United States Steel Corporation Reports 2015 First Quarter Results
-- Net loss of $75 million, or $0.52 per diluted share; Adjusted net loss of $10 million, or $0.07 per diluted share
-- Adjusted EBITDA of $110 million
-- Operating cash flow of $136 million
-- Total liquidity of $2.8 billion, including $1.3 billion of cash
-- Updated full-year 2015 outlook to adjusted EBIT of $115 million to $315 million and adjusted EBITDA of $700 million to $900 million
PITTSBURGH, April 28, 2015 /PRNewswire/ -- United States Steel Corporation (NYSE: X) reported a first quarter 2015 net loss of $75 million, or $0.52 per diluted share, which included a net loss of $65 million, or $0.45 per diluted share, on the shutdown of coke production facilities. This compared to first quarter 2014 net earnings of $52 million, or $0.34 per diluted share, and fourth quarter 2014 net earnings of $275 million, or $1.83 per diluted share.
For a description of the non-generally accepted accounting principles (non-GAAP) measures and a reconciliation to net earnings (loss) attributable to U. S. Steel and earnings (loss) before interest and income taxes (EBIT) see the Non-GAAP Financial Measures section.
Commenting on results, U. S. Steel President and Chief Executive Officer Mario Longhi said, "Our results reflect extremely challenging market conditions, including the negative impact of the tremendously high levels of imports, which have contributed to reduced volumes and average realized prices. We have taken aggressive action to balance our operational footprint in the most cost effective way; however, we are maintaining our customer focus and our flexibility to respond quickly when market conditions improve. We have accelerated our Carnegie Way transformation efforts and we expect we will continue to increase our earnings power and create stockholder value, while working to minimize the negative impact on our business arising from current market conditions."
Segment loss before interest and income taxes was $21 million, or $5 per ton, for the first quarter of 2015 compared to segment earnings before interest and income taxes (EBIT) of $420 million, or $92 per ton, in the fourth quarter of 2014 and segment EBIT of $154 million, or $30 per ton, in the first quarter of 2014.
For the first quarter 2015, we recorded a tax benefit of $174 million on our pre-tax loss of $249 million. The tax provision reflects a benefit for percentage depletion in excess of cost depletion for iron ore that we produce and consume or sell.
Despite the challenging market conditions, we maintained positive operating cash flow of $136 million for the quarter ended March 31, 2015. As of March 31, U. S. Steel had $1.3 billion of cash and $2.8 billion of total liquidity compared to cash and total liquidity of $1.4 billion and $3.1 billion, respectively, at December 31, 2014.
First quarter results for our Flat-Rolled segment decreased significantly compared to the fourth quarter due to both lower shipments, including intersegment shipments to our Tubular segment, and average realized prices. Our Flat-Rolled segment results continue to be adversely impacted by the massive volume of steel imports that accelerated during the first quarter, many of which we believe are unfairly traded. Average realized prices decreased due to the adverse effect of these imports, which have served to dramatically reduce spot market prices and indices and have negatively impacted revenue streams in both spot and certain contract volumes. As a result, we have aggressively adjusted our operating footprint. The decline in results also reflects operating inefficiencies due to reduced production levels. These decreases have been partially offset by benefits provided by our Carnegie Way efforts.
European segment results were comparable to the fourth quarter. The positive effects of an increase in shipments, a reduction in raw materials costs, and benefits provided by our Carnegie Way efforts were offset by negative foreign currency effects and a slight decrease in average realized euro-based prices.
First quarter results for our Tubular segment decreased significantly compared to the fourth quarter primarily due to lower shipments. Shipments were adversely impacted by reduced drilling activity caused by low crude oil prices and the significant amount of steel and tubular imports, many of which we believe are unfairly traded. The decrease in results is also attributable to operating inefficiencies as a result of reduced production levels. These decreases have been partially offset by benefits provided by our Carnegie Way efforts.
Commenting on U. S. Steel's outlook for 2015, Longhi said, "We are currently operating in the face of extremely difficult conditions, particularly in North America. We have made significant progress during our Carnegie Way transformation on improving our business model, including cost structure improvements, which will enable us to increase our earnings power across all market conditions."
The headwinds we faced entering 2015 have intensified. Spot prices for flat-rolled products have decreased at an accelerated pace reaching levels well below market expectations at the beginning of the year and imports have remained at historically high levels, both negatively impacting our flat-rolled order rates. The pace and magnitude of the drop in both oil prices and drilling rig counts have resulted in decreased steel demand for both finished tubular products and substrate supplied by our Flat-Rolled segment for the production of tubular products. Lower order rates for both flat-rolled and tubular products have resulted in lower utilization rates and increased operational inefficiencies at all of our U.S. facilities.
We expect lower overall steel consumption levels to unfavorably impact the timing of a rebalance of supply chain inventory levels in both the flat-rolled and tubular markets we serve; however, we expect market conditions to improve during the second half of 2015, which will have a positive impact on our Flat-Rolled segment as inventory destocking nears completion. We have taken aggressive actions to reduce costs and adjust our operating levels in the near term but cannot fully offset these increased headwinds. We remain focused on meeting both the current and future needs of our customers by providing innovative and value enhancing solutions, as well as on the Carnegie Way transformation.
Based on all of the factors described above, we expect full-year 2015 adjusted EBIT to be between $115 million and $315 million, or full-year 2015 adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) of between $700 million and $900 million.
We present adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, EBITDA and Adjusted EBITDA, which are non-GAAP measures, as additional measurements to enhance the understanding of our operating performance and facilitate a comparison with that of our competitors.
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 first quarter earnings on Wednesday, April 29, at 8:30 a.m. Eastern Daylight. 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains information that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, we have identified such forward-looking statements by using the words "believe," "expect," "intend," "estimate," "anticipate," "project," "target", "forecast", "aim," "will" and similar expressions or by using future dates in connection with any discussion of, among other things, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to the risks and uncertainties described in "Item 1A. Risk Factors" and "Supplementary Data - Disclosures About Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2014, and those described from time to time in our future reports filed with the Securities and Exchange Commission.
UNITED STATES STEEL CORPORATION
We present EBITDA, adjusted EBITDA, adjusted net earnings and adjusted net earnings 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. EBITDA is defined as earnings (loss) before interest, income taxes, depreciation and amortization. Adjusted EBITDA and adjusted net earnings (loss) are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with GAAP and are not necessarily comparable to similarly titled measures used by other companies.
UNITED STATES STEEL CORPORATION
(a) Excludes the (decrease) increase in accrued capital expenditures of $(58) million and $18 million for the quarters ended March 31, 2015, and 2014, respectively.
(a) Excludes intersegment shipments.
SOURCE United States Steel Corporation
For further information: Media, Courtney Boone, (412) 433-6791, Investors/Analysts, Dan Lesnak, (412) 433-1184