X - Earnings call transcript Q3 2020 | United States Steel Corporation

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Operator

Good morning, everyone, and welcome to United States Steel Corporation's Third Quarter 2020 Earnings Conference Call and Webcast.

As a reminder, today's call is being recorded. I'll now hand the call over to Kevin Lewis, Vice President of Investor Relations and Corporate FP&A. Please go ahead.

Kevin Lewis

Great. morning. good and you, Thank We appreciate in continued interest U.S. your our earnings call. and welcome quarter to you Steel third

and our On with Vice President are and and for some on Christie the that U.S. and Chief third to CEO, on be call Breves; are Officer, materially. also uncertainties based Dave let quarter call, our yesterday, results. and me webcast and call found Fruehauf. SEC Strategy and this and you The remind information the link risks our vary that provided of Burritt; Investors Rich a Vice business our of we described walk release future assumptions via we subject today's start, Senior and through be will Senior in After President we me Development as our slides today's the actual CFO, close filings, will and earnings certain slides and select forward-looking section during website. posted website. President this before morning include But Steel may of number may earnings can call results under statements On presentation

today, CEO, we President X. today, to in turn Steel today's presentation conference release statements and press would like our Slide as I as U.S. now actual yesterday, on them Burritt call to and and to update the made that he'll the with along remarks we Forward-looking undertake duty over are of issued Dave no begin events unfold.

Dave Burritt

and for Steel. in Kevin. part being everyone, today's Thank call a U.S. Good you for interest morning, you, thank your of

quarter third has a of optimism. continued to The quarter improved be

I we've the to before the progress investment to in about you also get lot our report. progress on a tremendous X Steel for one-year to more But high-strength an year, their optimism We'll Generation of and more Big impressive. anniversary to and line and at to through first initial we value Best unpredictable accomplishments take progress steel questions. want about Steel Big made that a moment River proposition. tremendous The creating for our River together. U.S. mill thank unprecedented the teams marks teams the been advanced We with into an making have Today of for now customer unmatched mini and update that open making their much your detail have collaboration, Both a

thank unmatched and you steel GENX future Steel the So the I'd customer the to three get innovators an fast first the away our from teams high-strength enough you deserve. are stockholders to to messages Both value, our remarks. for for proposition, River advanced demand and creating value of we Big mill like mini take There deliver our a Steel prepared to Best customers making U.S. main can't and of at

Let's one. get with started number

confident book First, XXXX continued conditions continue quarter. the stronger fourth the of the our We our We rest last year. we order believe on of are quarter based are collaborations. will performance as the optimistic can strength about the into first market through and market recovery and believe market customer has for

Christie by of for complete product delivering and execution significant Best in third Second, only improvements our milestones cash we third, able process strategy. optimistic later. the world our been to about Both unmatched will in COVID-XX optimistic And quarter. as Europe, improvements customers. we we're of XXXX, response of optimism flow significant continued are fourth strategy about and but U.S. will the Both Flat-Rolled about of quarter, generated reaffirm seeing from talk innovation we the Best in the rapid have further generate Steel we to free also the We're our the Throughout our not which competitive future

Both of Best our about X. more on strategy with Slide execution start Let's

We good at personal are remain and in year's stop Days coverings, the physical spread track setting to to Work on emphasizing last our distancing, Away virus. of face vigilant performance. from and hygiene record continue the to performance, operate on improve We COVID-XX industry-leading safety protocol, including

ended by cash free $X.X the of with nearly increased million $XXX liquidity reducing actions we earlier third addition, of quarter fortify quarter. $XXX working generated by balance We in from in to from ABL improvement our significant over have year we've after the billion $XX delivered million. cash release we in capital. $XXX the and million, Next, took primarily this and the the the third million borrowing generated about cash We flow cash of of sheet, operations quarter

also XXXX, ore before the critical million related of year-end. about we of While agreements iron $XXX monetization to navigating executed our

completed We Best of slide, successful celebrating our of also most our want milestone arc our schedule. spend reduction Both a is on million goal, of costs accomplishments. Both month, on this our few $XXX Fairfield, this fixed ahead to major electric last remain delivering of which focused Best strategy, minutes we at furnace startup the Alabama. I on the Earlier of recent

our startup time Big River EAF to team learn Steel EAF part the points and delivers Fairfield team value EAF on EAF to our of reductions. proof best with customers. efficient driving startup. making cost The ways commitment completion River two add process, of new our our strategy the and to a collaboration of Best our we U.S. and while capability to Big of Both steel significant Steel sustainable footprint can the safe practices at As The with operation our provide ensure spent are Steel to

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makes producing of steel, the of This a the in possible are of partnership. solution alone customers. first once think integrated a We grades for didn't possible many process. steel at grades let provide from our We only year mill, winning through all mini for thought a can

our achieve is Big ultimately our through it EAF. Now customers their carbon U.S. value goals. demand This to differentiation green doing the unmatched River with while will steels customers and Steel providing an create low for through

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steels steel As that shows, at offering over Big of working making XX Phase the pursuit grades the X proposition, X. change Slide months Big X we Slide also meet to Phase for will qualification are growing certified This value X million on delivering through completion of going and demand River’s targets. expansion, in the lead customer on superior from team. together. two green Big River the sustainable bad ahead process. steel River is one Not schedule, different management facility. Big the are sustainable steel climate the The will River thanks tons At of only steel expansion for project of produce X gold decarbonisation of including collaborating of year

benefits value leverage and operating Big completion and X is Just expansion unlock should River of Phase line. drive near the that as of underway. they significant reach to a straight substantial the will bottom expansion of efficiency full will the few go This production. the

exceptional can continue to confident We so ramp significant my operating that progress leverage management This making Steel earlier. mentioned we to are second me together. production we River are point at and Big I efficiently will brings that and safely, team

sustainable why We and months. we that has been underway believe optimistic market the continue demand today's is about X, recovery next are Slide into past confident. are summarizes year. We the will several for

to are restocking future strong change to rates vehicle have in and example, COVID on Take movies, low automotive exceeding been with September demand dining for while a home across will August and projects, concerts of and Meanwhile, vehicle production. is have customers limit Steel released Tuesday, and vacations, interest purchases appliance the steel to improved today and OEMs, XXXX. by more strong sales report, X.X%. reporting This our X.X%, report and support continued which noticeable in end in led patterns durable induce increased will steel both see improvement has which demand the supported in spending demand. compared by As by goods increase out replaced we markets forecast expectations demand up inventories. low opportunities

other packaging. are steel such We as appliance U.S. seeing this end markets and across

These confidence lead and These further plate reinforced products today's bottoming extended current be are are current current rates plus sure strong likely prioritize Improved restocking near also are the data suggests continue statistics, to supported the demand our stats higher, utilization is in we centers near year. book they has is for continued give even Additionally XX% XX%, center industry order in long industry are collaborations statistics the customer us next back and expected steel activity customer industry inventories demand. should times weeks. service in past industry that as exceeded this products to increased U.S. demand are low. by hot-rolled the utilization customer inventories XX% likely for eight for spring. demand coil Flat-Rolled To prepared these now unsustainably winter. after Service while today's demand. balance industry into in

meet restarting iron are analyzing the Keetac will right Lakes. The ore to have so on incremental pellet Great blast inventory the locks we ore the furnace iron while our configuration, closed de-risk our production current around demand timing are customer facility. We

to it talk about than better taken to actions generated Christie results. pass expected how year I we've Before this the

capital on Slide our me and an Let provide projects XX. spending on update strategic

XXXX million. unchanged about budget remains for CapEx at our $XXX First

projects our of resume For XXXX, $XXX million. of for strategic smart portfolio to our approximately believe XXXX, we of The confidence execute in be continue is currently expect strategy. this best key best us the sustainability investments in activity capital both in a strategy growing spending customer cash as both we to way. of confidence We the right gives to

additional discuss and I'll the rest to Now third it color over Christie performance for our the hand quarter to year. of

Christie Breves

Good us. begin Thanks, everyone. Dave. you for joining Slide I'll Thank morning, on XX.

our we're positive across highlights quarter-over-quarter Our the the EBITDA Europe. in seeing turned EBITDA Flat-Rolled Steel as performance business, improved improvement in U.S. we and significantly

expected X% million a created Our million. the Adjusted guidance to of performance, we environment. across loss EBITDA margin. effectively were a flowing spend management Europe, higher generated EBITDA cost quarter that ton quarter $XXX prices than Strong second costs our returned that Tubular We quarterly from to our to difficult third be lows. primarily This and results, quarter $XX results prices. all continue In of loss result major shipments of quickly through our million, as positive to August tailwinds EBITDA of segment lower EBITDA positive operational was have reflected to better categories Lower commercial segment. Flat-Rolled the cents EBITDA nearly third offset to for cost from a significant outperformed ability the $XXX contracts third operating still demand Prices loss drove customer of and quarter. leverage. $XXX and respond in Flat-Rolled adjusted performance. compared in increased Flat-Rolled the and index by monthly helped lower per impacted

we We around center at Fairfield have our streamlined operations facility, recently completed as operations to Fairfield. our EAF our

Looking over by to cash, commitment million business working delivered $XXX on resilient capital. the at our keep of releasing we

on our executing CapEx. also are We XXXX

of we cash. For million focus billion flow, dramatic quarter clear of improvement our cash of We $X.X result cost approximately free and on with ended $XX the generated the nearly management. of quarter, liquidity, a enterprise continued including and billion $X.X cash

Flat-Rolled quarterly steel the and be contracts prices higher monthly similar our third expect flow-through we ahead, Looking to selling expect and quarter. volumes to to

our contracts on order in fluctuations book reminder is is of selling annual spot subject As Flat-Rolled to and prices. not XX% a historically, approximately

We tubular operations and and opportunities pleased cost reported provide ramp better cost European with the on EAF future expected about we our focus are and than results segment. will further that management reduction the in cash continued at optimistic for our To are of our performance. third quarter summarize,

at looked Dave, on investments liquidity, resemble our clear focus we we back both maintain best we key a strategy. to As in you. XXXX, will of as

Dave Burritt

Thank you, Christie.

Let's turn to XX. Slide

Before we from me let to takeaways move Q&A, call. the key summarize today's

into about fourth optimistic are that We the the quarter. has continued recovery

that execution both our we've improved into taken Kevin, are move actions We are competitive about the of strategy. results. the Q&A. best continued translating optimistic optimistic we are let's And to of world

Kevin Lewis

yourself one each follow-up. you please Thank and question you, ask that Dave. a limit We to

ask the Operator, to questions? question. opportunity for a the please has line everyone can queue you So

Operator

first Karl question. Blunden line Goldman Please from [Operator your you. Instructions] Thank Sachs. of Our with the question with proceed is

Karl Blunden

morning the Good and time. for thanks

about first pushed control, Just than versus how earnings Is a you've being bit significantly much wanted is that CapEx a coming to including speak expected, back of much what there with that a down? is think XXXX CapEx number I found? incremental that to ourselves. lower efficiencies quantify deferral had the the bit How way power many was

Dave Burritt

We're make or allocating so I'm our comments flexibility, to optionality doing ask the And but to CapEx everybody's that this, both that sure this to that And I'll we that, then you to assets type want see question on of to value strategy I’d is and to unfold. environment Christie, building Big best can transitioning then is make and a the second it's and capital question like the and safety we'll Karl. you and all that yesterday mind. spend. we're Thanks, things know going how when dialogue I'm say further to trigger we'll in of just think best most with – the that first, I on on on the everybody And CapEx. the what can, understands here. and we sure deliver like River, do thing pull I'd the like to the but have few

And managing sure making bit stage of value liquidity decision, to lastly, then about We Big capital cash we it's creation. before and that have actually a this quite time the optimum good we but about have feel make gate the relationship we with and for River. that

obviously cash pandemic the of get we Now, this that. did talked and in things and in-determinant we like that some should we built gate million But caster mill endless year, hot the XXXX stage last delays priorities, of lot we a start raising upturn, pulling that and the we into $XXX some those be and this on strip like – able had things and we as that about. into that appropriately to other

So little Christie, more. maybe a bit

Christie Breves

CapEx Okay, plan. a on few make comments more Dave. XXXX our I'll

million forecast spending XXXX projects. strategic our earlier, does it CapEx resumed said on in is And our we As include total. some approximately $XXX

currently For rest expecting of we're on capital will the million allocate base the $XXX strategic to our business, be projects. and

those you for strategic So on a expect few and on to we agreement me resume endless let agency details equipment project, credit projects, that. give draw that. casting The purchases plan export our rolling to and on

right the resume project time continue our rolling for project. So steel high substrate. we endless building differentiated advanced the casting The and as customers, to this equipment to monitor including strength will us solutions the allow fully delivers

Works, to execution plan cash for mill million we to project. And leverage capital looking million but approximately it's we next really of project, At to that this to Gary we that smart $XX plan of about the in some year flexibility at important to progress, And upgrades with our on the $XXX on invest spend hot built year. conjunction continue pace. this strip next have that the capability a so outages we for in we're planned

high steels. and that strategic the differentiate further meet quality demands XXXX. and our customer will over investments that asset heavy-gauge remaining these highly for includes The and it'll steels line advanced is from high carry So strength spin capable substrate for this pipe we ensure

we at reliable best capital of and supports strategy. execution next both our both looking the our the with year, operations continued believe XXXX safe budget and it So today of supports customers

Dave Burritt

Christie. Thanks,

is, here, but next a lot end the we are time Karl, we're more So we'll the transition what and have to in allocating into doing and are future, a you both optionality we as building January, nutshell process of we the of in best with as of we towards we in talk year that on that get color at transitioning next flexibility.

Karl Blunden

helpful. very That's

it sounds number business. the being I think the priority aligns for Big River one with it like

the Just to us the export Mon credit more important funded a – there how probably give the extent, $XXX can indicate that versus come Valley frame kind million granular agreement it'll CapEx, from item I that's to coming you cash? way some be of picture. that from on is for much liquidity think way do of a

Kevin Lewis

this is export that just million be to leverage as Karl; financing have we just expect through. of for would walked Sure, agency the able described us Kevin. $XXX to immaterial we in amounts credit the Christie place I

So little bit $XXX call of more than availability between facility. on order that magnitude, somewhere I it think – million a of

Karl Blunden

Okay. Thanks very much.

Operator

Thank you.

line the next Our Exane question. Seth Please BNP. question your proceed Rosenfeld of from is with with

Seth Rosenfeld

and that at questions of to cash capital. continue can morning. you've going QX QX transaction of remember to of fees, working the strong working on forward guided Is in results, sheet I and a fourth quarter cash today. for you of generation performance? question Thank very principally I What the ask have for Good we need volumes as start time a in our third capital should generation the second recover? the reinvestment driven If I'll terms taking there expect by there please. for obviously all balance release quarter. in achieved half XXX with

Dave Burritt

that. conversion a for cycle I time. this management, And lot are think in cash cash thanks Yes, the based reward structures we fact, know spend you of time that all on upon

pay Christie portion. you I as pushing cash, short-term that. day. continue on So again, for employees, but make whole to actually look we company on and incentives more And every cash Kevin, focused our the her the this at incentive we'll think I a said team And keep each is and that had some sure on across

Kevin Lewis

Seth, think we great to your to to going when cash, Sure, that working are respected point, comes managing related be are and question, Dave. I especially A to to hypervigilant, really it all continue but facilities. capital inventory and levels things

obviously more goal our able important. demand ever customers obviously always is support to that first The to is an increasing be in environment,

through So we'll see the amount I inventory that wouldn't at continue working us flows to in. build orders book, to how a capital. are coming order to material expect look have of

the into inventory, sure fourth So for make I quarter to expect we're need think the to to But XXXX. believe positioned support we're cash year fourth build support expected be purposes don't of demand. well a will we for any going increased in strong to quarter, significant what that

Seth Rosenfeld

you Okay. Thank very much.

I on a more neutral from that's is So basis, that correct? guiding being suppose quarterly

Kevin Lewis

that's a good I think approximation.

Seth Rosenfeld

comment �� of very an you translation Obviously separate much. of a those? Can Thank in from compensation recurrence please benefit FX And like and quantify on benefited electricity on question Fine. those you've and the you also Europe. it looks QX, rebate.

Kevin Lewis

Sure, Seth.

to so the our $XX On if impact And occur that look the XQ over that a XQ you're we in summary quarter, moving absolutely earnings then calling event third in million provided expect into we That's correct forward. quarter materials. in that out came at third rebate, as specifically chart the a electricity quarter. you fourth bridge the that for the wouldn't about in non-recurring that's something

category quarter. third is benefits largely FX had of other the that The we reflective in the

to business. or looking as that cash described you to continue the the would forward quarter. cost of in about that the Europe in think So But be should Christie management help impacts say for one-time with impacts driven size remarks, extremely of the I her we impressed FX and

that segment near in well look the to So continue the positive perform to build, continue we'll to and to momentum expect future.

Operator

you. Thank

line next is the Please Bank. Terry Our Chris from question question. with of with Deutsche proceed your

Chris Terry

more tech. a Christie. Hi, just to David ask I key bit wanted little about and

raw you’re as So really inventory it. material to clear restarting managing that's wanted period, through do with your to I just winter the be understand

not you. to block related now the Just anything Thank wanted HSE restart might on that Venice XXX to check at and that's side?

Dave Burritt

question, for the Thanks the is up. sure we have winter close making through Yes, Chris. the how months, the doing we're levels locks what inventory

– the through make the So this we this in clearly an we’ll some clearly things good with get it, related, sure decision this, with if like customers. pellets winter but had we've and be tied months, we of terms market our is seaborne that selling success inventory to that make inventory it's the related

Chris Terry

thinking then my up I Big how the might two the take Okay. How on give could about that you long you. second update product of reminder Thank you tied River. you're size on? an asset long of auto that lightest on sector? ramp potential that question substrates, if And of might any just you as what the wondered on And the qualification how think and well? thoughts take then

Dave Burritt

that that things exceeded do the River moment schedule. our with Steel, a expectations. and I as Stickler team, question demonstrating on turn they said say favorite Big as they even it. expected they're his words Dave about before, than you couple the we they X months ramp going are one for And and up, to in talk of Thanks a I certainly clearly ahead And here. and their faster Rich, it But well, Phase of they could I'll when and think budget Yes.

I'd that the said long faster, very to as Rich, and here. option feel as see far is going as earlier progress, I the on yesterday. that something as how an And future exercise answering we the And of to the So I in but impressive. said remarks have opening I with that said, go that to progress they're timing clearly getting we the done time having we're as GENX able work that we're we're pleased my very optimistic maybe as at to on there. appropriate very, think to the things I in like question, the future. call, be And making last else have

Rich Fruehauf

asked, My expectation thanks. so up they're Phase Dave, ramp finishing how as would our experienced the X. would on that long will they for to – of I completion the Phase be they're it And expect be Sure, well to up X quickly. Obviously we relatively ramped think take Chris in startup, did X, them Phase very construction. ahead of schedule,

think this me, soon and a So experienced as team, competency excuse pointing online is, running mills. Phase is mini is I building to Xa as mean, their far I and possible. starting core a positive direction very everything as coming as this

have quickly that that as we get as a done lot they'll So of possible. faith

the As platforms. vary for but results can we some XXXX we're XXXX as far customer-to-customer, have should are from that from very qualifications, processes OEM-to-OEM, those in that hopefully optimistic

Dave Burritt

saw firsthand as course training arc – of and mills our recently. we operating mini they and as one their Alabama, EAF that well in and, help then building were where here generous with we as extraordinary really with mills mini They're launched first number

had some folks went guidance, and them. to coaching come we and our provide folks So in visit their and

So, effort. great really it's collaborative a been

demonstrated and making well, why that far, sure the on at schedule extraordinary work, necessary to we expect that don't budget get them as that, run up way safely that we they've So facility which they the they expect know can and and their I of is to to be I ahead the would same, change. do so it stay volumes word ramping

Operator

you. Thank

proceed from is the question of question. BMO your Markets. with next line Gagliano Our with David Please Capital

David Gagliano

my taking for Thanks Great. questions.

that on in from is much beyond complete $XXX CapEx Mon on previous much quick Valley the left how timing left XXXX, XXXX. one incremental And how the that the what's spend is – Just CapEx? that project, commentary million after follow-up project to

Kevin Lewis

I’ll confident remaining plan around the we the the given $X then let million and address about foremost, and about of in some project. between including other think David, here, question think about considerations been in give magnitude, financing that XXXX, year. and remaining Christie to and a and I'll maybe billion with of how think bit hand feel of that somewhere have vast if $XXX equipment have spent about we little us given to position and proceed so optionality the Dave project. But can in the and next that the we we first as talk remainder the put from about support we purchases, maybe proceed to what's especially remarks, Rich good can we we that flexibility, and your So first Rich let in far, flexibility some there. But a talk that'll talked their we we how us comfortable with of would both I but from and think optionality proceeding be for the equipment about would spend order billion $X.X the capital, spend majority

Rich Fruehauf

Kevin. Yes, sure. Thanks

some fast So a to proceed. as with required permits. the to that obviously critical icon, there've respect are We're some project from Mon of are on number path pursuing COVID as there and of been Valley permits can, impacts we those

to item those gating as and maintain to obviously think continue we we place, CapEx be get optionality. in So try a work nimble to Valley but spend stage we about that's and need for why the and Mon

David Gagliano

assume of or XXXX XXXX should XXXX? spend a we – and the in evenly between that majority that Okay. perspective, Is spread it modeling is incremental from

Kevin Lewis

it, move support out make million to the built right market cash attention with construction we're as equipment, support now ECA to and XXXX, that when of with I and rolling. will smart David But approach focusing for liquidity a be the financing flow our getting leveraging continue and time forward and what is it conditions and the groundbreaking to leverage when on the business to the support the going it we're generation ECA number have, $XXX we it cash that the what the casting facility. to for proceeding resumed would think say choose I we of cash is the appropriate endless

Dave Burritt

Kevin, said, is key the the well that's think optionality. of in this I all word really

we So we somewhere Valley, it decide Mon in put to to decide else. can put it can

to pull We all a when decide these of flexibility and of we have lot things. the this trigger goes on where

see we well taken and moves care keeping sure sure forward. We're in make equipment to And how going the to make the place deliver have we'll to So employees the process our permitting we're going sure to are take as the of put the of, COVID-XX customers, works. most see value we that have making – we to stockholder. care how as

going place we're keep here We're casting and is endless going we appropriate make at the the put sure the optionality. rolling to So word that time. this flexibility in again, to key have and

David Gagliano

these my question. move the next on that upcoming And thinking about as my the $XX switching maintenance if we hold chunk few you or That the in we costs there this bridge update over other was on overall is was but and side the rates, one on outage there can if a be of also and that that with you question quarter, negotiations, restarts expect speak and well. great. the And auto obviously, need anything contracts moving would I'm guessing XXXX costs could last question quarters? million your that of was should in XXXX, to a then I XXXX. in annual production that wondering costs just the about outage third to met for forward, an lower part coal given producers contracts that maintenance the improvement then level big Okay, ramped follow-up gears, direction or up for of provide the quarterly XX% other

Kevin Lewis

Yes. Sure David.

customers questions sustaining think CapEx we support Let the me given diligent customers. And outage, maintenance to in from bit I'll and and negotiations required here. a be maintenance maintenance to a extremely to here a at work speak But with your end. to outages about and Dave that let are related little on that understand our continue the backwards year perspective, I

environmental So reliability our as from heard on and focus you remains related Dave, safety, projects.

fourth quarter prudent or about maintenance nothing the list we And and and at in next material So costs. priority we'll a the of we think investments, of but put other and be outage we'll for if the perspective. year, big disappointed probably those top types how from proceed

for things, probably where little of too the On into early conclude some customers. let get more our on to probably have are bit Dave details I'll side But call, we next with then the now. coal information we'll you with maybe a

Dave Burritt

going Yes. annual negotiations this Thanks. the they're frankly, guess contract environment, market in I very well.

that but there's Both successes having And course, always those the the critical a And the thing that deal we're most discussions engaged important we to to most and that comes quality. with the just them. things. make And them on the the important are think with we mind our now, service there's customers, early I name it of our we to is sure core strategy the actively with that and keep price, steel. River certainly we're those Best U.S. a to matters of the value for when in really need few issues us with it's Big present innovation proposition, customers on of lot, with

where understand to get And when showing and so For us, show value with we're markets And we're where to to to them, of headed. The good with their everybody have important fit the we're in want knows compete course, the most you're a the able we the to strategic they're dealing how targets understand chain compete customer moving and and and differentiated goals with up we and have think into their new having customers. future. you proposition. the you the thing this rates is and win them, their – closer dialogues you well. better listen platforms the We're I very food that

I we have clear us Commercial with Chief moving industry, feel Ken focus steel I got and Officer is from we our the we're Jaycox and you customer now expecting great announcement, focus, intimacy greatly, think everybody. think and to irrefutable that And outside the better base some saw it's bring probably start a customer-centric greater organization off customer more and to understanding for forward. making we

Operator

you. Thank

is proceed line of next Our the with question. Nick from next Jarmoszuk your Stifel. with Please question

Nick Jarmoszuk

In the savings you seamless $XX sense for it the says savings what Fairfield, Hi, give per earnings that? on from on gross are ton. us the morning. cost good Question EAF. are presentation, a Can

Dave Burritt

Yes, Nick.

a compared a was cost rounds just we're logistics in-sourced big for the structure to when mean, bit and rounds, opportunity it, some have you’ll ton reduce that's component sourced one me the dependency drivers transportation externally of size but to rounds. to have of volume you I mean, obviously I $XX So, unpack to of going per the cost And kind the to externally we let then having context. so some sourced

especially challenged, a lower costs, lead versus freight unit EAF obviously be of we but much than on once is was energy which to be third-party on initially, So at our sourced can having would we levels have our externally pellet, what facility that per campus a which may think our savings getting supply rounds that is Fairfield. consideration into at utilization lower cost the we to taking market competitive would belief round the that

$XX how how boost So, come, a the business EAF confident forward. achievable across tubular pretty range pretty level the to per probably utilization of But see ramps, more the that we're at furnace. we'll electric wide ton arc is

opportunity significant business So achieve our to a for cost savings. some good structural tubular

Nick Jarmoszuk

terms in is to be segment? going of So through the the flowing Tubular savings

Dave Burritt

correct. That's

Nick Jarmoszuk

And us of give you sense that of a can seamless? much how business is shipments, for the

Dave Burritt

Sure.

calls, previous welded indefinitely we as with So facility. Star operations Lone we on had our sole pipe idled our discussed

to to XX% the we So as expect operations increase quarter as our about would in continue the And and that third focus quarter. we the third in at shipment to seamless volumes, look higher mix we're a Fairfield. of of seamless consolidate percentage mix a we

Operator

Thank you.

with of next Our with your America. question proceed Please from of the is Tanners question. Timna Bank line

Timna Tanners

congratulate first that. morning Friday. EAF to Hey, on Wanted and the you about happy Yes. and off, starting you up new ask good

given Second, automotive heard regarding think my mix, big first automotive if the into you're spot tied up as a with Flat-Rolled fourth contracts, with but And market a that was to that aren't quarter. so which had $XXX about move, the sharply, busy recovering but the the it's almost I've ton, really we question hot-rolled to is market.

So and remains just laid keeping trying restart your lines, course, in tell blast to you've get would Gary demand the that be that can is think the out. there, sense a the of Works your us long-term, And configuration given mix the might furnace short-term, same with strong it the soon. in very you you target along of why mind, just what to as the

So I again. wanted Thanks. to that just about ask

Dave Burritt

Timna. Thanks Okay.

average I certainly think increase. as we look we forward expect into quarter, fourth proceeds to would the

automotive and seeing of We believe continue the business will remain that. we're certainly to book strong,

contracts to in times and to fixed before participating When mean, we spot it mix on balance really order the we've at the continue book. we'll So evaluate with the many obligations market. contractual I we look outcomes as think it to and furnace price I pricing blast optimize comes Gary, said

we continue to support we And to But and the We time, of in eye Gary our to best our book we'll configure this continue to the but of we on evaluate on meet needs have close going and not we'll the a plans, forward. we're number At foremost, we point sure restart operations order forward. melt, first decision keep the That's to in haven’t a their currently moving order it four. our moving demand don't care and need take customers. the customers. made book

Timna Tanners

again mill. then Okay. on new the to tubular And back

to I pointing great is So you again, but in markets energy have utilization out. point the that heard weakness pretty low, the startup

you $XX per the on could ton utilization. depends if us is remind utilization just of that. tubular the what So you across said, And like your

And perhaps EAF profitable those rounds there that uses to that be the other are produce can of these optimize So facility? at you levels?

Dave Burritt

continue operations. In an of in pipe of be I shipped the of tons about total since mentioned, third our increasingly we will higher to to that percentage be Fairfield I'd the seamless as out Tubular Sure. XX,XXX segment. quarter, tubular sole And mix expect our

on run validates business. electric to able an to us that we towards your electric Timna, tubular expect utilization, think moving the to footprint lower is arc of given know your but mean, I furnace pipe important. would comes And really We I at to XXX% we in when leverage I question, go, can that expect having an specifically won't tubular be that we'll where be arc fully so comment mix So seamless it looking much pretty utilization. forward, more volumes EAF, of you levels furnace why in

don't have inefficiencies the operating inherent of costs the frictional You of integrated assets. or some

that confident rounds are moving of forward. a other arc to segment a can cost-effective should savings we that at transportation, So for operate which in-sourcing and furnace expect electric cost like related level the of see utilization that's the we provide to tailwind

production change, keep furnace views case current to are the that's leverage our for is So we rounds where internal currently, consumption. if for we'll but updated you business that

Operator

you. Thank

of Please John Tumazos proceed Tumazos. question line John next Our from the is with question. your with

John Tumazos

you. Thank

Or so remaining River do specific for CapEx in target year, you the mind off that's reduction CapEx next year Steel lower are buy to why target the you next teeing next With restraint. in is improving And debt with Big steel the for a half have of prices markets? year?

Dave Burritt

do, have we ratio charge times fixed lot as we we about that making that of X.X what sheet, a tried the and amount. thanks we balance to think our sure we here. Well, Obviously, about liquidity, think And that have look to for question. in terms

this day. is the what the seem while much does X.X flows terms upon customer demand, of and with the it see is is Big see of effect about debt talking the but all go in River liquidity what on next about this think happens we or COVID-XX this uncertainty spend about we can or optionality about see that have through that terms like a the year. time XXXX, word And of we other what in terms pay about we Typically million we a we'll cash So know the with we option in is make I we we how carrying. Steel time, We it uncertain possibility our expenditures. off in don't of very of back determinations to way depending what lot future, think we're exercise capital of the pursue cash and of an managing cash

And strip River than caster in decide the USSK. So we top in endless that frankly, the Gary priority our than line make mill. course, can again, we hot can then what best be are the Big with, Dynamo Steel the moves of

add the So I something. in are think priorities going of our CapEx is those Christie to terms and

Christie Breves

say, continue, we COVID, we important but just flow execute cash liquidity. sure and just to cash to not our through going And also liquidity make I'd and strong financial Yes, to remains as priority strategy. top it the are make extremely think we're

said, of Dave of $X.X have As billion $X.X liquidity, billion we cash.

So we're increasingly optimistic conditions. about market improving the

know, you extended. debt maturity has As been profile our

we're hope. so that We future scenario to continue it the and resiliency might planning prepared business on analysis and work what our around do

move capital XXXX, as to a we we're take So as cash into talked approach we already about. trying to model

all execute and basis our strategy long-term we're and are of cycle that differentiation through So these the flows more several coming strategic both and earnings, because our of strategy capability online. positioned is as have we resilient know, cash continue delivering about projects on to to well cost that you

has line coating started. JV PRO-TEC Our

the have We EAF. new

So all will us help to sight this the of cash which line deleverage is a improve future. of profitability and flow, in

John Tumazos

you buy want to you a a or reduction you're cash hand debt have is target, if to Thanks. precaution? I'm River on have wondering going still a or balance just Big big

Dave Burritt

to do We've we’re we here, to this to we're going make through a wonder. important lot Well, the let time. got strategic I'm going those to of choices make sure to get continue and at you going year appropriate work

John Tumazos

Thank you.

Operator

Thank you.

of Bank question with America. your proceed Our Fields is from next question. the of Matthew line with Please

Matthew Fields

roll your everyone, lines to rolling your some Big proprietary starting anything grades. on JV Is River about River starting your the just earlier rent finishing comments facilities like else? Big some and essentially of going and back rolling or to substrates Hey, some PRO-TEC of your facilities to time,

Dave Burritt

It's here our that marry get it. We to River going details think none. marry that, then at an that Steel LEED few processes. actually finishing up with been proprietary then some flex you proprietary mill. we doing our that's Steel’s lot to work a what research of and but have Steel, if I has related great that frankly, process And team second a you technologically with with we're Big had to certified elements up here also River incredible it's not development which we're that a advanced Yes, the think U.S. about doing is to the customers. And Big with into

and certified advanced all our our River very with things – finishing technology the those PRO-TEC position just CGLX. us well up of for finishing we're through basically it's operation R&D combination of on the going LEED So plus Big where period we with The continued actually in the had process, to of frankly, underway. as are And development fast that of short Generation we such And can't XX grades of the believe this I said, able has X. that well this move steel team a been time.

of process possible. has technical not we're to together of these our the you that team working what been all there's for tell proprietary So a elements closely things, is going but to whole make it very lot

Rich Fruehauf

GENX footprint Rich. is important thing this high-strength proprietary Not advanced as make at we they forward. facility. a carbon of can I steels low Dave is Yes, steel move just River, grades those going had Big one I be only think that's to to what which said,

carbon is facility that important but customers, going emissions, value footprint be LEED think and where about in you low the today at to when is can our base. into to not are to world those additional greenhouse carbon gas moving So customer a the it to increasingly ability steels certified, make we we're an our emissions offer only

the far. So we're so really about achievement excited

Matthew Fields

trigger to like to the on follow-up a mentioned early that as then pull Burritt, Mr. And Okay. you'd think River yesterday. you Big in call, that I the

you you how If the pulled would trigger fund yesterday, it? had

Dave Burritt

on with We've cash pulled call also do quarterly I sheet, yesterday we certainly cash. last balance could sheet. in our recall, but got balance great. so said a seen trigger as that our you've it the the I'd That's

Matthew Fields

very Thanks And good much. luck. Okay.

Operator

you. Thank

question with with Please is the proceed next from question. Our UBS. of Bokkenheuser your line Andreas

Andreas Bokkenheuser

Thank you very much.

and should question I follow-up of back a lot presumably a Just of it later kind shut we next you that obviously year, not to the basically the you're reliability makes over again. spring into which may down winter, Keetac, How mentioned on about mean, supply going into going sense. think

Thank the buy What's that? City, Are then about And think to third outside strategy question. that's basically parties? Blast through you going we do A, less how the there? from just much. Granite So you Furnace you very read

Dave Burritt

said what here, but demonstrate in really the think already time And pellets course, piece period to is who question. that customers that a demand. make the of able did good inventory it's And key the been That's on another I that are short we we we've the in and are high related want. of the customers range

North We agreements have the here actually on up picked been couple and America. of selling market we've a in seaborne

go figure now, figure made, obviously, it to we'll if decisions that we to it's about good be to long make Keetac pretty for actually but – some out, out, through And it not, to right sense or and open have the But does does be feel to do business keep grow the there's sense have to customer-driven. it right we to So make how it. opportunity we going now.

Rich Fruehauf

of side Yes. with Dave, only significant implications add forward not not the aren't the restart material, then only additional of to if around million, financial $XX than either. for in And thing less the decision. choose of some that would on The context the flip the I is are move potential the Keetac we restart costs them and cost to themselves facility.

running decide the into continue go we if to ahead will as potential future. restart So proceed we that flexible asset And we evaluate how flexible Keetac. restart and be to we'll also be that to the in

and third-party demand. make we the mentioned, footprint we'll So, customers all have sure it's the It's business. as the satisfying Dave always to internal as about we do support a about

Andreas Bokkenheuser

much. Got Thank it. very you

Operator

the I to back now session. that And concludes you. will presenters. the over Thank our turn presentation Q&A

Kevin Lewis

final Thank some up you, to with remarks? wrap like you would Dave,

Dave Burritt

your before employees, to I you thank you've but want to a do been you it's customers support. and sign safety challenge. for everyone I continued continued interest our Thanks know for I Thank much. tough in delivering and employees off, our our And to for so customer. To the U.S. their year, our commitment your Steel. for thank rose

collaborate customers, develop as winning Our future you to our we bright. thank To solutions is partnership, for your together.

get safely. Now back to let's work

Operator

a the you, conclude lines. you for for great have participation, and today. does We That that thank and Thank your conference all your we disconnect call day. ask you

United States Steel (X) 30 Oct 202020 Q3 Earnings call transcript