United States Steel (X) 2 Aug 182018 Q2 Earnings call transcript

Company Profile

Participants

David B. Burritt	United States Steel Corp.
Kevin P. Bradley	United States Steel Corp.
Dan Lesnak	United States Steel Corp.
Seth Rosenfeld	Jefferies International Ltd.
David Francis Gagliano	BMO Capital Markets (United States)
Curt Woodworth	Credit Suisse Securities (NYSE:USA) LLC
Piyush Sood	Morgan Stanley & Co. LLC
Timna Beth Tanners	Bank of America Merrill Lynch
Matthew W. Fields	Bank of America Merrill Lynch
Matthew Korn	Goldman Sachs & Co. LLC
Chris D. Olin	Longbow Research LLC
Michael F. Gambardella	JPMorgan Securities LLC
Chris Terry	Deutsche Bank Securities, Inc.
Philip N. Gibbs	KeyBanc Capital Markets, Inc.
Andreas Bokkenheuser	UBS Securities LLC
Alexander Hacking	Citigroup Global Markets, Inc.
John C. Tumazos	John Tumazos Very Independent Research LLC
Charles A. Bradford	Bradford Research, Inc.
Karl Blunden	Goldman Sachs & Co. LLC
David Lipschitz	Macquarie Capital (USA), Inc.

Call transcript

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Operator

Good morning, everyone, and welcome to United States Steel Corporation's Second Quarter 2018 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.

business and company the updated of website. of release, its Investors close its presentation, earnings question-and-answer after yesterday, posted the earnings section Now, document onto differ forward-looking today's on future Today's projections call. statements, call statements or contains results conference may materially from made and at and document statements referenced the U. and the risk question-and-answer earnings are statements and the included of forward-looking that could presentation end The those company's and in affect factors are the earnings release in S. Form provisions. XX-K on on updated most in accordance reports report Steel's recent quarterly and Form with their annual the in XX-Q Safe Harbor I over U. turn will now the to your conference host, S. and CEO, President Steel Burritt. Dave Please go ahead.

David B. Burritt

the for in including business, state noteworthy morning, and I of accomplishments today's Steel. several Good operating our from We highlighting appreciate begin joining U. thank segments. strong S. your interest you the will everyone, across by us. call

financial review some updated the Next, context our our quarter provide full-year third on Kevin results quarter and and will for will guidance. second

strong that yesterday, we As value to performance, working. our quarter delivered we is create strategy disclosed another proof

on focus stable stronger intense a for operations S. more us create Steel. foundation U. is a helping Our

few our delivery. of our I capabilities, strong jeopardize in commitment we work. safety the are and and assets of with highlight in of are Strong phase remained improvements or early each our the our and increased in environmental the revitalization XX% to prize, to improved and relationships While focus EBITDA stewardship, want in we program, quickly seeing not execution, capabilities, quality are have of which But the asset employees, quality a reliability we towards to moving will investing. we the million We're areas: of the still execution, customers. and the successes $XXX return. XX% our our

effectively managed at Great we challenge both Granite Works City. and opportunity our our at First, Lakes execution,

at Great vessel team our back in minimize quarter the operating able were at was Lakes impact second the of operations to the during with the call, quickly Works. And at we focus the outage service City, demonstrated we in issue As by getting the and first by execution remarkable. and unplanned an the steelmaking We efficiently. steel disclosed quarter shop began the Granite

support result we furnace steelmaking our to customers' operations work, restarted and of sooner allowed win, winning. respond than provided expected opportunity of their our order incidents and a to our any are for This the to execution book. and better needs of As safety hard we footprint us to blast required schedule. an is and B without rebalance is ahead type us to strong This spot that

capabilities. our increasing Next,

and I've Our but opportunities together. customer-driven, for extremely been it our market high win When we the customers their product leader joint value-focused we our to we our in strategic are Last, business customers. are and we solve that the it's GENX strength steel. The quality investment closely demanding issues, commercial value-adding we in venture successful will is Generation worth repeating, work identifying of with reliability. products. X and track advanced our has at proprietary needs meet confident understand before improved are model on our PRO-TEC making said

customers. that been revitalization to facilities long-term have Our on are with success the vital efforts achieving asset our focused

call assets. Kevin? quarter and Bradley to second our are turn improved reliability We seeing from our the facilities value-added at the we'll our guidance. and our over and And, benefits now, full-year Kevin Flat-Rolled to quality priority third at improved highest results XX quarter cover

Kevin P. Bradley

to year. our last earnings in our half today's the a adjusted first three compared expectations. morning, This first-half everyone. positive and over momentum which reportable increased EBITDA Dave, benefits $XXX we quarter, second our half into good All Revenues in of With $XXX capture million, continued the $X.X XX% to our reported XX% on strong of year. improved EBITDA reflecting year-over-year had of segments brings a million, ability the Thanks, quarter adjusted basis, improvement of the market. last of to billion first exceeded

in all markets We seeing shipments has demand in trends End we benefiting serve. and favorable segments, the strong been three XXXX. prices market the are increased from in

benefits We not are now also previously applications the asset expanded through in seeing we we from revitalization our as serve. could steel participating are efforts capabilities that

the a side, few events our Flat-Rolled operational highlight want to second briefly I On quarter in segment.

of minimize to able unplanned were we Great mentioned, Dave impacts at outage the the as First, adverse Lakes.

of also two and maintenance mid-June schedule both at second half outage outcomes, furnace Gary in shipping customer budget. X furnace with spot completed expedited planned the restart we a along increased full at Second, take steelmaking in Granite These positive contract and B enabled under blast of of exceed City, ahead and plans the market of to blast and Works the demand. Number advantage June us

strong Our European the reliable contributed finish operations a continue consistent quarter. to our also second performer. to be and to Europe most

market on are execution beginning be we in of $X.XX range billion. a full our in to our our EBITDA our Based coupled execution, guidance guidance, focus the adjusted to is raising with $X.X shifting Now positive backdrop, results. continued to confidence on reflected billion this to year

quarter, currently of the we expecting For third adjusted $XXX are EBITDA million.

EBITDA level quarter. at quarter fourth pattern the have Our than normal enterprise higher would seasonal third

the behind case shift. We are primary two this this year. drivers anticipating that be not are to There

First, Flat-Rolled This of reliability materials, revitalization will operating result and our part scheduled quarter. at and quarter, kicked is and as with asset revitalization third our productivity the third asset in compared XX-day major actually as This maintenance in the had second of outage, an program earnings outage we outage cost furnace segment increased improved a the million. significant in as planned Works investment the targeting approximately our This of Lakes outage for projects along QX other off $XX furnace. to today. communicated in reduced we well Great cost, as blast quarter is

third XXXX we time to expect versus stronger quarter full quarter our primary available. U.S. have other blast furnaces is the be portfolio first driver will The quarter fourth that where in a of fourth for the expecting

and are the anticipating furnace blast North We not restart in across fourth any second Flat-Rolled quarter City in do October have Granite the outages planned the American the of blast furnace segment. at

back year, the guidance at the back half year the expecting Digging into lower seasonal outage of $XX approximately outages increase We sequential the costs necessary EBITDA impacts. the pattern lower the we in planned in assumes advantage drive take maintenance our market. in each half seasonal to European an perform in in minimize now demand the lower of These are customer of will mid-teens. Looking quarter further to actions adjusted margins million. European our reflects the quarter, third EBITDA segment. This third

the We quarter. $XX Tubular also in The our to lower substrate has performance of million commercial negatively volumes financial impact expect unfavorable costs. an changes mix been impacted increased of versus and product segment approximately by second related

increases begin quarter positive third in through QX. pricing driving to adjusted for flow expect the to We EBITDA

it sheet Before just put position we the in to work want and the capital of have that on I structure I turn back has everyone balance Dave, done to remind the us strength. a

a turn in to of ability focus more initiatives liquidity work progress and it passing to execute for to confident our by on business. we become growth Our our to us inflight do, but back as provide cash our encouraged our that, quarter. ability still each strategy Dave. I'm I'll to sustainable, the With lot drive profitable have opportunities We the on execute and

David B. Burritt

I open additional for Kevin. you, line the topics questions. Thank two have before we

on of U.S. First, of X.X%. embarking the latest U.S. We we as with strength S. the the of economy in evident estimate that. are see second part renaissance Steel U. delighted a a GDP the in was as quarter manufacturing

are A steel We at blast Granite toward furnace. restart now progressing B of are and the City with our furnace, the we quarter of blast fourth the making restart

tubular open willing, increases and and make: of corrosion-resistant, participate in tin and cold-rolled, business the are mill products for ready, slabs. We to hot-rolled, on all we able demand products,

here. Did tin We Contrary Let me just open offered products, and information able media, prices. business and to spread to merchant in and the mill tubular, are to able hear those in the for the of significant at cold-rolled, make willing and hot-rolled, ship willing a sell pause corrosion-resistant, quoted remain slabs ready and that? slabs market false import and U.S. volumes and we and who have slabs. by everyone second

the making our working. are business business we stronger. Second, is in investments The are

our is value to we revitalization we returns way balance are to stockholders. through Our the our achieve flexible, by long-term Q&A. our cash do, that in to is and of are still passing believe targeting in growth-oriented business place, combined a and efforts committed believe asset and our have and strategy but creation that across in of sheet more pattern a to each establish Dan, is to profitable lot improvements generation will consistent sustainable value execute stronger to growth. with more growing become move we We work let's the invest are the quarter. ability our cycle. we encouraged The foundation we We and additional a confident investments when progress maximized

Dan Lesnak

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

Operator

you. Thank

the Jefferies. of Rosenfeld, ahead. from line is Seth go question First Please

Seth Rosenfeld

as utilization? that Should City. expect questions I'd the in should contract Flat-Rolled contribution U.S. guess, of like be it mix City, consider immediate outlook furnaces volumes product forecasting? you business A business we U.S. going in more hits should mix the just understand to into questions, for Good And Thank months? Flat-Rolled morning. how given your ramp-up today. QX you. Granite Thanks ramp for be the in forward I shifting of Granite taking how better also of full the we XXXX both ramp an for and can the and then gradual mix my and to coming couple quick City we should perhaps, the confirm Granite or volumes the

David B. Burritt

There's a there. in lot

say lot lot first to going not about if provide details little he help that what's a Let whole give going us could a it with to me probably But a It's that. be XXXX. Dan I'll color. bit pass just premature for talking on on some we're of to

Dan Lesnak

Yeah. Sure, Seth.

faster the expected. So XX,XXX about than in we running by June we tons hitting got ground

before July. rate a We about yeah, that So we said at XXX,XXX expected be month. we run should starting

there, good The a that that furnace, X. contribution good it's October X; XX,XXX performance a month bring from blast around furnace. progress October A About there. hoping to on So a a

will had. that give more of up will those Certainly, new this a one spot too How much our much what that in contract tons more in year, contract next certainly as determine said, particular take of a us. – wind contract want they spot. we XXXX. Dave really our to lot us going So exposure will need. from is important for customers versus year spot being than customers little A as Like our bit becomes early little customers,

Seth Rosenfeld

on based Thank capacity, you. downstream your downstream optimization to earlier City, was but clear recognizing Thank sell running are on at the you. just you we have to quite should already your mix? or And on Granite internal been that willing obviously side, your you the product third how internal slabs call suite the that online bringing product expect historically, Granite City parties,

Dan Lesnak

I with we do To fill the more a but think, of extent furnaces to out, capacity sell that we before. we as pointed do we slab have our more slabs commercial capacity slabs. seller have have had it. We've along, demand, been all we'll running, Dave – all blast than we

Seth Rosenfeld

very Thank Great. you much.

Operator

The line go is Gagliano, Please ahead. BMO Capital from question next Markets. David of the

David Francis Gagliano

quick Hi. spot under you've Great. contracts, XX% roll us and Can got firm volumes year. given in firm-based of Thanks mix question the my your XXXX, volumes a under contracts. end XX% both mines of How of at of have those actually Europe? question. just much remind versus European time contract again, on U.S. for just the the Flat-Rolled you off of the taking I your

Dan Lesnak

January, the they're so very to, sensitive more the volumes Europe About are three-quarters fixed to look year, contracts. Flat-Rolled restarts. in not distribution, when April. our cost are the of July. X actually, about of contracts based, contracts. buckets Most cost the those be rarely contracts, you would They're And, and we six-month to firm they annual not our be those price XX% Dave. January generally tend Europe, ones are full They Sure, would adjust. at labeled that also rest of all very them tied are

David Francis Gagliano

That's it Thanks. helpful. for That's Okay. me.

Operator

go Please (USA) The next - everyone. Credit Curt Suisse Hey. Credit from Securities question the morning, of Woodworth Dave, Suisse. is line Curt Woodworth, LLC Good ahead.

David B. Burritt

Good morning, Curt.

Dan Lesnak

to an the exit company, market, (USA) of your given view revitalization and cash $X.X you've Credit XQ, spend. of billion, when based that's sort on contract - company, Suisse the of already be pre-funded your the your LLC capital you rate or at options Woodworth book. Securities EBITDA about bullish generation majority comments, guide look Dave, the return $X.X you'd before at close XX% views of sustainable for on think And your of bullish free Curt for the of reprice you on Hi. billion,

going a plan So can an discussed with you usage you flow share authorization the on Do that in I'm you I program? if not comment Because today, have buyback do place free board? forward? cash Have on think implementing correct. you

David B. Burritt

sheet for that in many going at to the priority I respond clear And you to state. think Curt, here sheet can to pursue years the spent pretty balance on it's question, working right think everybody Thanks Bradley profitable a we've and I look and growth. good earned our what's there. have Kevin we've on balance But now I'll first to pretty grow putting and the is

right on if in can faster it. will the for move we the We we stockholders, to company order some of the we improve have our do make if here, long-term investments opportunities faster can and revitalization, benefit

looked fund is have keeping much really certainly the well-funded, We contributions the which other essentially see we for now, priorities, and don't at foreseeable in future. pension that it

these perform best. been these put place give dividend this increases be delight we clear, in abundantly around capability us here, it's assets, they time record to we about when the opportunity things be of long lower rating, when a repurchase who's assets want very we and does these want invest or But all-time amaze avenues. it we And and growth. for would I pursue the and certainly, improve priorities. an programs think to other profitable We in BB-type an credit and So sometimes team

have but And can And not well. to be really do we want competitor better, if so we we the able as can if move faster, mills mills, to a we do. that's with compete be with to we strong what want integrated just to mini

ride we're throwing to out this to from off can well everywhere cash. way Kevin? a cycle We have figure and that we trough peak between where in

Kevin P. Bradley

revitalization, it said don't a good work in We've ourselves It's generational value. the anybody the shareholder We've all his want confused. Dave be Yeah. and put about in a the Dave it to long-term we think smart shareholders. position. sustainable, value pivot good a position made more that's the not on We've in capital, allocation good and terms for we've debt. are really right. We and management looking through, capital We've not investments value team I to of but the be time driving through company accelerate We an shrunk growth ways maturities. sheet. right put about efficient. balance of done shift feel for lot now. long-term to to shareholders. want Right even now, creation now other in company our we're equity-friendly, in we're of real, about create return and for halfway our direct investment

David B. Burritt

this there, the as also And we Granite tonnage with of City, complete upside. And us well and program. strength with what steel. that preference with when get is the growth, revitalization course, our an gives extra and of doing we're extra organic assets, PRO-TEC, for advanced course, we're high some you is That to opportunity going where tons, see of

And ROI focused by areas in Understood. It's - just we're of the step, Okay. and step then we're Woodworth business on deliberate, LLC Granite the the (USA) value the clearly, Credit for purposeful, of those we're business Securities business, it our getting Curt to Suisse done. that creates at high So end progress. point revitalization creep guess I City. capacity and the stockholders most that making and it's on

X.X I million, will You're volumes. another, more. of maybe of City Granite of at tons get this it, think, run you million first half call XX.X to, shipment year a rate close

you So years million benefits at by would think be XXXX capacity XX a of be that you do shipment revitalization, assume could plus? And rate you're year. into next I two from you in some that so harvesting

David B. Burritt

going but add to through Dan, of we're and I to Well, talking asset want the XXXX. we benefits, know, there. not something already a year about revitalization second you we're halfway lot the of our again seeing program spend time are

Dan Lesnak

only X.X incremental year Curt, tons a ship markets Granite about Yeah. are from level. to because remember, assuming we're at would this million And there increase still City going be benefit the the certain

pattern you the year. this we're going four-year to target, the when did hit revitalization, we more on spending think our clearly, look I asset than at next to be year

probably we're So going take additional time to outage assets. some at the

So there's some give to be backs going there.

that's wait were Valley little million So, XX yeah, and lined Curt lot. going outage to a tons. year. XX when as have I'd for the what full say, a Granite Great X.X next Credit Whether for - get or Lakes, Okay. to and stays year, Mon We that run we bit, tons projects. up expecting all to a million next Thanks asset from this stays our Gary, rate at add (USA) see year Suisse LLC plans creeps Woodworth we'll Securities happens revitalization City

Operator

line Piyush Please we next, of Stanley. And Sood, go ahead. have Morgan the

Piyush Sood

guys. me. A few Good questions from Hey, morning.

one, was rag versus First yesterday in a weaker ago. trade article a about talking OCTG an reputable prices there month

Some ton; down demand quotas? instances, than is and than that. Could some tariffs grades anticipated? on comment per down why weaker despite you falling import $XX in Is (XX:XX:XX) prices, maybe more pricing

Dan Lesnak

Piyush, Dan. this is

in order that We haven't book. seen our

I at in that have our not book So but their seen this are, know order where sources we time. don't

Piyush Sood

the if books? possibly terms prices those in it say were lags of Let's order are what looking through kind of through weaker would industry, when to sort flow permeate we at your of

Dan Lesnak

on of us, a we Tubular most our business. lot for one-quarter have of lag Generally

David B. Burritt

think in right to that order not I But now. our book seeing reiterate again, impact we're

Kevin P. Bradley

in and through my in remarks, of earlier in half. actions the QX pricing EBITDA-positive actually seeing starting From in QX the so took Yeah. turning some flow we're Tubular back opening us to we

Piyush Sood

had Europe moved next haven't That's seems the We quarters. tons you And like seen then in saw the the we Flat-Rolled last that to XX,XXX in half helpful. about it from last year right. segment. XQ, first and question, All three in

again to paying changed you if if start duties that what's will that also, these wondering had continue. and Just you're on these imports and and

Dan Lesnak

balance particularly the we've some over Piyush, with we're Well, Europe help I here, slabs here. the think, to on brought periodically assets from all work doing

So going we're Certainly, there all across but and moving them. place, a was. steel that's in volume paying if we're it small are that to be tariffs borders was

Piyush Sood

last one right. And on All me, is this pensions. from

Any the off XX%. some it topping shift is closer Your onetime above could to burden you funding? now company with fund an pensions of ratio insurance by to maybe XX%, possibility additional your whole

Kevin P. Bradley

bringing Yeah. pretty improvement sure Appreciate excited the looking company. options our We're related at we've you that We're all coverage. we're the further about up. funded made to to that de-risking in make

that looking nothing that So, to you company at team de-risk but can on further of we a a in area. as lot today, the management promise I time spend optionality

David B. Burritt

Yeah.

if think back I $X.X look years, five we what? Kevin, billion...

Kevin P. Bradley

billion XXXX. in in back $X.X unfunded

David B. Burritt

here. ...and we're line of seeing XXX% to the sight

feel we good about strongly about the way managed. really has pension the So – been the the way

Operator

you. Thank

Bank question of Next from the is line America. Timna Please of go Tanners, ahead.

Timna Beth Tanners

hey. Good morning, guys. Yeah,

Kevin P. Bradley

morning. Good

Dan Lesnak

morning. Good

Timna Beth Tanners

to couple things. of a ask Wanted

of you upcoming Anything I color if that's touch how hear remind can I'm progressing? missed In or it. didn't on discussions, tell regarding sorry regarding the us labor that. I of the timing you terms us about that of

David B. Burritt

discussions. here pretty we're the September with Steel was a due, X workers. is becomes the We had sound-off much Sure. U. S. some Yeah. actually as meeting expected. contract and excellent when having It

we pretty pleased this kind with where this of some meeting to good more through And need of do. point. work at We've we we're be frankly, the look to going are of I'm to feel without pretty disruption. that I the minds that a have to able we comfortable think I got things of work course much at.

everybody closely to was together And company. have great key relationship of our very to and and to we're can work membership aligned And committed gives succeed. this completely I important that safety. we comes to with it that I there effectively it learnings. been think very that they rally they've advocates knows as trade. is the We're think company when helping USW the We one both the

So we're this year. looking to and encouraged where negotiations by forward we're we the are completing

Timna Beth Tanners

are I on just And at into I you about, we you like stake fully that. Okay. could looks annual discussion timing to usually it X was us, then, Thanks – was January XXXX That's hoping slide And for annual. just if want appreciate but what's during Europe, you is Flat-Rolled, of I XX% those your amount contracts, really XX about have contracts drill the the might and Tubular talk April. decent for and understand down business you and on of then that restart again, your for to said on be the of to think, up then – October-November? And But think what is said that remind rest renewal a percentages XXXX. helpful. you've so of could it of don't it contracts on

go the just wondering a coming quarters. through more up could about you in several what's next color in bit So for little if renewal

Dan Lesnak

I Timna. new Sure, pricing. quarterly. Yeah. ones not volume Tubular, This tends be be in were six they really than aren't is There are Pricing months. tend Like Dan. that as far the as pricing. arrangements Europe more to no fixed annual to said, On but

in I yeah, side, the on in rest said most Flat-Rolled based the about April. So three-quarters fixed I cost of January said, reset X, the the of

restarts go monthly to have those negotiated the adjustables, with those. On also quarterly

a said there's amount fair (XX:XX:XX), like reprice. I So, that we'll

what's I and monthlies mean next spot also else. to play determine that'll how think anything cost and out do going the questions year kind of our the curve than more

Timna Beth Tanners

be timeframe, But expecting fair? Okay. is the Is bulk those we should that then? when October-November discussions Flat-Rolled of that

Dan Lesnak

the and end what's our quarter stable them start are the how probably and on soon will are how Usually dictate going done. going will things and we how on depending markets conversation get of fourth

Timna Beth Tanners

you. Okay. Great. Thank

Operator

Okay.

Merrill America Please of Bank go Fields, ahead. Lynch. Matthew have we Next

Matthew W. Fields

comments rather rating. to of your in the that quarter. I cash quarter pick I credit sort Curt's maturity in free than that some waiting cash? the pay know to you out intention on question Hey, these at out third purchased the to in flow mentioned you XXXXs XXXX and earlier and cash. priorities the on your it paying in the saw focus them everyone. way Appreciate to along until these of Is down BB

Kevin P. Bradley

Kevin. the highest our It for goes next Thanks It's anyway. Yeah. current It's April Matt. That's X.XXX%. Hey, question. cost debt.

So we're to in $XX July about proactive up about of in so $XX of through we on took to the these million end reductions those try June, on go in out we and things, bonds. be kind did and million

we've got paying We they million left. so debt. So get premium was highest prudent. think we're about basically a little out $XXX current go Again, in it And bit that's of a April, our cost to our strategy.

So...

Matthew W. Fields

little from bit will kind how Flat-Rolled pull-through or there Tubular the Okay. one extra decrease, and And Tubular. your of give sort kind hardest things how on maybe increase us some this to of how are the this the Flat-Rolled be rising is expected interaction stay and and then, Flat-Rolled the think out is of profitable a spread interact quarter tons to I comments same? between expected growing of of prices, model OCTG With can Tubular for you help us next to and and about of

Dan Lesnak

This Dan. Matt. Sure, is

really for Tubular adjusted business, part sourcing the seamless rounds that from The sources. segment. our is source welded But bigger market a volumes they business, for lot. on which the of doing the We're the business, they're Flat-Rolled their part So, of piece monthly. do of the the whole pricing, the move from business, won't third-party at right now,

operations pretty welder running have counts. stable with been Our rig along

more onshore counts high ramping really facilities it's been than for pretty been the because half, a So, volume a now. price have that a have markets upside with service for that the up of those back Tubular while upside rig in the our

prices. I do welded from tons Flat-Rolled more it's of those say price the from on But coming I'd a benefit So come said, flow-through market pipe, at as Tubular.

David B. Burritt

seeing should half we'll see be we Yeah. alleviated able to the been to challenged get was be as that be There's back outlook provided margin in should we compression hit But positive. that we that previously. the and we've and

Kevin P. Bradley

and million at to that, talked million, January so of year, add be but bit $XXX at the we bit expect a Tubular when the the out our probably full had to but we by little about $XXX for light Europe. a about about Europe to outlook, on $XX $XX little Yeah. originally million. million being we offset with in came And strong positive, just Tubular in

segments. of push between two So kind a the

Matthew W. Fields

sort the Okay. one mills? of of from question, integrated That's forward? great revitalization Obviously, progress the separate balance helpful. yourself intend business IRR then, Without that's last kind you your on U. product to jeopardizing of sheet, lines, peers, But further I our And how you've your there bigger-picture capabilities, if are whether the should may. made asset you that other in mini like or S. priority seems in be think highest materials Steel investments. other of terms other going do

David B. Burritt

new this think, I X Well, this for our of Generation steel; is line Yeah. continuous us, a X differentiator Generation construction galvanizing at PRO-TEC.

Recently, Enlightened Research. Enabling this the at automotive (sic) Automotive there. Award Management said do Technology As of presented for I leader Altair the (sic) Center And for Seminar are earlier, space, [for] well. won it's we on the we by we the very track and Briefing in [Enlighten]

things So we're that's just doing. one example of the of kind

faster, can leadership want we this. need end, that's will. we focus this got money made, steel moving the and I certainly to forward. is move the this if on high we have continue So But this to advanced And to us and push great we is right is think high this to we and strategy, where a be at strength for so that hard

Operator

we have ahead. Goldman go next of Please the Matthew And Sachs. Korn, line

Matthew Korn

morning, Good everybody. Hey.

warning of you've at you on are you quality improvements Could about. costs the would reliability, expected in your or Great the So lower costs, projects a at quarter, now XX? project quantify lay for Lakes goal, and where repair what of you been as relative slide which there measures work upcoming additional facility, instance, result? either For all throughput in as to the lots us scheduled out the terms

Dan Lesnak

that is of Dan. entire ultimately of tons all Hey. as the the through we're talking Matt. is projects system. That's additional total about. complete asset part revitalization scorecard Hey, more This project we That where we'll get

through get entire entire revitalization. part going So not project. asset this one really much any really is that of how numbers one better What talking the is gets. discrete system matters about just to improvement we're for We're system

Matthew Korn

got right, All Dan, it.

look this. sure should year is maintenance outage about expense years? and and should Let these be Overall the that next schedule last ask there like on XXXX, me And anything thinking account for? there we what couple relative of to

Dan Lesnak

pretty Hi, you in total, total expense mostly at piece But normal revitalization pieces, probably say maintenance. small too I'd a stays tell. it's when pretty Matt. of soon to the And, our asset Certainly, our that's that Matt, percent look flat. of

we hot for have think may of the maintenance note which going have year. year. to makes would wind there costs the too that this be actually what normal is City really only done get But bulk really on all yet I certainly up expense. The for running don't so the number will I on that kind that planning didn't the soon thing have And maintenance to of up an schedule. for still entire our we hands that We'll what's Granite be

David B. Burritt

capital now revitalization on the XXXX Matt, That's the peak right pretty clear additionally, news. would side. for Just year be (XX:XX:XX)

Matthew Korn

guys. All right. it, Appreciate

Operator

Please next have Chris of line the go we And Olin, Research. ahead. Longbow

Chris D. Olin

morning. Good Hi.

David B. Burritt

Chris. morning, Good

Chris D. Olin

of starting moving I'm would side contracts. to are on customers from know terms Has bit automotive X early, the they on maybe months limit the want else a maybe curious contracts, XX anything follow-up your I question you to to anybody it's months. instead but to hear changed X there? those Just do little on a to quick that or like if

Dan Lesnak

competitively relationship We just that really our that's detail. of don't a of go into kind like we customers. to Chris, say also, our sensitive. lot And respect much very with I would

to pass the one. So I we're on going answer that to think

Chris D. Olin

at marketplace of South XXXX, Tubular? the already these going have away? or gets And Just to that that's was think XXXX, import me Okay. that I'm put on into a some import been of trying were warehouses understand material what Once be trade about that bumped against I how touched I'm Hearing has that Fair landed you about it lease looking this market, for their dynamics anything Korea material in diverted under assumption forward. up does the with? producers the that then, How means and upon OCTG quotas question excess in help deal. can can't within that some disrupt they should that within this enough. that agreed

Dan Lesnak

we direct customers I our we pretty that much But us. said, demand there hard as as running there's part. we for most impact know as We Chris, can. enough to a facilities the have from don't stay our think we're think I to

happens, comfortable year. what I'm when our are unless pretty next Inventory a see I don't quota up, But aren't shows in us But going there's Certainly, fluctuations changes. we'll a up. have it we well. So this on upside that that unusual. pretty – at sure them running facilities see the it but we're of point. like We're to year running said, what not next for agreement that market shows to volume lot happens be

Chris D. Olin

was hit no There impact when that Korea quota? South

Dan Lesnak

I said, we pretty us, for were already. running full

prices – why back to room that's quarter. didn't But fourth really Yeah. to we volume. better the half price perform Prices the expect are see the take have on more we So through benefit. in some did we

Chris D. Olin

Okay. Thanks, Dan.

Operator

Okay.

have the ahead. we line of JPMorgan. Michael Gambardella, Please go Next,

Michael F. Gambardella

Good Yes. morning.

Dan Lesnak

Mike. morning, Good

Michael F. Gambardella

the guidance start-up last annualized Just nearly quarter billion, out including that new put don't the fourth you quarter. that guidance, till the (XX:XX:XX), run EBITDA of City regarding have your largely that quarter new some $X.X you contract in happen from night doesn't costs implies of first which rate obviously a – coming still of Granite the also and the have fourth have the you assuming repricing a

is almost months quarter, $XX on stock a situation the administration's which a the lot price? The back. will of assuming uncertainty; that will kind trade your view run of up and some stuck assume a the of fourth What's surrounding value away, worst holding annualized range, view market's trade Trump the the form uncertainty here obviously, how the scenario. on stock April in So the free billion trade there's and up a since is how mud $XX, stock lot you think of kind couple that's in $X.X higher EBITDA case end creation in of the of your in only rate and

David B. Burritt

just And is and the has the And visit actually to well think ago. He this. for of taken us you this this happen. great America. he we is the question. got United of tell that of with knows we care we're can incredibly good that should've guy I him S. the He's do States support everything is there been exciting to that He's U. commitment unprecedented. unfairness for was long and This from because and steel going this for blink I would kind that to to notion not not an thanks his Well, had can as president going daughter is just Steel.

to a if to to you got want strong steel You've able country be have presence. have make to manufacturing want a strong and you

kicking with organization be supportive. down trade of view And my is we have years. lot administration So and will it take advisers and years it courageous secretary and of continue. to blink. future. so addressing requires expect seeing to and We president many discussions the expect that's in continue the it to here he and situation be This the is foreseeable expect courage we now we had than so can other every and We the committed the hold a to finally leadership that. now it's gave fully are. commerce the and indication that rather the other I him happened as don't We're for He road years

Michael F. Gambardella

Okay. Thanks very much.

Operator

line have next go the we Chris Terry, Bank. And Please Deutsche of ahead.

Chris Terry

Morning, guys.

at I about more implied step-up wanted detail it's midpoint. guess the $XXX XQ Just million a get to bit a on guidance, the

you've City, think Furnace then I stepping XQ that starts and A Just there, Granite in about, be versus spoken million think it's moving outages from there the the $XX outages, shouldn't then million XQ. parts the I about contribution. the EU the and EU for $XX through

I or at a close to the pricing, into flat on your that perspective? year full close you from get all for that put $XXX you million, comment So can on the so what pricing to assume you're on guidance you've

Kevin P. Bradley

year. in not my to be probably in opening We it, a accurate you're there's outage Lakes going work Yeah, QX, recommending. That's least on at on right? do been Great I blast remarks. Europe in is of significant quarter one step-up referring think in QX. know amount to the I the fair first so have Europe, furnace going the case explained the through impact, we're planned is Timna has from planned now, Work something I Europe. went But, that's in not Extrapolating again, your for math out the right yeah, as full in

from continued. I know impacts administration on comments agree business, with support we've You although don't know be, seasonal impacts, We the cetera. QX the to pricing is Dave's got where being fully necessarily going mining et

really in So quarter expect to talk the going really by to QX. on where QX, is really Works next we're outage year about cadence Lakes Flat-Rolled but fourth having the big all the QX furnaces the not in Great we be, driven American in and North

Chris Terry

Thank Yeah. you.

Operator

line of KeyBanc have ahead. Capital. And go we next Please Gibbs, the Phil

Philip N. Gibbs

Thanks. morning. Good

David B. Burritt

Phil. morning, Good

Philip N. Gibbs

Hey, wanted pillar expect Dave. that like on to on EAF. the hear more seamless any it a key seems because structure I Fairfield be in could down driving side? Should in just we some about thoughts the it the Tubular cost

David B. Burritt

to make see get make We business But of the of to if, not folks to its labor want for different we working sure foreseeable stage have confident a is the we've and That's EBITDA great through stage just And for I agreement with a other want are Tubular businesses performance, need of we're think the business. labor this business. need need also a question. the it's at Tubular question to that when. we positive this the and gates alignment. it's Yeah. and that with sure and separate Flat-Rolled said future. we one but before, very have aligned this positive agreement American like a number it gates, we we've North And aligned the the that thing with They're

big to But one another. arc And we're dilutes through need kind soon order that in have XX make goes everybody organization it left to about we one because $XXX XX, the stage the you the performance on get of million as electric that to progress agreement complete furnace. on ready over think it have of months turn we we to gate. to as and can't I You know spend, go to

Philip N. Gibbs

in money not the And situation? thought I had you to Thanks, profit a in hasn't how terms last that if comp. segue, night I direction, changed of terms stream, being alignment. really would cost And losing on other QX talked that maybe increased a terms business actually related in division Tubular the about of Dave. – saw stepping would step-up incentive your bridge, is just I of in QX, its versus that you in be a in think that up. actually in

Dan Lesnak

the was under U.S. I covered one all point Phil, operations making. Dave the are think now, Right that's agreement.

now big us entire right the differentiation it So is And for calculation. from the it's employees right as all but segments one no now, one results now. the have our U.S. segments. for very you noted, There's different U.S. calculation population right for

David B. Burritt

workforce This We where to together get have and is rope the just we won't and the non-represented represented And the to versa. management and vice need same represented alignment fix issue we reward pull metrics. need need on to that. a and we situations get have will and any

this on trade, safety, on of working doing And we what together. everybody's when we're on benefits when the agreement. like accomplish that, doing rope anything like on we pulling labor do that's so, There's lot through isn't we're there we're means And can't a that together.

Operator

And next UBS. is line ahead. question Bokkenheuser, go Please from the Andreas of

Andreas Bokkenheuser

good the in EU Thank going this half second an at Europe a you settle good you generate XXX? on how between Thank elements in you in dropping terms you you're end bit going market, outages talk measures question growth you at Thank of in White but trade and taking or that? higher all the Do with these very problem into opportunity up point in safeguard as think might on basically up trade you EU prices to how guess the challenge second I of be EU been Section agreement is you and in view first That's market question. secondly, tariffs in time? half that you the some in for EBITDA year or look war had that response key they new to the talking being do the for prices? QX, Would view there's and about the do planned positive if it And you also the to a this a view in lot much think U.S. and House the European European the a you question. for volumes of Quick a of QX very obviously, would morning. potential actually market my basically then much. ends of

David B. Burritt

going a a been for measures. has country. of here comments supported safeguard by commission at in for per evaluate the take country applied the are product, in definitive the a think lot be which of it questioned states, The This expected imposition several is not global that per the quota position very, and whole there's phase member soon. measures with measures here. about reacted will that these me so is quotas our it form definitive trade the line very EU in in let cases, you shot there, a of to the Well, When preliminary provisional

the just and But the do much the said be as the So year, there, Kevin to VX. in the so EU I big don't that is the think not than illuminated. as U.S.A. said just impact expect because what a outlook our the pretty earlier between we far within within USSK that impact it's as reality we sells much we EU, better we operations the on

Dan Lesnak

trade everybody completely Yeah, at good look market here. is caring we is like for caring free EU and agree. about that's is the I it their think just The it – way I about probably

of positive is extent So that free as incentivized. conscious sure European they're business our we see what's that for to trade a the making

David B. Burritt

the don't has resolve sit thinking and our And that this sidelines just if to you it president think I don't everybody anything. table stuff. We've do the to got passively anything, about right. get you on And

the be should result this of talking as it a we big us as going more as can there's said to that. in environment I to don't are the United as the is here the not country going trade case, a So with about table, fair for leadership. he there and any we're the has European a his deal implications XXX habit a in But bit that through he's that to earlier, thing States. to is doubt on, people But the table, to actors a been doing people sometimes and what especially finger bad we'll forever. trade all And the President important get certainly everybody the have working globe trading about plus be of his getting it, putting get said, think it's be a who this unfairly for in priorities most trading disruptive. the

Dan Lesnak

And out one to thing little time, of We're queue I the would running long. just so pace the picking try pretty relation up our say a still is in we're – bit. going to

So talk I you through bit today. to move chance understand move get that a a everybody for I hope might you so you can guys – little faster we

Operator

Citi. Please next is ahead. go Hacking, Okay. And Alex

Alexander Hacking

quick. I'll Good morning. be Yeah.

done was have Granite first on it The the that revitalization will be required or that done question there, you. that Thank subsequently? that's work to something is City, was while closed, just

David B. Burritt

that just say, assets. business; can doesn't But them that. like assets way mean we have City, not in of were as Granite were on the didn't money City I'll No, to a won't really assets. something figure in out to facilities allocated shape; a the much those Granite and and They better better further we revitalization, and or million invest grow if $XX these we asset newer maybe bring faster lot along

Alexander Hacking

would and you of OCTG Tubular, continue on better XQ XQ catch-up lags at given or than mentioned stable expect going to the XQ, then, be pricing? that XQ, that And be Would that better Thanks. into between substrate. you some Thanks. in Okay. trend to is

David B. Burritt

better. Yes,

Dan Lesnak

be that trend quarters. both Yeah, through we upwards expect to

Alexander Hacking

Thank much. you very

Operator

we John next Tumazos. ahead. have And Please go

John C. Tumazos

the Thank any be City What up? quarter operating do you Fairfield? books do will the rate expect keep you you fourth the in much. on with And still very Granite capacity for

Dan Lesnak

dismantled. has John, been no, furnace blast Fairfield physically been destroyed. the actually It's

will would system-wide into talking anticipated said that a imply assuming and will to book. fit be City our based order we're good demand shipments overall Granite are think I that system probably XX%. our in there change, customers on close it'd the – about, I our (XX:XX:XX) doesn't

John C. Tumazos

Thank you.

Operator

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

Charles A. Bradford

couple A Good questions. morning. of

revitalization about all, to number it's do in with of program, capacity the what XXXX First completed, that your the and what employees? when will of

Dan Lesnak

Yeah. This Chuck. Dan. is

right ship efficiency So we'll Gary, more change than reliability, It look drives have consistent primary that It's Lakes, just Mon less our more of Valley, that that and to able tons focus when be out count. now, doesn't million that facilities performance. more expectations now. downtime, incremental at Great an the are we the we head production really those

Charles A. Bradford

the affect stated But or capacity the just rate? operating does that

Dan Lesnak

capacity, our capacity higher The Just just expect new at able the to capacity. operating a we're be utilize rate. not We to existing adding rate.

Charles A. Bradford

Okay.

Where you been from? move tons Second NYK iron question. ore seems little to from did be... ship a XXX,XXX of for to a In Japan, there's report come that that a far iron Ōita. that Québec ore from to It hired

David B. Burritt

(XX:XX:XX) come from? that information

Dan Lesnak

are of And, Chuck, commercial we say, I we a would international just clear iron we've that seller have been ore business. and do

we've into about now. iron the seaborne right of international Minnesota market mean, talked we – out sell contracts. it. I have do So, We We ore

Charles A. Bradford

Boy, a $XX pretty freight expensive. rate, that's

David B. Burritt

making... We're

Charles A. Bradford

you. Thank Good.

Operator

the of Please from line Next is Goldman ahead. Karl go Sachs. question Blunden,

Karl Blunden

Good morning, guys. Hey.

sheet on the one quick balance a here. Just

to spoke BB You desire a rating. to get about

show to do along to a costs chipping to or based conversations, progress an at XXXXs, your fund, with on as the that, pension agency of immunization also Is of BB the think reducing need been you earlier. you get You've further discussed enough on that rating, away you business? those that's

Kevin P. Bradley

of the Technically, So a on comfortable, basis. through-cycle the performance already business, sure that that of we're we're thanks we're right? meeting for in criteria making those really the there It's question. terms

about as So make that that sure maintaining we're spending are level. a lot of they we and cycle, will do how time that cycle, thinking we things

do terms basis. we're so that going can credit beyond that's to in variabilizing why sustain a work And our there's market go probably it to rating-type BB cost in through-cycle there slightly current then, metrics So on of structure. we

Karl Blunden

we've then, And just spread, when or given investments, looking as organic longer-term you. rates, how price on do you at calculation Got a that the about hurdle you assume volatility recently? the steel seen you're go your

Dan Lesnak

expect where we of cash, on – evaluating capital. cost Karl, here something's We are focused part create make to We're worth we're the be market cash generates. We're our value. our just looking our assessment what say, we looking won't certainly, at hurdle DCF-type be. But to That's on projects, at we're would rates of anytime job. on values. I spreads

Karl Blunden

you. are Got consistent hurdle rates spreads, – that baking just those the current in, you're And or... then, return

Dan Lesnak

vary cost is. Definitely capital, that's going our it of higher how discretionary strategic is a how by than to project but and

Karl Blunden

kind spread rates, or of then with down the bit? are those And consistent current levels, a

Dan Lesnak

when We investments those assessment have generate the their in are because to we to the returns. to make where future, an on be market expect going that's

Karl Blunden

Okay. Thanks very much.

Operator

the Macquarie. Lipschitz, good Inc. ahead. Please Capital have go morning. of David David - we Hey, Next, Lipschitz (USA), line Macquarie

a of either and the like – European things rumors terms with quick the back in or What selling like there you question Europe Just here are your a thoughts of stock that. that, while things Tubular price was selling or assets? on your

David B. Burritt

It's Europe say would and them consistent at they're sale the that a for are right our any can we I reliable. at assets Europe outperform. I assets that we're with have time best is happy sure stockholder In well. asset asset. always think to USSE quality we've delivery. price all but tell fantastic in It's performing right It's said I the particular, create this for the continues value, Eastern you of now, and very to

seen great the it's now cycles, we So in to when especially improving. past be and through back, talked improve a we've this should and bit it's We've – the already rig better days we're and expect And those makes hit the but a heck we the try about substrate so coming come it asset. cost lot that's back. a the business, money, getting an you to business counts Tubular see see with – that delta absolutely of

rig I pushing think counts over now, the towards X,XXX are X,XXX.

to So getting back it's times. better investment

assets Inc. and do that and good are and we're somebody those with compelling going running a assets assets we're (USA), David to Capital Thanks. the - perform. unless Macquarie continue make comes Lipschitz assets those offer, both to So

Operator

no this at we questions in have time, queue. further Now

Dan Lesnak

to Dave, have for do remarks us here? a closing want you

David B. Burritt

our Yeah. and day short-term everybody, but think focused believe day our this, joining without in communities and our on quality, for in and on and today. in and all long-term I We safety, value Thanks, create more focus very where working being customers, know for by our we're we market operations reliable delivery distracted are results the And result stockholders, and Okay. the intense hard of volatility. improving our all results stakeholders: employees, delivering out us consistent you cost operate. will the

far, value so that We kind progress give should customers. we you. create our are and in for ability to employees, confidence and XXXX We're won't for results stockholders. eyes by prize for cost-effective It's solutions building more off the our pleased investors customers, the work. our get our reliable us our our our Thank delivering and to with to time back take of

Operator

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

disconnect. now may You

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