X - Earnings call transcript Q3 2017 | United States Steel Corporation

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Operator

Good morning, everyone, and welcome to United States Steel Corporation's Third Quarter 2017 Earnings Conference Call and Webcast.

As a reminder, today's call is being recorded.

Now on the call this morning will be U.S. Steel President and CEO, Dave Burritt; Executive Vice President and CFO, Kevin Bradley; and Dan Lesnak, General Manager of Investor Relations. After close of business yesterday, the company posted its earnings release, earnings presentation and updated question-and-answer document under the Investors section of its website. forward-looking or future call. projections contains materially may call statements from made conference statements results and differ Today's on today's forward-looking are end factors are risk presentation and release, statements affect Q&A earnings U.S. The statements document the those and in that the referenced in the of could the in company's included earnings at and accordance XX-K quarterly reports their most Steel's with Safe updated the and recent annual report on Harbor Provisions. FormXX-Q on in Form on our turn to the like host now to U.S. over would I conference CEO, and President Burritt. Dave Please go sir. ahead,

David B. Burritt

Good innovative our our to quarter, fresh resources a develop execution the I The President remain was morning. to our announced Last our valuable successful and that strong business team of the and partner Bradley Kevin for Kevin, team. strategy perspective experience solutions Vice the product welcome for brings to are joining that to Kevin as and revitalize Executive create customers. assets, team our talent CFO.

You're off to a great start.

Kevin P. Bradley

happy of company. Dave. to this Thanks, be of and real the very to part part I'm be proud team

David B. Burritt

improve on facilities, it our projects Works every I'm our steel business, challenging Lakes downtime quality, day. spent talent, value improve our I'd projects commitment commitment delivering difference into finishing sustainable how that employees of and customers. our such day am are reliability, that dedication goals. our firsthand always converted opportunities very a with with employees enthusiasm and safety. our operational are energized motivated lot are of achieving lines and potential and and are our conditions that for reduce by in furnace at to what they Works a being at or at are doing employees Valley a really I've them thank mills as sometimes strip to blast under and strong our and from I their asking making and a hot work their shop commitment to Great improvements for We're seeing every our they a our like lot core of control Mon Speaking time

of true were Some employees. some employees area impacted, around Harvey character homes. those and true for losing of shown that our from help very type say what our camaraderie really struck all recent were part our I'm part to and storm. co-workers is does the in their events many entire team. impacted by U.S. Houston, of Hurricane proud of severely that of this This the being out Steel show reaching employees about, have am When the corporation to our I Immediately, caring

our our commitment performance their day. our the we that us. and person the thoughts and stockholders, enters for to been every safety of impacted everyday our unless safe work, are and natural are remains Safety top satisfied important difference States. with hard with that It's disasters our we all teammates we the make have that the concerns those on count across United never and our the facilities every with secure by employees, work, our is Our customers priority

operations, of each positive our performance operating Tubular in segment our were segments, our our with expected to producing third quarter. and we on stable results the Moving than better at results and modestly quarter EBITDA

XXXX XXXX improving Our over compared nine with segments nine three XXXX. improved the of with months results our first the of of for all first months

and of total our debt we the debt liquidity the position and reduced average maturity transaction interest a quarter refinancing cash expense. Our annual our that during extended and improved completed

few invest over no and the very create debt next investments liquidity Our to we best quarters a satisfied us. have cannot We for at We've our with over start like and years, to enabling do well to work excellence, superior and so hard stable maturities Two quality two assets cash to still the value the significant our objective for reliability XXXX, respectively, years. make meet liquidity and can and customers that and success net our just is critical new few $X.X safety, to the is levels position X our $X.X lot we billion But and at for relatively next areas stronger operational believe we steel. of good remain our is worked technology creation. on in a the XXXX We revitalize quarters. billion, with achieving perform debt be focused since assets foundation Gen and of these a delivery long-term cost. executing quality, in

to consistent operational and investing we to forward earnings operations term Again, committed improvements our remain revitalizing by are focus are delivering with delivering our XXXX. continue on move to and focused well-positioned solutions. for our longer on reliable assets customer We on

revitalization structured improvements pace improvement assets our we and the good investing. year, necessary. stronger. progress program our gotten XXXX has management next seeing we the We targets asset disclosed. our made that operating We've and have confidence are so year can consistent focused This project get plans where disciplined we operations. in not we achieve in And which increases talent will earnings. We've to this We're process added on on are reliable have only accelerate our

customers. the for our develop next generation to continuing also steel products are We of

steels and needs of high-strength automotive will while X venture, a September kind steels, X late superior properties, PRO-TEC new and we be announced high-quality the producing pressing line approach of high line produce using first continuous be proprietary in utilizes zinc the This steels strength weldability. steels cutting-edge formability of Generation Our Generation allow hot-dip their challenges. X that its a Generation meet will PRO-TEC Company some will our advanced our expand in will To constructed with and coating. our for at provide galvanizing technology solve joint capabilities more which capable low-alloyed that robust to a customers' Coating

our to choice. It to steels of material mix U.S. job developing environmentally steel steel tubular Steel our our for of our value lowest increasing premium at and Europe, all for continue our is customers, X We're Generation revitalizing the advanced new most reinforce strongest, connections and create value-added remain efficient Flat-Rolled developing will our assets, strengthening position stakeholders. for safest, customers. existing our why in Our product cost, high-strength people,

our opportunities primary businesses. While very always portfolio innovations, focus right of for and optimize talent is steel on we looking our our facilities, now much are to

we a at market capabilities serve can positions. hard of and more We and segments look each our fully are determine in our how product taking to on products our of capitalize markets all we

related must create always be many non-core to assets improve we decisions to strengthen We the long-term have exploring over our and and difficult our few made underperforming for that stockholders. earnings grow can and value open position, opportunities our power market last years and

we I As and must say, started. do We're better. just can getting

questions. We go have a do. Dan, lot to more let's work to

Dan Lesnak

can the questions? line Thanks, please Dave. queue for Kevin, you

Operator

you. Thank

the from ahead. of question Cowen Novid Please Company. is First of go & line Rassouli

Novid Rassouli

guidance, Good guidance the us guys want that morning, see, XXXX guys. your Thanks in volatility we've be for HRC assumptions given start taking U.S. prices, seen my I at arrive questions. very that helpful. give could would just to could you If your to with we if

Dan Lesnak

prepare the last CRU we everything CRU, the we disclosures. to on based for have before our quarter-end That's had,

hot-rolled CRU, based So, Wednesday's $XXX. on was last that's

in calculation. embedded that's So what's our

Novid Rassouli

European it. And for Got pricing?

Dan Lesnak

That period. would using for Europe from be data the same

Novid Rassouli

costs very was Flat-Rolled should be first insight stable higher pellet Any quarters. could Was would wondering, into about seasonality we've there the the just curious of lower potentially in relatively on seen helpful. to Okay. And costs, shipments of costs? we XXXX how think moving I XXXX? moving if then quarter drive two

David B. Burritt

talk Well, this to is light Dan it you as the the Dave. know year, XXXX, we relates typically you pattern, you Maybe provide had don't let more pellets last of we the I'll quarters about run, so we quarter continue. and that But would which to but expect expect a as details. can –

control. intense We and on are – cost doing operations focus on

numbers, So not we're we're on really our guidance much deliver XXXX. best doing our give you to related to to going but

Dan Lesnak

is Novid, Yeah. Dan. this

in XQ just we'll down numbers third-party But a little we to is a in bit change impact. we a XQ – mining Q, And seasonal Flat-Rolled. are which that large why bit point little, it component for you'll probably little stronger have has we now more start is see So, a now, see a the our see do that little decline pellets, of a be also first seasonal of in are quarter-to-quarter. than impact is, XQ that bit out -want versus to of seller little the are a XQ, past,

Novid Rassouli

basis are costs But potentially based on thinking on Okay. you XXXX, have you programs directionally? annual for the the guys all that guys move just lower can that

Dan Lesnak

in there's doing far the lot we hard I parts cost we're a to our will total to to we get but come with Certainly, for us, help up the there. Until plan we're it's what we're as to there. work what going all business get more going a year to will create moving need operations as efficiency next how picture. and program mean, done, see of our really total be accomplish

David B. Burritt

I But iron to a getting nice shipments. of I we seasonality part ore eight, the to back think out this, number of Dan's refer question do on job everybody laying the

I think that. understand to it's important for people

Novid Rassouli

Got taking questions, guys. it. my Thanks for

Dan Lesnak

Novid. Thanks, All right.

Operator

is Suisse. Curt Woodworth, Please ahead. of from Credit line question the Next go

Curt Woodworth

Good Hey. morning, everyone. Dave,

Dan Lesnak

morning, Good Curt.

David B. Burritt

Hi.

Curt Woodworth

regards question just outage the maintenance with costs. a to I had and

million. that, be talked lost $XXX that another million million assume could of year, to wouldn't cost I include $XXX increase this and $XXX You on opportunity about a from the volume which

we into revitalization XXXX, that time about all going accelerating to efforts spend, year. this the think you when harvest you're at about So made going but same the talked you

comment leverage think costs though the therefore revitalization, even maintenance issues like volume you So, on year? you're able out get can to be you that look more should how repeat, outage don't and XQ of think base? assume next you. asset we you can Do Thank you could accelerating

David B. Burritt

to this know too XXXX. not – Curt, going really is much you commenting be We're Dave. on Well,

to linear going But in just move plot of XXXX think we the in do putting if in all a year. you XXXX. together something we'll is some volume, today find to can of terms opportunity are as about no But should that some goals we harvest as point of this is remember one to where plan million this that type volume this of extra our relationship next we improvement, of the terms can for from part this targets, of talk more We quickly that. value, an forward, the in

that XX% the year. we have we're think have thing sure here we take And make to short as revitalization value continue we automatically going the very about move toward we drive and that move and gain into to may the XXXX, where and these if money term to spend XXXX focused. be capacity can on we goal, understand people the of increases to not this in deliver and going XX% I really be to that confidence quickly accelerate assets, because able is we're So, return, all more to to seriously we more other are that's want can we next so

be Curt. the roll and That's So, something that's we we be point, can't do focused wouldn't sure you number I may term is not some end to this short-term things XX% want concerned the going what here to volatility. the return, XXXX in that at we'll really shorter at But that mean, be, XX% to that we about after for, who out number's of all, and delivered. January. where have tell make to

Curt Woodworth

Tubular, can Fairfield your and the completion thoughts thoughts then some on at just provide EAF on on that? And Okay. you

David B. Burritt

Yeah. Sure.

if, believe before. of it's I when. me not but a think you've We question heard this say

for we able in need how way, but demonstrate to our and sooner the if Now, low earnings. And know valleys how much means figure we're cost to trying a manage waves. that We structure at and we big these lift more we'll that more peaks figure rid turning Flat-Rolled rather to business this haven't ride our to levels. very make more business out want all not term. have to than and to the positive, not but get out, heavy we business, nimbly. and That's we a to figure nimble just North thing it's just USSK earnings create on this be EBIDTA been later, run out the that that stable and can how predictable longer and have to business American that to We're has stability big more business, sure Tubular we of greater

it's have our certainly, So in we're Electric EBITDA be or and And timing. that future of I then, to guess, strong going will Arc up confident have running XX so, we again, when and matter the months we'd the next, performing But we is a have announcement. and Furnace that well. returns, an in

and on. EBITDA sustainable an that have announcement help? we that back then we'll flexible confidence a Did have cost to have We turn and have to structure, that

Operator

our to sir. Okay. question, I'll go next

ahead. Please Next question, Seth Jefferies. go Rosenfeld,

Seth Rosenfeld

the questions. I associated for Good spend points morning. the to of with regarding asset couple taking touch on Thanks revitalization my want of plan. CapEx timing a the

First, if there's fiscal full projects? the the noticed ramping trimmed target and perhaps explain difficulty CapEx you year by Second, I in given... why million. these Can $XX – that XXXX you any

David B. Burritt

any the projects. I don't CapEx really in Yeah. think ramping there's of difficulty

think number the on the commitments basis. take but CapEx and I payables cash, tightly. so cash we're the you how know we we very in the a And seriously those managing queue, certainly, have terms of is

cash actually it's able we're news spending good so, a cash. things here, than to that And done some less story get rather more

much pretty on with So, we where track think be. I we think should we're

Dan Lesnak

reduction that the And Seth, revitalization came None on this of program. asset is Dan.

spending projects need revitalization of revitalization it decided areas some whether asset budget, helps around things have done changed move our getting to us. is where may the projects of in for matter the the times year. lot it's asset of some guidance Our spend assessment But haven't we Across still under or a we we other a this was. other for which

Seth Rosenfeld

just pattern year? know I on similar low. expect Okay. of Obviously, but won't the been for give you choppy a expedition, for quite Thank XXXX, year-to-date the the you. investment for any side formal a has the XXXX And course on follow-up should spend of CapEx guidance we

CapEx XXXX? we that So, big you're in targeting Should a pickup into very seasonally QX. in expect

Dan Lesnak

been the will paid point. Dave this XQ. Like see flow work's get already. terms, it's of that at don't I just some of said, we done can The lot know bills in

the will next I'd shown soon on to that's why too away. quarter-by-quarter So, statement it's CapEx say, be guess But of it's not on the cash overall flow what right year. pattern

David B. Burritt

for eager tell know let XXXX. we're is eager everybody you, I and Yeah. me for XXXX,

have when accelerated we in place, XXXX. robust what those be more focused. coupled we to on where deliver call a getting on right, We're deliver maintenance to to that's centered So, we we're And here going in performance with reliability our asset revitalization this way. do going manufacturing things

prize, the that's XXXX. So,

on robust we information we'll with you And for more give XXXX, CapEx. so, move as forward plan a

Seth Rosenfeld

Thank you very much.

Operator

Please we go have Capital. Next, Gordon Johnson, ahead. Axiom

Gordon Johnson

Hey, guys. the for taking Thanks question.

Dan Lesnak

Good Gordon. morning,

David B. Burritt

Hi, Gordon.

Gordon Johnson

Good morning.

nearly Just looking of at for a prices. prices, while, with noticed time a lot import prices the parity global we've in the first at U.S. import that are

thoughts XXX even already if get the then passed, follow-up. hasn't you of So, on, actually your just the think guys wanted effect been I XXX to have if And think you though the is a in prices?

Dan Lesnak

say, prices of the I'd cases biggest from the the Gordon, the Flat-Rolled, out guess, I ago two probably import bad that things some of – really years on players impact cases from of took the the market. one is

unusual, pricing cases a I reflection that's think. I else. higher So, offers pricing, those think is trade anything seeing those close of more How U.S. import to than import got

So announcements. – think, the in going what's supportive price I recent of no, on that's

David B. Burritt

much of a see to when something fairly how States continued thing that's that I be space Gordon, the in And we'll that good a companies steel. again, practices and for harming But, think meaningful optimistic that and on in on to happen them question I be when. United unfair patient let mean a still the anybody's we're this good America guess. confident I will do that'll for we're it America. built and government think sure their do impact into steel the does it. so job not if, a again have going and I'm thing we're count trade is domestic of We it's but the XXX, XXX not Yeah. the are

Gordon Johnson

get If the And on oil and could decision, I oil helpful. the thoughts excess your some we've the That's a follow-up. building separately, also Vietnam some just in then patch, in inventory the building be inventory recently may heard patch. comments some field there Thanks. in just that

If you Thank that. guys can comment on you.

Dan Lesnak

tax they mention haven't the reasons, unusual see our be their is, particularly that. typically people Texas, Gordon, heard we say, year-end. on I minimize would what minimize try I tax oil guys inventories would their actually in based bills, That the by to because and for patch, for pretty

guys. business. said, pattern for haven't So, But from I unusual would our I that be that that like heard an

Operator

Okay. re-queue, Please sir.

your is Gordon. sir, ahead, Okay, line Go open.

Gordon Johnson

Yeah.

just then circumvention your Vietnam the thoughts on And Sorry. case.

David B. Burritt

just think the Vietnam what, on delayed don't to decision's indefinitely really report You know I preliminary the been case, on and circumvention that. we anything more have

Operator

All right.

Bank we Next, have Timna of America. ahead. go Please Tanners of

Timna Beth Tanners

guys. Yeah. Hey, morning good

Dan Lesnak

morning. Good

David B. Burritt

Hello.

Timna Beth Tanners

market your on to and regarding ask One, current the want about I other take two your questions. repair asset conditions program.

your on still but lead awful, not comment time, not really, So, four-and-a-half weeks, great. the

in talked the the the starting spot space conditions to of in CEOs about market One other market improve.

if on that could through then like And quality if Thanks. also any time us that. comment given I year, you're of it's customers discussions So met the or concerned with if the you auto give into wondered costs, passing and your and coal could you insights alloys? about higher

David B. Burritt

Well, I'll one, handle us That's the between our dealings and Timna. first customers. We our don't and about with prices the talk the customers.

about any to So, think keep won't it's That do so. we one? information share that we We your question. was second and What confidential, like was appropriate your that. to first

Dan Lesnak

market The conditions.

David B. Burritt

not get... The the we're market to as we on conditions, conditions comment market going

Timna Beth Tanners

Lead could improvements any Lead such on times on was other as and commented by times. comment companies, recent you yeah? if

Dan Lesnak

like for weeks and few our think lead about longer I four-and-a-half said, for are, they're lead galv. cold-rolled I for times, our times weeks hot-rolled, up

us, on we're a a work are bit footprint, for doing. little different the running think, of it's restricted I because because we

a fill. have we to So, certain only tons amount of

maybe a our may different be people. other books fill So, how we little than I bit think

general. the may that to us be in causing different be So, little a than market,

Timna Beth Tanners

fair. That's

probe comment be assets. from understand. I that, to through to And pass investments existing that's little better. higher please. program, noticed eventually City, you're trying just a was to that And did costs, I be much means was if assuming too just you into understand that product, want great; otherwise, that about with but final customers, wasn't And wanted I repair update that expecting slabs but million additional on as then include noticed on finishing to if an I X a asset your wanted to your there well, comment And I Thanks. so your an able also that generated Okay. could Granite so that not on

David B. Burritt

program, superior it's is bringing are up to revitalization shape. levels. Just be to assets our this clear, not like in them We're a terrible

talked think the XX a at improvements The BX, years made that blast Great are about lot. we've for is old. all-time Lakes, example, notably most this and the at I we these And the running the record levels. in furnace DX BX,

it's we're the So, we're repairing like them them, to not bringing condition. best-ever

prefer, than and competitive repair, deliver to some the we going give to us Timna, this is revitalization asset XX% Dan? rather clearly it advantage XX%. So, because

Dan Lesnak

will Yeah. so think million market believe produce I more able And be or that. those how on certainly have capacity, Timna, market we I guess get the determine slabs. facilities tons that to in volume, so incremental said now we will these a we the finishing tons slabs,

sales, could And then, have, are, with there to be I'm the be and then, product I could that the where determine there like like finished So, said, X sorry, look we slabs extra but into. will starts what... going margins said, million slabs produce sales. the turns product market ton an we for what best capability We're to

Timna Beth Tanners

Granite question, multi-part It's City.

Dan Lesnak

the Granite plants work other the now, as not City All part operations at is couple a the of right as certainly steelmaking but are City, part Yeah. There of Granite of program. program. the is domestic big

Timna Beth Tanners

Thanks. right. All

Operator

line the Brett next Please is And go from ahead. Levy, of Seelaus. question

Brett Levy

Hey, guys.

I the at talk XXXX, lot aluminum to CapEx be about to Constellium, seems automotive. bit seem it Aleris a at want little Novelis, the automotive look market, and rollers, aiming exposed the you to As just like a

trucks, obviously automotive not will your and to any look sort in mean into HBI in to at suggests You've aluminum in you know from time But what got automotive mention feed little XXXX talk more lot kind drop going their developing guys a commercials, they I soon. you're platforms, about many I platforms which Chevy are it, for I and will and potentially look mean your as And you you which mills not well. cleaner going hearing XXXX, their trucks? can bit as like a liked to look XXXX, aim go of of customers, and these rocks what your to at guys talk you're customers is position of how as strong cars out you steel for your to to as that

David B. Burritt

take don't up. that, I'll then Dan, why you and follow

Dan Lesnak

Hey, Yeah. Brett.

we're on important they to what customers think of us hearing Xs. them. Gen our That's I forward development to move want from faster is our

an there's So, really business. is way I competition going because attractive think that market, our into we to be lot a make to of into automotive. focus understand moving trying their It's

Our end to can, towards position we we feel is there. the the strategy move because strongest have we market of highest the

Brett Levy

there for if XXXX, And are they you you saying X? be to do in we'll need you Gen in do what

David B. Burritt

need. And with focused we're deliver and Remember is others the bit in X Generation others different that steel dies. they than a can working ours in very helping are use and fact, our little absolutely. closely are existing press-hardened tooling primarily who a that on of Yeah, what number the us customers

weldable possibility. is customers they're have ends our OEMs. Line as excited And by OEMs, money with that's up orders X Annealing for it our PRO-TEC currently and time the the the we Gen pre-production other JV that XX% all qualifications with this well of for elongation with Continuous and So, We as some finalizing our currently what saving XXX our off about. are

but we good deliver it announced we execute of have to So, something we and we've to Obviously, we to years where in couple get very here, have just this we is we pretty and place, but to have a do are. special take think that. going feel

as we to excited get XXXX. the we're so, about And possibilities

Brett Levy

Thanks guys. very much,

Operator

from Beristain, Bank. Please go is of Jorge the line ahead. question next The Deutsche

Dan Lesnak

Jorge. morning, Good

Jorge M. Beristain

outage impact XQ? volume gentlemen. be X is morning, Good questions. Hey. few or Works in what A from follow-up Number quantify furnace will Gary blast you the Can

Dan Lesnak

Any know volume went furnace, for why that. different we're at out why kind overall the That's time. we take of year many any influence one number of the specifically, a one because year, guesswork guidance outages. to take giving any full that's to mill going volume to Not strip gave so can we we

Jorge M. Beristain

Okay.

to Steel it or JV because recent a that PRO-TEC is isolated is scandal, impact line? there On be the any of Kobe just potential your measurement completely going negative product to

David B. Burritt

Well, far the impact, recall, impact see this to as as as you the we're don't U.S. that's is is, we PRO-TEC. �� Steel substrate any provided

So, that's Steel. all U.S.

be So, Kobe implication no incident. there to Steel related the should

Jorge M. Beristain

Okay. And then maybe tax just an idea technically you us a technical follow-up on why how your more tax just rate. paid having taxes foresee give carry-forwards? of Can And many you just were explain years loss zero?

Dan Lesnak

One just of that tax that having – up our from a discrete that's we tax our a big really footnote, thing rate that very really the rate, affects biggest a that depletion on item our good overall reduction to have keeps that is, shows affects us rate.

we do, our the we look that If it expect quicker amount tax we're The most of covered next there, our off, you is you'll for but at up year, likely. in what better tax after NOLs. see certainly the runs footnote, still

Jorge M. Beristain

Okay. Great.

push on so, regional higher Administration's the just as one XX%. Do of yourself last that content NAFTA And a see maybe Trump content beneficiary question you of rule?

David B. Burritt

Trade renegotiation and through with the highest primarily a formal, Canada the NAFTA, automotive trade not process. monitoring American North both We cross-border we're our and priority. have certainly Well, Mexico, trade is in

market, process we'll the our Our And Steel the are market. with engage the continue undercutting by to really governments steel don't the more Administration we'll on and that's more of that is of from American thing. appropriate. unfair kind I focus watch foreign trade subsidized the into overseas, have as that. NAFTA than dumping

Operator

Michael is line ahead. JPMorgan. go of question next the from our Please And Gambardella,

Michael F. Gambardella

the declining price, that's and despite the last an morning quarter, congratulations quarters on Yes. the and Good quite last accomplishment. two

David B. Burritt

Yeah. work of Well, lot do. to a getting started. we have We're just

Michael F. Gambardella

your the late back of big Right. to that Commerce The delay? had Secretary and What's he the have Ross nothing question think, XXX, in Why Section President by said would are June, April, end the we yet. I just here the with to opinion? going recommendations

David B. Burritt

I lot and will. them, this Administration, going the do they there's to decision. study believe that them and it heard issue that understands we're right the and it. is to there's Well, action. said want to make what certainly, a certainly they think an appropriate we're come been And egregious in and, We be the they right no And on the the something to going anemic say, to study things thoroughly we doubt. But people want they'll response. response. them Secretary And have response. we've confident that's meaningful understands want Commerce we close this want We why thing. we're This anybody And that the before, has that. we've when across and an fully through right That's strong that want opportunity with confident thoroughly, think to optimistic is don't

an sort I eagerly something through to brought be April. we lot think January the of on has we and by he appropriate to to a know, we think, deciding those. XX, and they it's So, And Administration But things a very be busy we'll will which time have with for response, going for President, get. this it's wait

Michael F. Gambardella

up work. good keep and Thanks, the Okay.

Dan Lesnak

Mike. Thanks,

Operator

Piyush of go line the Please ahead. Stanley. from Sood, is question Next Morgan

Piyush Sood

questions. and Dan. Kevin, Thanks taking Dave, Hi. the for

First next if year? for coal thoughts just Any your would met around wondering – negotiations you've change? how concluded prices

Dan Lesnak

No, we're don't the like we're we're give while same January. we're still negotiating consistent, really we to steel negotiating, you and contracts, publicly update our where with in on I said our with thing pretty going. an speculate customers, guys we'll But

David B. Burritt

XXXX. going in in but our of year in close awkward when we're out to with time, process a this know January. we'll and stay you're XXXX XXXX bit and is updates provide next the you about an Again, I trying year, to talk some get into

Piyush Sood

bridges especially increase is either could items, we of the And of go Sure. and second XQ – decrease? EBITDA, or in one, some if XQ, the if sequential sustainable for to through the other that kind

Dan Lesnak

other On had we the change in is, be not a one-time of $XX quarter in million biggest second item Flat-Rolled, the recurring. said would we

along the They've the biggest that's category. other well. is, way. were in sequential minuses. we've some valuations And the change In Europe, pretty pluses biggest change see themselves up and they had So, netted inventory you the Flat-Rolled, FIFO

out big way piece. that So, it's ways quarter of the Tubular. third for going biggest there. collection items. really different implications significance to small foreign was that's number, different but created for not us of That a second, of difference. just really exchange kind going Also, any – nothing Tubular, was call a there There's some favorable in Europe, on

Piyush Sood

a which helpful. right last you're for it's one probably on maybe little versus That's where focusing this more technologies. little hot Could me, point, at you'll talk about one years? guys versus more if now just industry high steel different to comparing one on level, stamping you headed? are stamping your a the other be cold five And and two but is, bit and focusing which approach And

David B. Burritt

focused that we're we the normal have Yeah, today. on process

So, the strength the squished normal a degrees, whereas for gets forging it the heat stamping where you time the steel and part quick which XX up then our saves steel other into number. press-hardened approach, types is high type of of to like to approach it's customers; advanced more it have

to approach. we a steel X. go for and formability And Of million Stamping you how is the can processes imagine fast. takes really course, there's the is press-hardened XX extra seconds stamping Press-hardened approach versus year, with the with slower. that steel our weldability, normal do type when is that, costly to Gen it good the vehicles have a

basic the difference. that's So,

Dan Lesnak

who customers grades customer pursuing to retooling we the to That's a good And be is the because having net our benefit thing do will adopt our cost for at to think the between they our thing grades. massive we're the why it this, is, not need and them. getting operations biggest retooling lower

Operator

go of And Matthew Please Bank America. Fields ahead. have of we next,

Matthew W. Fields

guys. Hey about to wanted pricing. Tubular I ask

You hold that the quarter. comments you Do think in had the fourth third can given about jump oil nice pricing your you running a in people into inventory quarter down patch? in

Dan Lesnak

For is That's usually the about the most kind business. our that nature a part, Tubular of of quarter out. pricing

Tubular I in expect we say, So, headwinds pricing any would unusual XQ, don't for no.

Matthew W. Fields

balance of the Okay. of And couple sort just then questions. on sheet, a

move of talked earnings, the the eventually about towards more more earlier sort You earnings. call on predictable stable

of level you $X forward might do it level there could business, sort amount eventually billion or you earnings? of out or be think just if dollar that lower be higher do the that have you think you right stable more at cyclicality the still do – think of comfortable out Given the make debt you you would under the a going of stabilize sort in

Kevin P. Bradley

I've pretty Matthew, lot the the it's Thanks sheet over is of on it's that's actually balance been looked question. strengthening. impressive. for years, It of Kevin. last done the at couple the a work

pretty impressive debt the net a last levels look you obviously bit in the If come have year, levels. at little at but debt down

pricing refinancing some the on did earlier near-term we million, pushed just saw maturities, there. about you on this good the got some year so and work debt, all out So, better tenure that $XXX we doubled

efficiency. been at look we has think still refinance percentage been We working exceptional, better at the that's a profile that to environment. think there's opportunities profile We but year looking improve there's capital. stability basis, also could still of made get and rate to better say, be much the there's debt think I into it improve next we on opportunities; progress and we working a capital more the the opportunities ability the on as to financial big of

we're So, optimistic.

done time. we'll good a got there been work by look Dave and this As to before lot improve of it here, acknowledged, I team has over

Matthew W. Fields

comment And a refinancing. may, I if about follow-up, on the

or Is that's July? July in have, callable address bonds, is you XXXX. chance until highest you the we there a coupon in are secured may that one waiting Your early

Kevin P. Bradley

a really think We that close in a our don't place keeping it. structure. We're eye long-term capital on has

the we and address take get to it. standpoint. structure time Thank to And that right team, So, pick you. ground capital out and higher in a from to a go we'll plan as

Operator

KeyBanc is Capital. Gibbs, Our go Please question ahead. Phil next

Philip N. Gibbs

Hi. Good morning.

Dan Lesnak

Phil. Good morning,

David B. Burritt

morning. Good

Philip N. Gibbs

in Dave, tons for target U.S. still your guidance? of XX is Flat-Rolled shipments a million within intact

David B. Burritt

Yes.

Philip N. Gibbs

Okay. Very simple. it. Appreciate

On going to a be sold the coating pull do wins or given one is take it Gen customer going time? you little X think out day of demand with this platform-specific line, is to bit

David B. Burritt

have be we'll excited but Gen it's this. along, that that feel pretty to our commit far X that about we in and good pretty JV this about We're place. we Obviously, hard

the excited we're So, about possibility.

really that to working goes. we're to it it optimistic it hard to well. up very a take do cautiously But constructed, it's but we'll see while, facility we're get have the how fill So, will and obviously, very, to going

Philip N. Gibbs

is question I numbers in my question, of last just make here. of housekeeping what's then Okay. the sure kind a And so more or accounting

a year CapEx bit has So, projection there a reclassification full for now, the been the little the got right of the accounting million? trimmed in but change benefit from that $XXX

Dan Lesnak

No, that's Phil. at, still we're where

Philip N. Gibbs

Thanks it. very Appreciate Okay. much.

Dan Lesnak

All right.

Operator

ahead. Please next line go of from Bradford the question Charles the is And Research. Bradford,

Chuck A. Bradford

Good morning.

Dan Lesnak

Charles. morning, Good

David B. Burritt

Good morning.

Chuck A. Bradford

steel is to is bit I and price pricing specifically of supplier, your you do talk understand your other product have Tubular kind Can about blooms your of which the the seamless pricing the purchases some you whether for or system? Nucor, a relative of

Dan Lesnak

with Yeah. indexed negotiations we who to Chuck, their but our with. mean It for sell We're I like at as business, is don't prices, that. negotiated Tubular or we into we're for people not commercially, get do dealing dealing go. our they're anything rounds

Chuck A. Bradford

also XX%, tax be have Would situation? benefit. your I deferred deferred? federal it's tax have your future eventually might talk the tax you the as If situation? announced you to Can guess down Okay. would rate to about that some goes what write tomorrow, on

Dan Lesnak

into that's have too I that's can that, people and be tax email. to me Chuck, you head, look don't deep my technical, the probably a an get we'd shoot me, bit top little our I but I too – for to off of guess why think.

David B. Burritt

implication, definitely and, we're the as so – so of thing. us. is overall tax evaluate therefore, a It's now. good very this rate tax it. Simpler like to better. But be business, position help continually economy effective for overall other This We right as revitalize is even areas far for will probably good too is early a the It tax to reform good we economy. many tax think complicated, our low going will the have

We have a lot of NOLs.

So good than edges but again, big Gen more need a the it's our be the where would around we're to us, impact. we for focused tax on reform the and But time. a certainly thing put and probably a on focused that's operations X,

Chuck A. Bradford

Thank you.

Operator

And our Tumazos. next Please question is from the line of John John Tumazos ahead. go from

John C. Tumazos

very you much. Thank

now? the the or the changed? product As connections premium has (XX:XX) are You rebounded, north, important I mix business has more in idled the lines other Tubular noticed

Dan Lesnak

and get back of capacity most focus. our on but line, our our John, facility did is seamless. We that's Yeah, certainly welder

us. is You for seamless us. Premium know best are product the that heat-treated product the for connections there out important

line, for heat-treating more was in Lorain. to to of that it taking one are move sense where going it us. We're We the makes other facilities,

having of we're back the and treat running other get is So, at maintaining capacity line important and us. That's going that to for one facilities. up strong heat why

David B. Burritt

Yeah.

as were And really and the as here laterals, to this they're of more they're own premium our said, before number recall, OCTG frac drill developed market. connections, value-added our environment. segment demanding you to – it's important everybody we think in it, suite I the of understands we stages Dan us drilling longer participate that the customers increasing in of unable and

going be invest Again, get be some But it's more in connections. and operations to important able to we've more the So, get us. we we'll premium making ready increasingly the stable got to money. EBITDA, more to first, to

John C. Tumazos

question. second ask I If a can

Tubulars, doing good trends Do now you do U.S. of Europe, business good, you Flat-Rolled is division money? Now attempting and good Košice couple a or revisit all Tubular is sell humming the that that good, are just you nice. think business up, to you the quarters, or would you're need don't think are

David B. Burritt

this. getting started off, well. here. don't do doing first can We we're lot a just just I Well, so think We're better than

can is approach out a kind very knock to this the of have you. This industry We humbly. wind of that

the while on So, day, ones we sight. work our focused to this about, XXXX time with the do. But the same and said care what stockholders. is have to that's we've all it got whoever value. for our this having for And extract the longer-term in can very we'll day sale we before, the to create value If for to we've stockholders, in we everything's at time. the We're be stockholders are

We costs, off and continually to we earnings, than But That's to made intend here some can more earnings get as can of about do to do. And important and say asset be not there's worrying a a decisions, at for non-core management, have And recently a stockholders, quarters, Tilden, value Canada decision, we're going continue do in as have couple whether what so this. value hard this or can short-term while can to but there's this it was predictable to number. game, the we Gen if for thing, improve we things so. deliver get getting good beating have more the that's XXXX XXXX. that's the even we do short-term this to it'd that this safety we focus consistent the of lot as our revitalizing sale delivery hard of and assets, upon far to name drum, and a better earnings of what more and get X assets, we the predictable focused reliable the of on; we we've quality, and portfolio consistent, of the the steel,

to thinking there's shape don't because that a do. have lot work here we're I more there's good want of you in to do. we So

Operator

go ahead. Bloomberg And is Cosgrove, Please Andrew Intelligence. next

Andrew Cosgrove

for Russia to and how ore And you for I But had understand guys thanks about kind a the curious I this was if European buy hop costs, from Hey, I through. my covered right, of taking call. they pellets, mainly off I'm not iron second. because sure Ukraine. you've that flow

maybe there to So, there clarity? an more a just idea, little just is trying mechanism lag if get or a bit

Dan Lesnak

is Andrew. Sure, This Dan. Yeah.

Andrew Cosgrove

Hey, Dan.

Dan Lesnak

pellets it's not indexed, lag our a it we cost through our pricing Yeah, negotiate. It quarterly, it side. not flows buy there. is generally mostly is quarterly and quarter you'll one that we but negotiated. over see But when it's pellets about It's – on so it's

of here. than Europe shorter helps our is is, steel it product also what I term pricing us is think kind in

match So, to through, material of price a it's why up changes changes and you raw flowing more decent there. tend steel margins we see price stable see

Andrew Cosgrove

order if mean around call. that? kind maybe on you know had just sorry, your picking you color I any on with covered one I something of any have about already, mentioned recently but book color Great. up order And books. guys if curious, their again, Flat-Rolled more I'm peers – then respect Okay. to this of

Dan Lesnak

of our because in running we're for general, little tons. bit a doing XX I'd because are limited on a we supply million what assets, say steel it's us different with

not it's So, up go to we're like capacity. fill trying

We match. orders to have the

customer order, our Just contract ties to service our most up base, strong of that our good customer tons.

don't chase and have out at point. this we go So to tons

Andrew Cosgrove

one. at making sure you mean, of a one rig focus OCTG, but and a little I are kind have supply big dynamics just demand that more know just curious, looking that of last then obviously to of bit, completions kind the towards DUCs, relative is Okay. at rolling and I over shifting the backlog we if on count? And count rig

Dan Lesnak

what outlook, the that say if thinking would we're I imply out. for few why probably. flattened think we're you That's I'd market could next be look stable pretty things our has I think, quarters at seeing that there

of say long it that how that – remains I'd seems to be right So, environment, like it's stable how seen. in lasts, that kind remains But long now. this that

Andrew Cosgrove

lot. a Appreciate it. Thanks Sure.

Operator

Thank you. Seth from And the question the ahead. of line is Rosenfeld, last Please Jefferies. go

Seth Rosenfeld

questions the few follow-up A please. you. on business, Thank European

metal help even of and would more understand scale Q-over-Q to in those quarter? improvement guidance us implied think inventory and that into And from the fourth into just imply full the margin second something million $XX the continue expect guidance your contributions obviously from your two per seems tailwind quarter. $XX You and ton revaluation there your operations spreads maybe Can or FX. improving in in quite then reported the you I is increase for incremental a QX? noticed strong else I year to expansion you flagged QX, is you that margin fourth QX,

Dan Lesnak

I Europe, see think to expectation. right expect prices I is This think our and now. would volumes for higher we higher

towards probably the that is reval, The end balance year. inventory the quarter itself maybe know seen. again, of You the what FX next to basically that out we've tends favorable

that It's driving quarter-over-quarter isn't that Europe XQ probably in change. volume a price more So, number. big and

Seth Rosenfeld

That's you much. great. Thank very

Dan Lesnak

some comments. Thanks. Dave, All final right.

David B. Burritt

the investors. working you our Thank of for interest U.S. to Steel. confidence earn long-term every your in We're day hard

delivering focus without our on result believe results cost our stockholders, more stakeholders, employees customers, all we and reliable where delivery for focused operations will our long-term value safety, market short-term consistent results are our of intense being create distracted in We improving volatility. quality, and and operate. on communities We and by and our the

as confidence more work. the asset our building of revitalization that should cost-effective are XXXX to We back our our get time customers. solutions Thank you. longer-term kind we It's to for deliver in give commitments reliable and results more investors

Operator

gentlemen, and do does We Executive conference. you that conclude Ladies thank you. while for joining, your AT&T TeleConference. using Thank

disconnect. You may now

United States Steel (X) 1 Nov 172017 Q3 Earnings call transcript