakland Bay Bridge, Willis Tower and Hancock Tower in Chicago, United Nations Building in New York City, Chicago Picasso, “Three Sisters” bridges in Pittsburgh and others. U. S. Steel supplies customers through out the world primarily in the automotive, construction, consumer (packaging and appliance), electrical, industrial equipment, service center/distribution, structural tubing and energy (oil country tubular goods (OCTG) and line pipe) markets. According to the world steel Association’s latest published statistics, in 2020 U. S. Steel was the third largest steel producer in the United States and the thirty eighth largest steel producer in the world.

The company has four reportable segments - North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE), and Tubular Products (Tubular). The company also has its Real Estate and Railroad Business. The company provides solution for industries like appliances, automotive, construction, electrical, energy, industrial, mining, and packaging. Specific products of the company include Advanced High-Strength Steel, Ultra High-Strength Steel, Coated Sheet, Cold-Rolled Coil, Dent Resistant, High-Strength Low-Alloy Steel, Hot-Rolled Coil, Mild Steels, and Tin. The company has annual raw steelmaking capability of 22.4 million net tons.

U. S. Steel is helmed by David Boyd Burritt as President, CEO & Director. The company has approximately 24,540 employees as of December 31, 2021. Return on Equity (TTM) and Return on Assets (TTM) of the company as on February 2, 2023 is 36.89% and 15.21%, respectively.¹

Acquisitions and Disposition

Big River Steel Acquisition

On January 15, 2021, U. S. Steel purchased the remaining equity interest in Big River Steel for approximately $625 million in cash net of $36 million and $62 million in cash and restricted cash received, respectively, and the assumption of liabilities of approximately $50 million. There were acquisition related costs of approximately $9 million during the twelve months ended December31, 2021. Prior to the closing of the acquisition on January 15, 2021, U. S. Steel accounted for its 49.9% equity interest in Big River Steel under the equity method as control and risk of loss were shared among the joint venture members.

Transtar Disposition

On July 28, 2021, U. S. Steel completed the sale of 100 percent of its equity interests in its wholly-owned short-line railroad, Transtar, LLC (Transtar) to an affiliate of Fortress Transportation and Infrastructure Investors, LLC. The Company received net cash proceeds of $627 million, subject to certain customary adjustments as set forth in the Membership Interest Purchase Agreement, and recognized a pretax gain of approximately $506 million in 2021. In connection with the closing of the transaction, the Company entered into certain ancillary agreements including a railway services agreement, providing for continued rail services for its Gary and Mon Valley Works facilities, and a transition services agreement. Because Transtar does not represent a significant component of U. S. Steel's business and does not constitute a reportable business segment.

USS-UPI, LLC (UPI)

On February 29, 2020, U. S. Steel purchased the remaining 50% ownership interest in USS-POSCO Industries, (now USS-UPI, LLC, (UPI)) for $3 million, net of cash received of $2 million. There was an assumption of accounts payable owed to U. S. Steel for prior sales of steel substrate of $135 million associated with the purchase that was reflected as a reduction in receivables from related parties on the Company's Consolidated Balance Sheet as of December 31, 2020.

Financial Highlights

Q4'22 Performance Highlights

Annual Performance Highlights, 2021

Revenue is generated primarily from contracts to produce, ship and deliver steel products, and to a lesser extent, raw materials sales such as iron ore pellets and coke by-products and rail road services. Net sales for the twelve months ended December 31, 2021 compared to the same period in 2020 were $20,275 million and $9,741 million, respectively. For the Flat-Rolled segment the increase in sales primarily resulted from higher average realized prices ($454 per ton) across all products and increased shipments (307 thousand tons)primarily for cold-rolled products. • For the USSE segment the increase in sales primarily resulted from higher average realized prices ($340 per net ton) and increased shipments (1,261 thousand tons) across most products.• For the Tubular segment the increase in sales primarily resulted from higher average realized prices ($425 per net ton) for seamless products. Earnings before interest and taxes of the company is reported $4,946 million in 2021, up from a loss of $1,075 in 2020. Net income of the company is reported to be $4,174 million, up from a loss of $1,165 million a year earlier. Basic Earnings per share (EPS) of the company during 2021 is $15.77, which was a loss of $5.92 a year earlier. Quarterly dividends on common stock were one cent per share in the first, second and third quarters and five cents per share in the fourth quarter in 2021. Quarterly dividends on common stock were one cent per share for each quarter in 2020 and five cents per share each quarter in 2019.

Selling, general and administrative expenses were $426 million in 2021 and $277 million in 2020. The increase in 2021 from the prior year primarily resulted from the addition of Big River Steel with the purchase of its remaining equity interest and increased profit based payments. Depreciation, depletion and amortization expenses were $791 million in 2021 and $643 million in 2020. The increase in 2021 from the prior year is primarily due to the acquisition of Big River Steel. Earnings from investees was $170 million in 2021 versus loss from investees of $117 million in 2020.

The company reported cash balance of $2,522 million on December 31, 2021, which was $1,985 million a year earlier. Total current assets reported for the years are $7,152 million, and $4,432 million, respectively. Property, plant and equipment on December 31, 2021 is $7,254 million, which was $5,444 million the previous year. Total assets reported is $17,816 million, and $12,059 million for the years, respectively. Current liabilities of the company on December 31, 2021 is $3,852 million, and $2,656 million a year earlier. Long-term debts of the company has decreased from $4,695 million to $3,863 million. U. S. Steel has 400,000,000 authorized share with par value of $1, and issued stocks are 279,522,227. Total shareholders equity has increased from $3,786 million to $9,010 million during the year.

Net cash provided by operating activities in 2021 is $4,090 million, up from $138 million. Net cash used in investing activities is $840 million, up from $563 million used in a year earlier. Net cash used in financing activities in 2021 is $2,747 million. The negative figure is due to the fact that the company has paid $3,183 million long-term debt in the year. Net cash provided by financing activities during 2020 is $1,581 million.

Business Overview

U. S. Steel has four reportable segments: North American Flat-Rolled (Flat-Rolled), Mini Mill, U. S. Steel Europe (USSE), and Tubular Products (Tubular). The Mini Mill segment reflects the full ownership of Big River Steel after January 15, 2021, and a new mill under construction in Osceola, Arkansas. Prior to the acquisition, the minority interest equity earnings of Big River Steel were included in the Other category. The Tubular segment includes the electric arc furnace at our Fairfield Tubular Operations in Fairfield, Alabama. The Other category includes results of our real estate business, the previously held equity method investment in Big River Steel, and our former railroad business.

Business Segments

Flat-Rolled

The Flat-Rolled segment includes the operating results of U. S. Steel’s integrated steel plants and equity investees in North America involved in the production of slabs, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. These operations primarily serve North American customers in the automotive, appliance, construction, container, transportation and service center markets.

During 2021 Flat-Rolled had aggregate annual raw steel production capability of 17.0 million tons produced at the company's different production sites - Gary Works, Mon Valley Works, Great Lakes Works and Granite City Works facilities. In December 2021, U. S. Steel permanently idled the steelmaking operations at Great Lakes Works, which reduced the Company's overall annual raw steel production capability by 3.8 million net tons. Raw steel production was 9.9 million tons in 2021, 9.3 million tons in 2020 and 11.4 million tons in 2019. Raw steel production averaged 58 percent of capability in 2021, 55 percent of capability in 2020 and 67 percent of capability in 2019.

Mini Mill

The Mini Mill segment includes the operating results of U. S. Steel's Big River Steel facility in North America and a new mill under construction in Osceola, Arkansas. The Mini Mill segment produces hot-rolled, cold-rolled and coated sheets and electrical. This operation primarily serves North American customers in the automotive, appliance, construction, container, transportation and service center markets.

Mini Mill has aggregate annual raw steel production capability of 3.3 million tons produced at the Big River Steel facility. Raw steel production was 2.7 million tons in 2021. Raw steel production averaged 81 percent of capability in 2021.

European Operations

The USSE segment includes the operating results of U. S. Steel Košice (USSK), U. S. Steel’s integrated steel plant and coke production facilities in Slovakia, and its subsidiaries. USSE conducts its business mainly in Central and Western Europe and primarily serves customers in the European transportation (including automotive), construction, container, appliance, electrical, service center, conversion and oil, gas and petrochemical markets. USSE produces and sells slabs, strip mill plate, sheet, tin mill products and spiral welded pipe.

USSE has annual raw steel production capability of 5.0 million tons. USSE’s raw steel production was 4.9 million tons in 2021, 3.4 million tons in 2020, and 3.9 million tons in 2019. USSE’s raw steel production averaged 99 percent of capability in 2021, 67 percent of capability in 2020 and 78 percent of capability in 2019.

Tubular

The Tubular segment includes the operating results of U. S. Steel’s tubular production facilities and an equity investee in the United States. These operations produce and sell seamless and electric resistance welded (ERW) steel casing and tubing (commonly known as OCTG), and standard and line pipe and mechanical tubing and primarily serve customers in the oil, gas and petrochemical markets.

The Tubular segment has annual raw steel production capability of 900 thousand tons. Raw steel production was 464 thousand tons in 2021 and 16 thousand tons in 2020. Raw steel production averaged 52 percent of capability in 2021 and 7 percent of capability in 2020. Tubular has total production capability of 1.9 million tons. In 2020, Tubular indefinitely idled the Lone Star Tubular Operations and Lorain Tubular Operations thereby effectively reducing on-line tubular production capacity by 790 thousand and 380 thousand tons, respectively. U. S. Steel Tubular Products, Inc. (USSTP), a wholly owned subsidiary of U. S. Steel, designs and develops a range of premium and semi-premium connections to address customer needs.