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United States Steel Corporation
Fourth Quarter 2013Earnings Conference Call and Webcast
January 28, 2014
2011 United States Steel Corporation
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Forward-looking Statements
United States Steel Corpo ration
This presentation contains forward-looking statements w ith respect to market conditions, operatingcosts, shipments and prices. Factors that could affect market conditions, costs, shipments and pricesfor both North American and European operations include: (a) foreign currency fluctuations and relatedactivities; (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 transpor tation prices,usage and availability; (f) international trade developments, including court decisions, legislation andagency decisions on petitions and sunset reviews; (g) the impact of fixed prices in energy and rawmaterials 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 col lective bargaining agreements; (j) employee str ikes or other labor issues; and(k) U.S. and global economic performance and pol itical developments. Domestic steel shipments andprices 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. Economicconditions and pol itical factors in Europe and Canada that may affect U. S. Steel Europes andU. S. Steel Canadas results include, but are not limi ted to: (l) taxation; (m) nationalization; (n) inflation;(o) fiscal instability; (p) poli tical issues; (q) regulatory actions; and (r) quotas, tariffs, and other
protectionist measures. We present adjusted net income and adjusted net income per diluted share,which are non-GAAP measures, as an addit ional measurement to enhance the understanding of ouroperating performance and facilitate a comparison wi th that of our competitors. In accordance with safe harbor provisions of the Private Securities Litigation Reform Act of 1995, cautionary statementsidentifying important factors, but not necessarily all factors, that could cause actual results to di ffermaterially from those set forth in the forward-looking statements have been included in U. S. Steels
Annual Report on Form 10-K for the year ended December 31, 2012, and in subsequent fil ings for
U. S. Steel.
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3United States Steel Corporation
Adjusted Fourth Quarter 2013 Results
$59
$113
$146
$38
($59)
($20)($0.14)
$0.27
($0.41)
($100)
($50)
$0
$50
$100
$150
4Q 2012 3Q 2013 4Q 2013
$Million
s
($0.75)
($0.50)
($0.25)
$0.00
$0.25
$0.50
$0.75
$1.00
$persha
re
Reportable segment and other businesses income from operationsAdjusted net incomeAdjusted diluted EPS
Positive reportablesegment and otherbusinesses incomefrom operations foreight consecutivequarters
Operating income perton increased $6 fromthird quarter, and $19from fourth quarter2012
Note: For reconciliation of non-GAAP amounts see Appendix
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4United States Steel Corporation
Fourth Quarter 2013 Flat-rolled Segment
Shipments(net tons in thousands)
$11
$82$87
$752 $750
$721
($25)
$0
$25
$50
$75
$100
4Q 2012 3Q 2013 4Q 2013
Incomefromo
perations($millions)
$400
$500
$600
$700
Averagerealizedpric
es($pernetton)
Income from operat ions Average real ized pr ices
4Q 2012 3Q 2013 4Q 2013
3,924 3,428 3,470
Improving spot pricemomentum maintainedthroughout the fourthquarter
Lead times for value-added
products extended duringthe fourth quarter
Outages completedefficiently and repairs andmaintenance spending
discipline maintained
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5United States Steel Corporation
Fourth Quarter 2013 Tubular Segment
$32
$49
$32
$1,624$1,543
$1,509
$0
$25
$50
$75
4Q 2012 3Q 2013 4Q 2013
Incomefromo
perations($millions)
$600
$900
$1,200
$1,500
$1,800
Averagerealizedpric
es($pernetton)
Income from operations Average realized prices
Shipments(net tons in thousands)
4Q 2012 3Q 2013 4Q 2013
407 459 414
Highest quarterly levelof shipments of semi-premium connections
Rig efficiency and well
completion ratescontinue to improve
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6United States Steel Corporation
Fourth Quarter 2013 U. S. Steel Europe Segment
$7 $12
($32)
$718 $714
$692
($50)
($25)
$0
$25
$50
4Q 2012 3Q 2013 4Q 2013
Incomefromo
peratio
ns($m
illions)
$400
$500
$600
$700
$800
Averagerealizedprices
($pernetton)
Income from operations Average realized prices
Shipments(net tons in thousands)
4Q 2012 3Q 2013 4Q 2013
905 861 1,029
Operating income perton increased $49 fromthe third quarter
Production andshipments returned tonormal levels afterscheduled blast furnaceoutage was completedin the third quarter
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Priorities and objectives
Macro business strategy
Carnegie Way value creationCost and margin improvements (including $75 million announced last quarter)
$175 million annual run rate / $150 million to be realized in 2014
Business measurements to motivate a greater sense of urgency
Investor communications
Reducing complexity and streamlin ing business processes
Strategic Approach
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Pension and OPEB
$129
$78
$271 $276
$443$412 $396
$330
$136
$149
$191 $152
$159
$100
$55
$15
$0
$100
$200
$300
$400
$500
$600
2007 2008 2009 2010 2011 2012 2013 2014E
$Millions
Pension Expense OPEB Expense
Total pension and OPEB expense by year
Major Assumptions:
Discount rate: 5.75% for 2007 & 2008, 6.00% for 2009, 5.50% for 2010, 5.00% for 2011, 4.50% for 2012, 3.75% for 2013, and 4.50% for 2014E
Expected rate of return on assets: 8.00% in U.S. & 7.50% in Canada for 2007 through 2011
Expected rate of return on assets: 7.75% in U.S. & 7.25% in Canada for 2012 through 2014E
Unfundedstatus ofpension andOPEB plansat 12/31/13 is$2.5 bill ion,as comparedto $4.9 bil lionat 12/31/12
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Flat-rolled
Automotive production in2013 best since 2002,expected to increase in2014
Service center shipmentsimproved in second half of2013, inventories downfrom end of 2012
Non-residentialconstruction expected to
improve per consensusforecasts
U. S. Steel Europe
Automotive production in2014 expected to becomparable to 2013, salesexpected to increase in2014
Appliance, tin plate andconstruction expected toincrease from 2013 levels
Service center inventoriesexpected to remain in-line
with sales activity. Salesexpected to improve from2013 levels
Tubular
Rig counts are stable and footagedrilled per rig expected to continueto increase
Imports remain challenging
Oil prices remain supportive ofcurrent drilling levels
Natural gas prices are expected toincrease per Wood Mackenzie
Natural gas storage levels at endof withdrawal season expected tobe at lowest level in six years
Market Updates
Major industry summary and market fundamentals
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First Quarter 2014 Outlook
Segment outlook
Flat-rolled
Operating results expected toimprove as compared to fourthquarter
Higher realized prices forcontracts and spot market
Shipments expected to behigher than fourth quarter
Lower repairs and maintenancecosts
Higher scrap and energy costs
U. S. Steel Europe
Operating results expectedto be comparable to fourthquarter
Higher average realizedprices primarily due tochange in product mix
Shipments expected to becomparable to fourth
quarter
Higher raw materials andoperating costs
Tubular
Operating results expected todecrease as compared tofourth quarter
Average realized pricesexpected to decrease ascompared to fourth quarter
Shipments expected to behigher than fourth quarter
Operating costs expected tobe lower as compared tofourth quarter
Substrate costs expected toincrease
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Strategic update
Process and cost efficiencies
Granite City Works caster project
Minntac mine extension
Product development and capabili ties
PRO-TEC continuous anneal line
Tubular semi-premium and premium connections
Potential Footprint changes
Fairfield EAF permit filings
Actions and initiatives
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United States Steel Corporation
Fourth Quarter 2013Earnings Conference Call and Webcast
Q & A
January 28, 2014
2011 United States Steel Corporation United States Steel Corporation 13
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Appendix
14
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Major industry summary
North American Flat-rolled SegmentSources: Wards / Customer Financial Reports / AISI / CMI /
Economic Planning Assoc / AHAM / US Census Bureau / AIA / AEM / MSCI
Automotive
2013 vehicles sales hit expectations at 15.53 million; up 7.5% year over year and best since 2007
Production exceeded 16 million in 13; best since 2002. Expected to grow again in 20141stquarter 14 build projected to exceed 4thquarter; best unit build since 2ndquarterVehicle inventory increases during the year by 6 days to 64
IndustrialEquipment
Tractor and Combine retail sales up 9% in 2013; 2014 outlook is mixedRailcar deliveries projected down 14% versus 2012; 2013 Order intake up 17% and in line withprojected 2014 delivery forecasts
Tin Plate
Full year metal can shipments increased a modest 1% in 2013Metal food can shipments increased year over year for the first time since 2008Imports averaged up 18% versus 2012
ApplianceMajor home appliance shipments up 10% through November versus 2012, and no major forwardchanges up or down projected.
Pipeand Tube
Structural tubing demand is consistent and appears to be meeting customer expectationsLine pipe market is extremely slow with minimal award activity in 2ndhalf 13 and early 14
ConstructionConstruction recovery slow in 2013, as Non-Residential spending was flat in 2013, but expected toimprove by 5.8% based on consensus forecasts.
ABI falls in Nov and Dec (seasonally typical); Billings index averaged 52 in 2013; up from 50 in 2012
ServiceCenter
MSCI carbon flat-rolled improved as year progressed; 2ndHalf USA shipments +8.9% versus 2H 2012USA inventory down 4% from prior year end; Canada sheds almost 36%Combined USA and Canada flat rolled inventory was reduced by 600,000 tons during 2013
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Market Fundamentals
Sources: Baker Hughes, Energy Information Administration,Preston Publishing, Spears & Associates, Wood Mackenzie, Internal
United States Steel Corporation
Oil DirectedRig Count
Currently 1,416 rigs, up 8% year over year. The oil directed rig count increased modestly
during the fourth quarter and increased 4% during 2013.
Gas DirectedRig Count
Currently 356 rigs, down 18% year over year. The natural gas directed rig count decreased13% during 2013.
Natural Gas
Storage Level
Currently 2.42 tcf, 19.8% below last year, and 13.2% below the five year average.Inventories are expected to end the withdrawal season (End of March) between 1.4 and1.6 Tcf which could be the lowest end of season inventory level in six years.
Oil PriceThe West Texas Intermediate oil price averaged $97.50 per barrel during the fourth quarter,down $8.50 or 8% from the third quarter. Wood Mackenzie forecasts an average firstquarter price of $94.50 per barrel.
Natural Gas PriceWood Mackenzie forecasts an average first quarter natural gas price of $4.12/MMBtu,representing increases of $0.27 (7%) and $0.63 (18%) respectively from the previous
quarter and first quarter of 2013.
ImportsDuring the fourth quarter of 2013, import share of apparent market demand averagedroughly 50% for OCTG and 49% for line pipe.
OCTG InventoryNovember 2013 OCTG inventory is estimated to be about 3.1 million tons, approximately5.9 months of supply.
Tubular Segment
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Major industry summary
Sources: Eurofer, USSK Marketing, EASSC, LMC, Euroconstruct, ESTA, ACEA
United States Steel Corpo ration
Automotive
1Q14 EU production is estimated to grow by 7% versus 4Q13. Total EU 2014 car production is forecasted to
stay flat at roughly 15.6 mill. units. For 1Q14, production growth in V4 will be 3 % q-o-q, quarterly growth impacted mostly by Mercedes
Hungary, GM Poland, PSA Slovakia. EU sales in 1Q14 are expected to increase by 10% q-o-q , while 2014 expectations show 3% growth
y-o-y.
Appliance
In 1Q14, EU appliance production is projected to decrease by 5.4% q-o-q and to increase 2.5% y-o-y. Prospects for the EU electric domestic appliances market in 2014 are for the continuation of the mildly rising
trend in demand and production (3% y-o-y). Positive demand trends are expected in Germany, the UK and the Nordic region resulting from the rebound
in residential construction. Growth in Central Europe will continue to outperform average EU growth.
Tin Plate
Tin consumption in 2013 based on October numbers is anticipated to increase by 3.3 % y-o-y. In 1Q14, Tin consumption is projected to increase by 7.7 % q-o-q, as usual after the weakest quarter during a
year. Demand in Q1 is expected to be at the same level as the previous year ( 900 kMT). Inventory of empty cans still above average.
Construction
The outlook for 2014 is for a slow and cautious recovery of the EU construction market. The pick-up in construction output will largely be driven by the residential sector and renovation and
modernization work. In 1Q14, activity in the sector is expected to increase by 2.3% y-o-y. EU construction output is forecasted to rise almost 1.5% in 2014.
ServiceCenters
The forecast for 1Q14 shows that inventory in the distribution chain will remain well-balanced withdownstream sales activity; ex-stocks sales are forecasted to improve in most countries.
2Q14 flat product inventory is forecasted to be normal and in-line with the expected activity of ex-stockssales. Sales activity is forecasted to maintain at least the improved levels reached in Q1 or register somefurther improvement.
U. S. Steel Europe Segment
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U. S. Steel Commercial Contract vs. Spot
Contract vs spot mix by segment twelve months ended December 31, 2013
Firm22%
Market BasedQuarterly *
20%
Flat-rolled
Market BasedMonthly *
16%
Tubular U. S. Steel Kosice
Spot29%
Cost Based13%
Contract: 71%
Spot: 29%
Firm38%
Market BasedQuarterly
1%
Spot50%
Cost Based1%
Program55%
Contract : 50%
Spot: 50%
Market BasedMonthly
10%
Spot
45%
Program: 55%
Spot: 45%
United States Steel Corporation 18
Market BasedSemi-annual *
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19United States Steel Corporation
Other Items
Capital SpendingFourth quarter actual $149 million, full year 2013 actual $477 million,
2014 estimate $650 million
Depreciation, Depletion and Amortization
Fourth quarter actual $170 million, full year 2013 actual $684 million,2014 estimate $670 million
Pension and Other Benefits Costs
Fourth quarter actual $119 million, full year 2013 actual $451 million,
2014 estimate $345 million
Pension and Other Benefits Cash Payments (excluding any voluntary pension contributions)
Fourth quarter actual $3 million, full year 2013 actual $338 million,
2014 estimate $540 million
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Days Away From Work Cases 31 Days(Frequency Rates per 200,000 Hours Worked)
United States Steel Corpo ration
0.500
0.787
0.620
0.282
0.3660.325
0.351
0.3060.3080.3170.309
0.2850.320
0.3420.3460.377
0.013
0.2160.187
0.0730.037 0.037 0.041 0.026 0.015
0.00
0.20
0.40
0.60
0.80
1.00
2005 2006 2007 2008 2009 2010 2011 2012 2013
BLS Iron and Steel BLS Manufacturing U. S. Steel
Source: Bureau of Labor Statistics (BLS) and U. S. Steel. BLS data not available for 2013
Global Safety Performance - 2005 to 2013
Safety Performance
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22United States Steel Corporation
Fourth Quarter 2013 Results
($ millions)
4Q 2012 3Q 2013 4Q 2013
Reported net income (loss) ($50) ($1,791) ($122)
Restructuring charges 244
Impairment of goodwill 1,771 23
Supplier contract dispute settlement (9) (15)
Charge related to an unconsolidated equity method investment 15 14
Tax related items (142)
Environmental remediation charge 21
Adjusted net income ($59) ($20) $38
($ per share)
Reported EPS (LPS) ($0.35) ($12.38) ($0.84)
Restructuring charges 1.68
Impairment of goodwill
12.24 0.16Supplier contract dispute settlement (0.06) (0.10)
Charge related to an unconsolidated equity method investment 0.10 0.10
Tax related items (0.98)
Environmental remediation charge 0.15
Adjusted diluted EPS ($0.41) ($0.14) $0.27
Reconciliation of reported and adjusted net income and EPS