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Press release from PR Newswire

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

Tuesday, January 29, 2013

United States Steel Corporation Reports 2012 Fourth Quarter And Full-year Results07:45 EST Tuesday, January 29, 2013- Fourth quarter reportable segment and Other Businesses income from operations of $59 million - Fourth quarter net loss of $50 million, or $0.35 per diluted share including a $9 million, or $0.06 per diluted share, favorable settlement related to a supplier contract dispute - Full-year reportable segment and Other Businesses income from operations was $855 million; full-year net loss was $124 million, or $0.86 per diluted share, including a net loss of $353 million primarily due to the sale of U. S. Steel Serbia - Fourth quarter shipments of 5.2 million tons and net sales of $4.5 billion - Strong liquidity position with $570 million of cash and $2.4 billion of total liquidityPITTSBURGH, 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 $0.08 per diluted share, after-tax environmental remediation charge.Earnings Highlights(Dollars in millions, except per share amounts)4Q 20123Q 20124Q 201120122011Net Sales$      4,487$      4,652$      4,819$    19,328$    19,884Segment income (loss) from operationsFlat-rolled$          11$          29$         (72)$         400$         469U. S. Steel Europe727(89)34(162)Tubular32102119366316Other Businesses913165546Total reportable segment and Other Businesses income (loss) from operations$          59$         171$         (26)$         855$         669Postretirement benefit expense(69)(74)(99)(297)(386)Other items not allocated to segments15(35)(18)(311)(18)Income (loss) from operations$            5$          62$        (143)$         247$         265Net interest and other financial costs6445102241238Income tax (benefit) provision(8)(27)(34)13180Less: 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 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.  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 CORPORATIONSTATEMENT OF OPERATIONS (Unaudited)Quarter EndedYear EndedDec. 31Sept. 30Dec. 31Dec. 31Dec. 31(Dollars in millions)20122012201120122011NET SALES$       4,487$       4,652$       4,819$     19,328$     19,884OPERATING EXPENSES (INCOME):Cost of sales (excludes items shown below)4,2164,3114,64717,63018,326Selling, general and administrative expenses142166183654733Depreciation, depletion and amortization171163169661681Income 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 expenses4,4824,5904,96219,08119,619INCOME (LOSS) FROM OPERATIONS562(143)247265Net interest and other financial costs6445102241238(LOSS) INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(59)17(245)627Income tax (benefit) provision(8)(27)(34)13180Net (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 UnitedStates 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-Basic144,351144,350144,071144,237143,967-Diluted144,351171,673144,071144,237143,967Dividends paid per common share$        0.05$        0.05$        0.05$        0.20$        0.20 UNITED STATES STEEL CORPORATIONCASH FLOW STATEMENT (Unaudited)Year EndedDecember 31(Dollars in millions)20122011Cash provided by (used in) operating activities:Net loss$        (125)$          (53)Depreciation, depletion and amortization661681Pensions and other postretirement benefits(181)(24)Deferred income taxes74(68)Net loss (gain) on disposal of assets296(25)Working capital changes326(552)Income taxes receivable/payable17133Currency remeasurement (gain) loss(15)40Other operating activities8236Total1,135168Cash (used in) provided by investing activities:Capital expenditures(723)(848)Disposal of assets15541Other investing activities(34)(6)Total(602)(813)Cash provided by (used in) financing activities:Revolving credit facilities- borrowings5234,715- repayments(653)(4,570)Receivables Purchase Agreement (payments) proceeds(380)380Issuance of long-term debt, net of refinancing costs485193Repayment of long-term debt(319)(216)Common stock issued-3Dividends paid(29)(29)Other financing activities-1Total(373)477Effect of exchange rate changes on cash2(2)Net increase (decrease) in cash and cash equivalents162(170)Cash and cash equivalents at beginning of the year408578Cash and cash equivalents at end of the year$         570$         408 UNITED STATES STEEL CORPORATIONCONDENSED BALANCE SHEET (Unaudited)Dec. 31Dec. 31(Dollars in millions)20122011Cash and cash equivalents$       570$         408Receivables, net2,0902,046Receivables sold to third party conduits-380Inventories2,5032,775Other current assets211165Total current assets5,3745,774Property, plant and equipment, net6,4086,579Investment and long-term receivables, net609683Goodwill and intangible assets, net2,0752,045Other assets773992Total assets$   15,239$     16,073Accounts payable and other accrued liabilities$     1,800$      2,063Payroll and benefits payable9771,003Short-term debt and current maturities of long-term debt220Borrowings under Receivables Purchase Agreement-380Other current liabilities211183Total current liabilities2,9903,649Long-term debt, less unamortized discount3,9363,828Employee benefits4,4164,600Other long-term liabilities419495United States Steel Corporation stockholders' equity3,4763,500Noncontrolling interests21Total liabilities and stockholders' equity$   15,239$     16,073 UNITED STATES STEEL CORPORATIONPRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)Quarter EndedYear EndedDec. 31Sept. 30Dec. 31Dec. 31Dec. 31(Dollars in millions)20122012201120122011INCOME (LOSS) FROM OPERATIONSFlat-rolled$    11$     29$   (72)$  400$  469U. S. Steel Europe727(89) (a) 34 (a) (162) (a) Tubular 32102119366316Other Businesses913165546Reportable Segment and Other Businesses (Loss) Income from Operations59171(26)855669Postretirement 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 settlement15--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$  265CAPITAL EXPENDITURESFlat-rolled$  141$     89$  189$  625$  616U. S. Steel Europe17151638109Tubular17171042104Other Businesses12871819Total$  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 ($22) million for the quarter ended December 31, 2011. UNITED STATES STEEL CORPORATIONPRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)Quarter EndedYear EndedDec. 31Sept. 30Dec. 31Dec. 31Dec. 3120122012201120122011OPERATING STATISTICSAverage realized price: ($/net ton) (a)Flat-rolled721741741750759U. S. Steel Europe718731770742845   USSK718731783743862Tubular1,6241,6761,7111,6871,612Steel Shipments: (a) (b)Flat-rolled3,9243,9723,78415,97415,509U. S. Steel Europe9059111,1533,8164,932Tubular4074574821,8861,812Total Steel Shipments5,2365,3405,41921,67622,253   USSK9059119083,7433,690Intersegment Shipments: (b)Flat-rolled to Tubular3934564311,8031,770U. S. Steel Europe to Flat-rolled-128-24971Raw Steel Production : (b)Flat-rolled  4,6864,6994,59319,11618,600U. S. Steel Europe9691,1401,2114,5225,640   USSK9691,1409454,4344,201Raw Steel Capability Utilization: (c)Flat-rolled77%77%75%78%77%U. S. Steel Europe77%90%65%87%76%   USSK77%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 CorporationFor further information: Media, Courtney Boone, +1-412-433-6791 or Investors/Analysts, Dan Lesnak, +1-412-433-1184