US Steel reports healthy earnings in Q1
© Oleg Fedorenko - dreamstime.com

US Steel reports healthy earnings in Q1

The company also has announced plans to cancel its investment in upgrades at its Mon Valley Works facility.

Subscribe

U. S. Steel Corp., Pittsburgh, reports that first-quarter 2021 earnings were up when compared with the first quarter of 2020. The company achieved first-quarter 2021 net earnings of $91 million, or 35 cents per diluted share, and adjusted net earnings of $283 million, or $1.08 per diluted share. This compares with a first-quarter 2020 net loss of $391 million, or $2.30 per diluted share, and an adjusted net loss of $123 million, or 73 cents per diluted share.

According to the company’s first-quarter earnings report, the steelmaker achieved adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $551 million.

“Our optimism in the strength of our business is clearly confirmed in our first-quarter performance,” says U. S. Steel President and CEO David B. Burritt. “Our first-quarter adjusted EBITDA of $551 million reflects robust customer demand and purposeful management actions that are delivering strong results.”

During the first-quarter earnings presentation, which took place April 30, the company said it “wouldn’t be surprised” if adjusted EBITDA doubled in the second quarter of the year.

Overall, the company said its first-quarter results were “strong” and it expects the second quarter “will be stronger.”

In comments accompanying its earnings, Burritt adds that U.S. Steel is benefiting from its “well-timed acquisition of the remaining stake in Big River Steel,” which he adds has delivered 32 percent EBITDA margins and has driven a 300 basis point contribution to enterprise adjusted EBITDA margin in the first quarter of the year.

“A strong market and our disciplined approach to capital allocation position us well to translate earnings into cash flow,” Burritt says.

In the recently completed quarter, U. S. Steel also released verdeX, a new sustainable steel product line. The company released a video on the new product line in March, but it does not provide much information on verdeX’s chemistry, facility origin or the energy sources used to make it.

Additionally, U. S. Steel reported that it reduced debt by $1.2 billion in the first quarter of 2021 and reduced its annual run-rate interest expense by $100 million.

The company also says it is canceling its nearly $1.5 billion investment in a new endless casting and rolling facility at its Mon Valley Works site in Western Pennsylvania. U. S. Steel had announced that investment about two years ago. According to a report in the Pittsburgh Post-Gazette, the steelmaker has been considering canceling this project since the fall of 2020.

U. S. Steel’s earnings presentation reported that the company is re-evaluating the capital allocation from that project, taking into consideration sustainability, value creation and lower capital and carbon intensity. The company said Mon Valley Works remains a critical asset that provides it with low-cost steelmaking and good logistics and energy costs.

“When we disclosed this project two years ago, we were taking a very good facility and increasing its capabilities,” Burritt said on the earnings call. “We remain confident existing capabilities at Mon Valley will allow us to compete in markets Mon Valley serves going forward. … I don’t think this [cancellation] will have material impact on the existing performance of Mon Valley, which is our lowest cost producer and one of our most profitable facilities.”