US Steel reports net losses for Q1 of 2020
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US Steel reports net losses for Q1 of 2020

The Pittsburgh-based company also is expected to lay off about 2,700 employees.


Pittsburgh-based United States Steel Corp. (U.S. Steel) has reported a loss of $391 million, or $2.30 per diluted share, for the first quarter of 2020, according to its latest earnings report that was released April 30. Adjusted net loss was $123 million, or 73 cents per diluted share. The company had achieved net earnings of $54 million for the first quarter of 2019, and adjusted net earnings for that period were $81 million. 

According to its latest earnings report, the company’s flat-rolled steel division experienced a loss of $35 million in net sales in the first quarter of 2020. 

In addition, the company reports that total first-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $64 million, ahead of its guidance that was released March 20. U.S. Steel states that its first-quarter performance was slightly better than initially anticipated.

“Market activity was beginning to improve prior to the emergence of COVID-19 and the sudden changes in global oil and gas markets,” says U.S. Steel Chief Executive Officer David B. Burritt. “As the impacts from these unprecedented market dynamics become apparent, we adjusted our footprint, fortified our balance sheet and aggressively cut costs. While these decisive actions helped us exceed our first-quarter guidance, we have quickly turned our attention to the second quarter to not only ensure the safety and health of our employees but also to preserve cash and liquidity.”

In its first-quarter earnings report, U.S. Steel announced that it has granted Stelco Inc. at a purchase price of $100 million the option to acquire a 25 percent interest in its Minntac iron ore mining operations for an aggregate purchase price of $600 million. Under the agreement, $20 million was paid to U.S. Steel upon signing the option agreement, and the remaining $80 million will be paid ratably over the remainder of the 2020 calendar year. Once Stelco has completed paying the remaining $80 million, the option can be exercised any time before Jan. 31, 2027, and, upon exercise, Stelco will make an additional payment of $500 million to acquire its 25 percent interest in the new cost-sharing joint venture. U.S. Steel reports that this agreement ensures it will continue to be the operator and majority owner of the Minntac mine and implies a $2.4 billion enterprise value for the Minntac operation. 

“This transaction shows that while we will be nimble and flexible in executing our world-competitive, ‘best-of-both’ strategy, we will not be deterred,” Burritt says. “In October of last year, we announced our acquisition of our 49.9 percent interest in Big River Steel and our goal of extracting incremental value from our iron ore assets. Today’s announcement demonstrates the continued execution of our strategy and delivers $100 million of incremental cash to the balance sheet in 2020. We are pleased that this transaction validates the competitive advantage of our iron ore mining assets and gives us a path to an additional $500 million of capital to support continued execution of our strategy.”

Layoffs and closures

According to reports from WTAE-TV in Pittsburgh, U.S. Steel also has announced layoffs and the immediate idling of its Mon Valley Works facility near Pittsburgh. WTAE-TV reports that worker adjustment and retraining notification (WARN) notices were sent to 6,500 workers throughout the company. Meghan Cox, a U.S. Steel spokeswoman, told WTAE-TV that the actual number of layoffs is expected to be closer to 2,700. 

Response to COVID-19

During its first-quarter earnings report conference call, the company discussed measures it’s taking in response to COVID-19:

  • distributing additional cleaning supplies throughout its plants;
  • regularly cleaning high-traffic areas, surfaces and common areas;
  • installing additional wash stations and added hand sanitizer to entrances and exits;
  • limiting outside visitors to its facilities and restricting access for nonessential vendors, suppliers and contractors;
  • actively managing physical distancing while at work, including no meetings of greater than 10 individuals; and,
  • issuing weekly communications to employees and their families.

“Our goal during these unprecedented circumstances is to protect lives and livelihoods, which means keeping our employees and communities safe and healthy and the business resilient,” Burritt says. “Over the past several weeks, we have announced a series of actions in response to the coronavirus pandemic and the significant changes in the global oil and gas markets. We continue to serve customers and the stakeholders who count on us as an essential business.

“Challenging days are ahead, but I am confident in the men and women at U. S. Steel who are continuing to make steel as a critical part of our nation’s infrastructure and progress our 'best of both' integrated and minimill technology strategy. We remain calm and focused to ensure a stronger U. S. Steel for all of our stakeholders," he adds.