X - Earnings call transcript Q1 2021 | United States Steel Corporation

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Operator

Good morning, everyone, and welcome to United States Steel Corporation's First Quarter 2021 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

Thank you and good morning. interest quarter Steel XXXX continued to welcome your first our earnings appreciate in and US you We call.

President through call, Dave for via On morning the link and posted Investors After Senior Chief our CEO, Rich select Sustainability section under of Vice yesterday, we and will we found the On website. and will this can release Christie Vice Burritt; Fruehauf. our be walk US Strategy and earnings and call Steel President President with Senior and CFO, be me the close Officer, today's webcast, The slides our first today's business earnings our Breves; and results. website. on and also presentation quarter call slides of

let number some assumptions Before uncertainties risks call are me during this statements that vary may a include certain as based actual in on SEC remind materially. to provided of you may subject filings, information forward-looking and that our future and results described are we and start,

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

David Burritt

rest confirmed year call first of and quarter, those Kevin. the performance you for in are Good you part optionality reference being today's for interest our and us outlook quarter XXXX. opportunity beyond. optimism, you, in Thank morning, our Well, the and Thank Steel. heard of everyone. your themes and a for US Last for

performance and our margins record our optimism, flat-rolled and quarter expectations EBITDA for confirm mini optimism. on segments mill First first for our second quarter

our facilities steel reliability matters, that throughout running report at keep we our cycle. are delivering but market fundamentals numerous quality resilient in ton are conditions am and record And Strong single performance produced market business pleased footprint. I operations great, of every across market are well. a the where quality to the on Our

first sustainable American Second line of on North footprint the in aspiration, successes differentiated both both of best the to opportunity footprint producer leader our steelmaking. of for zero join from best River of sustainable for of strategy. announcing US and verdeX optionality, inherent how early our opportunity, steels only first Big leadership And in of be Steel, quarter Rich US created sustainability the the our both performance foundation our creates XXXX footprint our Responsible steels to Steel's detail our and sustainability optionality role confirm the best launching American Steel net becoming confirms will Steel. available industry

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markets. us optimism steel heard January continued our for speak about You in

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of put mini River class quarter. productivity, employee River class of XXXX with by and team. has prices River structure. world the $XXX commercial per purchase in contributed the for ton EBITDA one this significant River from X.X begins market While the quality proving just entrepreneurial perspective, well-timed to Steel produced phase a world or strategy quarter. been first Big our Steel. XX% enterprise Average today's a showcase headline steel River To achievements even Slide Steel's expansion a that to well-timed driving performance Big variable employees low to more performance financial Big River's Steel's this real best-in-class of X XXX River per River the day two River results accelerate cost acquisition River of efficiencies acquisition the of market, These From acted our and our Steel's has strong X steel from superior per tons changing shipped. Steel the including the delivered driving reposition Steel our mills. and to contract producing Big $XXX of to now capable continued Big is in our value labor quarter reflect that's increased in first led Big Steel makes these domestic are quarter. complimentary value certainly factors in the earnings first selling ton tons workforce compelling. is Steel superior performance Each Expectations creation boldly truly of are two other emission high Big highly quarter growth competitiveness of Big quarter Big of margin We structure in EBITDA expansion. million compares and at potential. Slide benefiting margin phase Big the

US expansion make about you X. steel, optionality minute confidence just about called River we how our that continued Osceola, highly announced verdeX. Steel's gave steel is per In expect sustainable both solutions At you We This our and footprint line make, money Slide as steel line it's new quarter differentiated proprietary finishing is per deep optimized customer margin shown how together catalyst product and offering. best were utilization for and second more the line will to River not exciting relationships strong. optionality differentiated of Big Steel first Rich Big to profitability how Steel commitment details of the can with customers Rich? This of of by in River it's this much expand Steel superior March confirm performance product remain launch. know and the sustainability. in quarter minute Arkansas. us on much provide provides. that River lines valued the highly Big Big time Full time, capabilities ownership on the and can this

Rich Fruehauf

Thank you, Dave.

best the US we We flat-rolled advanced to XGX in to announce our best of steel, verdeX proprietary of the grades game COX is the changing our steels verdeX our production most combines realized pleased both its product. first strategy to business. including generation new grades three industry. from are line high able now our This combination, in customers now XX% finishing emissions. of reduction minimal of a with Through kind this or offer existing with in of steel a technology strength are some our up the best sustainable domestic Steel's steels, of

next We finishing customers. steels goals. customer for customers with market we our qualified cannot that sustainable request steel products. the take being class today. sustainable step a them unique to meet to Big solutions and are meeting We steel needs the de-carbonization leader together green and their a customers steels to generation offering help heard our by offer creates River advanced them three This substrate something of sustainable most with their solution. version the more provide OEMs high in strength assets understand is own our our are their with world we're ready with We've competition advanced are and many

by to line value, utilizing boldly to future we our We them opportunity action value our verdeX faster. can turn look their that share Our into Steel today's our an you. planet. right customers can Today, verdeX back market partner of to sustainable to offering new sustainable and and help with our proposition. begin with recyclability into forward to for sustainable customer offering the Customers steels looking best Customers solutions. the orders alternative endless suppliers. verdeX customers convert sustainable the US tomorrow's the sustainable, best pledges partnering green those vision our provide a Steels. differentiated to is steel advanced of the Dave, By get for Steel today, our are steel US

David Burritt

Rich. Thanks

versus Big of in the points world. perhaps on intensity mill by and acquiring River industry certified Our the reinforce the is XXXX LEED XXXX Steel, many baseline. proof announcements verdeX gas year Slide We XXXX build greenhouse States off global our leading one XX% sustainable our our mouth to by steel reduce X emissions that this is by put where The sustainability money announcement just proposition. anywhere our steel a only United in

an our And line announced we partner ambitious net XXXX customers we sustainability goal. just meet their zero sustainable future emissions that current by so steel our as they to Next, commitment week, of setting goals. we de-carbonization with expanded and solutions can carbon own last

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the we must events one to allocation creation, XX. we year and announcing footprint both change, decision the lightly. The the difficult Valley sustainability, we're took have action those right lower set aside footprint. But a the and to one through today's needs business. and clear, choices. opportunity we announcements must and approach provides strategic costs. making for intensity. facts carbon first the very on net countries, companies, we steel we the making the With by approaching cogeneration regular through what's best of we including the the serve future portfolio. opportunity create for of this future. a that This competitive capital a mill lowest our and end global not value steelmaking clear, remains Valley through to capital coke as planet. do and to Mon likeminded lens Valley and evaluated Mon carbon expanded competitive gave decision vision We're customers. by with up profits our us This construction and changing the structurally means When quarter competitors of accelerated This the to climate announcing turn step to coke our is change our Valley capital the effectively advantaged Let's This and informed quarter energy be will workforce our can of of last partners allocate in forward Mon difficult XXXX Christie? our plan rolling to timeline are steelmaking of as and footprint meet to is Slide how to the and and crisis, will priorities. this for serve intensity emerging But project. the attrition. world, to the future reducing understanding strategic reevaluate de-carbonize idle and know Valley Mon of informed must facility markets, in continue the decisions, casting right three, continue to to we Mon batteries call the our Based our flat-rolled limit cost planet. is of impacts It our the one how segment details customers everyone best is XXXX. To Today's Today our allocation making that asset also a across cost logistics on people and permanently into solutions appliance neutrality be of difficult for capital capital are evaluating endless the will rapidly Christie well clear step those we the works. not goal. counties, by We with and highly as provide one our operations we're today

Christie Breves

Steel term our Thanks to to sheet. busy and In US XXXX the secured unsecured debt US extended restoring performing begin due The all to quarter, near the better by allocation. due made is significant having as lowered interest as define strengthening level And business we we right strategy our advancing maturity first And annual Dave. and strategic to balance in us prioritize We expense million. senior well. we notes by XX. of by of we critical the deleverage. we financial issuing believe In refinance both the gives $X.X to And capital second capacity on quarter, total, redeeming our XXX senior steps XX% first our million the billion. delivering allocation capital enhance profile took Slide were strategy I'll the by near further flexibility. rate term opportunity the and In restored progress an goals. run best a have XXXX. sheet on longer-term secured of we've the In Steel opportunity notes balance debt The debt. we quarter, reduced the we result, at level $XXX

see XX USSK million XXXX disclosure million XX approximately we our and XXXX approximately Steel repayment of April, million facility have of our will Big market the deleveraging repurchases repayment you including in today. in As facility ABL and on completed already open XX-Q additional our notes XX River Credit and a actions

repay the to million addition progresses. we and at increase least In currently actions that taken quarter, the as opportunistically to amount the year in already $XXX additional debt plan could of

investments, competitive strategic best growth intensity. have advantages capital lower investments and As strong existing and for a assets think we potential our drive about to and bias for a and and carbon that organic fit, future transition we support with all

additional flow, liabilities. million. Steel billion. and million. advanced came country. we $X.X the pension $XXX adjusted the acquired Now by of making contributing our XXXX, the earnings of The and turning guidance for the on asset of and XXX remaining our growth cash the in debt. includes strong March approximately XX, driven EBITDA from for billion with not equivalents approximately repaying quarter in than approximately in quarter stronger This flat-rolled XXX to million. Ending approximately XX, liquidity cash We of XX Slide technologically totaled better-than-expected quarter first were January cash strong most liquidity Big River ended our This stake the XXX is after We quarter newest million acquired X.X results On improved performance steel OPEB segment.

and and pension XXXX asset in Our healthy plan pension improved plans years the the ratios defined ended fully do status. returns first by contributions a respectively. mandatory on well-funded well-funded on quarter, to XX% approximately today. the if We implying those environment based were X% in not rate X%, OPEB benefit any expect XXX% to funded several at next Based funded our and re-measured status the our have

contracts, are the price increased prices our selling through our prices in Higher drove quarter Turning and operating and increase our to flat-rolled segments, selling to market continue segment, our significant quarter. over EBITDA. average expected to first further a second average flow will in our in XX% selling improvement

our is our Soo the either from consumption on expected third sales, Additionally, ore flat-rolled Soo through own segment travel Locks. for the to Locks of or the Great benefit reopening of pallets, for Most Lakes. our party iron

the a business of in expect mini mini of quarter. Steel of power of River XX. EBITDA value full mill segment XXX the we March our XX% model, model January EBITDA XX reflects through drive second in the further from showcases Quarter to First the million Big mill ownership margin

quarter segments selling are We in performance. third shipments. blast also mill and higher the our Europe, flat-rolled performance furnace margin segment. EBITDA to prices second expect the improved mini for increased records new In Restarting EBITDA January in and in set improving the efficiencies

particularly higher prices We increased, Their expect inventories driving conditions iron European Goods in Oil In shipments increase. are customer Tubular, to higher prices. second market Tubular pipe stronger costs and quarter Tubular Raw performance factors average segment improving. cost material demand counts high. from the our a distributor remains modestly are in improved important remain from normalizing continue ore are have and Country the higher selling Rig levels These segment. headwind.

to back Tubular be expect second We near quarter Dave, breakeven. EBITDA to you.

David Burritt

Christie. you, Thank

today's prepared recap Let's XX. remarks on Slide

stronger for First, is a confirmed. optimism long our for environment

was First strong second and even stronger. be quarter quarter performance will the

And Big that confirms of the a both best leadership footprint United River's third, creates. sustainability the flexible confirmed. optionality is in role States our Second, performance

We the the let's steel. for now about to And the have means voice Q&A. in industry. in the biggest move the most have brand opportunity Kevin, sustainability recognizable we industry

Kevin Lewis

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

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

Operator

Instructions] [Operator right get go And our Please from much. Karl Blunden question first Sachs. Goldman very line on you thank Absolutely, we'll ahead. to with the

Karl Blunden

morning. time. good Hi, Thanks for the

down. allocation interesting about debt some capital comments and You pay made the

the front. Just pay tradeoffs to was debt. in down I on interested liquidity that between using

in some investment of reduce sound in rather going replace new so options XXXX, that through to then some And you just those did with to some to balance you're the like you in course. between then debt. may cycle also the interested shareholders of outside up the than it buybacks, Valley, have it in do So relative And cash Mon debt fits payments things. last how

David Burritt

Karl. to I'll comment, Thanks more information. and pass then I'm Yeah. very a it make question, for much that Christie for going to

with to I priority bit sheet. place make so in cash balance people year a But We're is, course, do can different think, won't to little resilient what than we first and for because Christie here optimism are will this XXXX what were beyond. and sure maybe obviously of much be going all more a specifically much questions, doing us, be before have we your more. you be keep to long a asking ago, we provide that

Christie Breves

Okay. so clear priorities we generated very in the from have Yeah, to be XXXX. we for earnings that cash the expect increased

maturity we've that often that resilient priority our guiding we capital and we As our sheet. is strong first said, we more growth. will foundation when sure make to to balance to have about a our create a sure financial supportive principles structure, is liquidity, profile. maintain future believe support think We have make And a flexibility,

our like We so we strong also assets like strategic fit. - both are advantages, that and investments investments, and best a that have And that competitive advance strategy. of existing

like that objectives. our We with are investments now aligned sustainability also

heard target. these And announcements. carbon also our investment and neutrality future are decisions. aligned lower intensity, targeting our our sustainability are intensity our informing net You've investments leading capital recent XXXX that our industry with that we're Obviously,

David Burritt

Christie. Thanks

making have So create strategy then that sure that we to with a There's some balance our value position our best of stockholders. very clearly, on more good we both it's to for de-levered. action do have going And sheet, make be sure about to opportunities sheet. we're balance the our in

Karl Blunden

Got I much there you shareholder didn't about Yeah, return. that's hear helpful.

mix production there of terms to long-term an on I the on on great, price more from arc anything the So of was back the point in should now, and in to that. burner I'll investment Big standpoint, asset represents has changed the you're Big thinking what wanted from focus just some for quarter. opportunity. focus a the But great and from ways comments sustainability, than typically River, from to in assume some was performance maybe River that's HRC just There earnings we're in There on be? in so that little there. electric furnaces shifting bit margin mill Yeah, seeing your maybe that

Kevin Lewis

is Karl Kevin. No, this

I this think first environment. have Big saw that profile exposure to in quarter the mixed what confirm the the that strong in they of does you River indeed

market where some steel. think of about of talk the those to Big of it our leverage footprint verdeX you've about as with I sense term in steel heard line lower and makes grades previously to longer to transitioning proprietary we medium think their steel us only integrated carbon our to though, leverage to River lines coming

of the EBITDA steel So their see run as to continue the markets accelerates profitability as in the with verdeX value customers, all change continue business mean minute could River, right from ensure Big could solutions continue to for engage ton performance on to will prioritizing like that margin generate what about end that our sustainable in we mix. you per asset. we're to we and But that per driving line right a performance,

to So expansion I ramp But have two as additional strategy in more to continue as but some with I'll the color Rich progress naturally the a integration to we pass well. ability execution. for on up, phase bit think the the creates optimize HRC we'll

Rich Fruehauf

Yeah. Thanks Kevin.

capability pretty as mill capabilities unique mill, over ability think of are comes vacuum too, have really with or things with River, the Mills to working in move Big products I for gets gas US see Steel mini higher operators. is to are integration make the that keep for the most online that we as optimized. RHD experts have time, was River an mini example, of a our is Big we technical I D-Gasser built the you'll That something think that through end one even on D-Gassers. mind And and they

opportunity margin Kevin qualification more expanded the line of said have verdeX come, trialed products. grades the successfully. We're XX in that got been as the on with on up more working there's there's the And come. move So we've to I think more mix. And to of - time over customers to

David Burritt

help for how acquisition this and a and we're back D-Gasser the But both you able then lot able to US best knowledge think the for to mills. operate we're River Big work to integrated works. take at the get for nimbleness time, from entrepreneurial virus then that obviously, spirit, and and the on both D-Gasser this the background, best Steel Steel is of this the new is the if same us. with point to We're touching Rich's experience best that all, learning - the that with a I

to be and it we products can been our off mix So great another to so acquire while lot with when our get well. have fast you on going Big all asset say we does that I of Steel the better how most a with understand play and has you for expect on. business, really upon And verdeX, be a one portfolio especially first to on, a issues pre-qualified River early part, products it's we is move XX gone pretty that and it and can to what dependent going and of what

optionality so as and River we want at the a we make sure the keep integrated Big US can open opportunity Steel Steel. we opening, with minimal that of capabilities to of there's that said we lot So leverage

Operator

on to much. BMO from Thank proceed go line line very We'll Markets. you Please of right from Capital the David next now our Gagliano question ahead. the

David Gagliano

is cancelling just where Obviously, up for allocation my capital or are shareholders thanks policy reasonable is the prices actually the assume on liquidity than Mon clearly to and the Valley with and investments. debt Hi, focus specifically? project what is wanted and reduction, cash there's, to few it I the as towards you taking question. a returns options questions. the on Rather to mentioned of follow quite assuming here

David Burritt

think optionality capital allocation about Mon to David get the pretty we're go might X.X is Yeah, terms we - you we're money, in largest off so and Mon of endless the this well, and the the built I caster that down think where not you billion to that been again, be where think that's Valley, first have the go. spent, can to on at Valley is the remains of what that as portion you going we have pencils has that of putting the way with much that

as expect through as new the as spend we balance footprint in would the be we're far still here year, of this we'll So short-term have for And outsized But at that the CapEx to to I sort continue returns. putting together; this through we big steps have figuring we're through I to say our to those that next in and as just with are, think cycle what outsize and improvements river margins. we'll see come. out I And more frankly, work XXX.

David Gagliano

Okay, right. steelmaking? talking you look talking investments, organic growth, all you when then at And about you are are more acquisitions? Or specifically about

David Burritt

possible. Steel - there, is preference use there, capability existing advantage I and is our whether and see money for River for said growth, think we've what have our I a and spend Well, for a the either organic cost expand footprint the example, assets advantaged what's advantage look Big the those or money grow opportunity at

the this optimized capital the where continue least mini at of of that path mills, is. both cycle intensity we'll look best through integrated, profitability highest looking we find As at the

Operator

from proceed next Seth right very to our question we'll you line And Exane Please ahead. much. with the Rosenfeld the now Thank line the go of BNP. on

Seth Rosenfeld

morning. Good

that partners decades. I interested hydrogen, DRI do towards CapEx about you've next again capital next your you but included from obviously, of scale push think What or de-carbonization on in like would what's own you quite aggressive so? considering do you fund kind with observe I focused consider also of and on be be a question a or your think regard for it's US peers, remains the couple change. the to how DRI week? strategy target When lot leapfrogged to de-carbonization technology from Valley, announcing some of over Another And broader Steel the CapEx are at allocation, EF and Mon de-carbonization more working last of announcement to was happened your confirmed to drive US think can capacity over decade things and that the you side? this bracing with going in transition

David Burritt

we make there line be goal. really XXXX work common going that us this who's Well, will how talked a get about those help lot impacted. with we in there's to And to then lot to and And who us to partner and there's that question. with of us a three categories It's up achieve and this there's steel, to the allocate for we we the certainly capital. goals BHAG get where

And think have So where we to we're that's out. goal if it categories, figure to make the organization least our those you about capital-intensive in three possible. sure is it again,

as to dollars, years, the far across this the just it integrated billions mill XX industry, will make the won't competitors we collaborating. industry, individual and and it years, countries next next mini As and companies be for but the all expenditures all, companies, over obviously, the specific be best transition be it whole from as of will steel actual XX

you steel going BHAG things If so it's competitors, one the big, of breakthroughs cement as immense, that those to it's to find and about with thing, the it's collaboration, to so it's think de-carbonize the make to how take even planet. and

we has out to we of have into you there's - opportunity been wait as and come, to wait partnerships. phases. thinking So it's necessary lot in because first in a We're setting We've to know the this. go beginning to as the and terms where of that goal But And the have we develop those far the those see. funds and have see planet. for

to the that we're pay, collaboration of competitors to to made. And over As to governments' we improvements that for suppliers' collaboration of develop to across be there's our have pay we pay, our pay, that have going saw the be and kind going types customers counties have time. vaccine, with our those COVID-XX saw that

markets to you. that and the be how up. the up decide. gets Now, going divvied It's to policymakers to Thank

Seth Rosenfeld

Can caster? CapEx? on And comments earlier one in And you be allocated the Valley. simply development again us different just Mon I that volumes a on update could changes clarify? follow again, through facility. you the Valley to given In just that you on date future said your the Mon up walk think any you. from Can to Thank

David Burritt

million, going spent $XXX and we on that think $XXX the on Yeah, I Casio, million. the toward about

second the that's repositioned part So be question, going under could of equipment elsewhere. Of And to what And study. storage where that we was positioned? your have in be course, that's

Kevin Lewis

Seth with this as capacity the about the the And Seth believe capital reminder the I Valley production to of was Mon without - never investment a Dave, asking was expenditures. just at Valley. the expand

a the like continue that steel that will unchanged we serve strategic be appliance, and expect on to in that so change go facility basis So will of our quality a regard. perspective no end to and markets from capabilities forward volume construction

Operator

go question Bank. next We on from ahead. our you. Sathish Kasinathan Go Deutsche to the line right from Thank

Sathish Kasinathan

thanks my taking hi, for Yeah, questions.

identified and in quantify you XQ XQ? can the it that or in expect for volume please. ramp should you Big lower to have into XQ, the that related over given now, how three we any for were and months talk with maybe you've weather So had utilization one-off ongoing Also us the improvement about synergies River there costs much

Kevin Lewis

Sure.

Sathish, So is this Kevin.

Steel. Big the Let part hand River into little second talk about me address to US over the we've a the first, of and Rich bit I'll on of question then made integration progress your to it

everybody that about you look of prior rate, utilization we time make the how to with money it's just for facility really consistent on much I steel can that So important our and line It's It's per not have. loading much remarks. how you minute about make. at understand can how you think

while a to of of line we utilization a time how lower, allocate and to order choose rates be bit may trending see So that's profitability. you mix some function in maximize really the

disruptions the sell make had I while right impacted EBITDA $XXX quarter, quarter a the the the generated Big We were we feel weather ton we at the chose into and were in like EBITDA loaded ones. the So the first there middle the some XX% that's in way And validated products rates of production. utilization that margin the we River. by the think of and performance the to marketplace facility

Rich let's if should want a thus on EBITDA to secondary measurement you So utilization maybe view, with mills and and segment and for what focused But we at far. in It's elaborate margins a learned lessons the per is look grain at the least EBITDA our the ton. on of mini synergies made salt. be the

Rich Fruehauf

Kevin. Thanks, Yeah.

it expertise. I the the And plus areas. of what which we've deep always plus the is verdeX process, River for US the technology substrate other thought using cornerstone of those river, think with know with And best that's is the that has, River's our Big Big how proprietary green product big you we're would and customer is steels opportunities relationships of what be, both. under see Steel leveraging umbrella

of on And value scrap respect our with to I think coming needs River scrap to We've internally I is some our degree. integrated our that. specific and value, from to Big precise sourcing, by scrap there's been So Dave sourcing quality think scrap some footprint a high on it. their more generated capture touched offset had that to to we've sending able at prime Steel optimize purchase

RHD So that talked already April, come. there we bit about that the about $X to expect to saved We a and gas opportunities continue. and the little million through

So lot to more value a of a We're there's some capturing think seeing opportunities. we're And great we come. already. lot

Sathish Kasinathan

you. thank Okay,

in agreements, last the on this? Just you're update as call, a any follow nearing mentioned that pellet you earnings additional up, third-party

Kevin Lewis

So position, our ore those Sathish, selling progress, market. which third-party really into of I the think we've continued includes the monetizing good make to kind iron

disclosed new that ore I our agreements. we everybody confident the positive low-cost haven't and leveraging for opportunistically opportunities think to our into business We that market sell iron find be should But are position. EBITDA continue any

of that's So against. strategy that continue active execute an we part to the

Christie Breves

And new record hitting is high add I'd IDEX records. prices,

David Burritt

It's been this on being a to stream us able market. the revenue good for for sell year open sure

Operator

with our ahead. on next from very question right proceed Timna line Bank to America. you the now line of of much. Go I Tanners Thank will the

Timna Tanners

guys. kind Valley this of Yeah. Mon morning, But second Hey, quarter. to I announcement. on good stuck ask I'm about wanted bunch a the

to wanted was to about couple question not crucial to that have replaced. I'm was ago, still to also understand metal it it an announced, sheet ask When of means I a it what years trying said over hot game XX-year-old my time, that be described And really the that at know first project. had you as that. it and kind So of changing, really I so was

for help understand Valley? you you you was can that critical us So help does just Mon So what it please? And not also a can having us that said operation? reconcile update

Kevin Lewis

is this Timna So Kevin.

ago, remains that as very think were facility in its we strategic endless when we good technology years facility so project we and very transitioning were foundation provide. capabilities, the this a that was the So talking the potentially place. different about increasing to I good rolling taking two we casting for on investment serving this And disclosed and markets based

confident us markets Valley of end we allow construction, However, Mon et and at those in the Valley the include the always the remain has cetera. served capabilities levels forward will going that served to existing has at Mon profitability appliance, very centers, compete that high and service

producer, that within have think forward don't of our cost the is facilities the Mon on a Valley, impact is I lowest will of and most is our one one our - performance So, this existing segment. of which flat-rolled material most going efficient our profitable the which operations

blast for Valley obviously We some the So in increases existing furnace. and announcement, just capability the XX furnace there confident we're started highly we the would blast of showcasing a highlighting Mon to the back were be make the operations going But investments mean. during some forward, that made. at days today outage

that to committed facility. remain we So

for generate And believe capital strong continue forward, we'll flow earnings continue the it'll to we to business. strong cash allocate and towards it. Going

Timna Tanners

revisiting costs in quarter cost for so little looking bit you're margins spot for just the just if along blast than thinking inflation could on for the talk Thanks Obviously, spiked, similarly, seeing? could just detail annual market Okay, that the opportunity I furnace the thanks guys. if a a And when got any contracts any on about lines going price the a margin there's that. you past, relative first to wondered any the your prices operations, contracts? And forward, if revisiting provide then wondering lot, customers. forward, higher the were then of expected, And good we there they've margin structure was some of of in pretty lately.

Kevin Lewis

Timna. Yeah. Thanks, Sure.

So to we then material charts. is impacts cost, I in is the quarter. bridge be encouraged and on for that other mean, from the mindful quarter-over-quarter kind flat-rolled this to the always a things That our like as on segment, always quarter, And certainly one some seasonal highlighted a side quarter. the the mature Obviously, the mining scrap thing that quarter-over-quarter. a also operations, headwind, was variable - of had in the first of we including first which in raw business quarter-over-quarter comp perspective the headwind

the great year. the commercial Going really our throughout we forward contracts environment, negotiating about this is good the that thing in type of strategy - and about news we're

nonetheless, We to to we customers more have are to and earlier opportunities the year. the our weighted do But the with on continue so. contracts, some contracts year in heavily have engage that we'll throughout price fixed

every be XXXX, and customers. So of the And way keep more discussions year. negotiate so we're we the those optimizing between engage. to we on us our in that. But that'll contracts We come the case quarter continue to

Operator

Andreas the Thank from UBS. right question go very Bokkenheuser Please our proceed with ahead. next We'll on line you much. from

Andreas Bokkenheuser

very you Thank much.

that said Can the blast kind this A? closed - start usually quickly up? can that remind great. you if markets about have obviously down, could of But necessarily doing away high remind furnace better updated of furnace And you've because of A Tubular's on being switching you a Valley stages there's City that be not thinking operate furnaces previously on What overall order just is count talk is prices. you growing. your on been you. services blast How for towards strong at Thank us moment, us And it a any just demand energy? Just it rig kind flow, better. Granite based would is and is yourself lot mentioned Mon from you obviously blast your you of doing and what we

David Burritt

cost In so its furnace actually we existing well the blast in serving, now add on A, again, is well it's turn no operating it's markets of positioned base and plans got no to capabilities earnings. very to furnace. think now current currently environment, right great blast another plans customer City There's market that to terms serve it's maximizing for Granite and the

Andreas Bokkenheuser

blast the Okay, restarting and place, A? what's holding all that energy furnace the market the mean, that is from you it back services Or furnace different a I industries? typically? over is

Kevin Lewis

serves Andreas. market. that's the Yeah, energy right It typically

And it's ago. improving the below it where market's while a energy was so still year

consideration. So think important I that's an

to by the improve, to Tubular level. still in starting pretty market market high it's general be exposure energy while of yes, So impacted in levels market the a continues low and imports.

So as Dave footprint this at to we'll the changes just - time. no mentioned

Andreas Bokkenheuser

very clear. Thank taking I appreciate question. much. very you your That's my

Operator

you We'll question next to Morgan with the much. Alba line right De ahead. our line Thank Carlos get Go from very of Stanley. on the

Carlos De Alba

morning, Good everyone. you. thank Yeah,

production on guys quarter that page about your weak of sector. have market, end the you semiconductor auto in second order the booked What are that yesterday's can problems see very of What some auto you your you that regard XX the Ford you So on commented do elaborate We back particularly on of that then? announcement comments end And made from read given the automakers you're facing. the market? with particularly the they're but rates customers? the hearing presentation, how

David Burritt

second improvements, be but global would been I first fact, think Well, the if attention and quarter. ourselves the double unrealistic. our quarter in obviously, impacted And in semiconductor of by good in we're wouldn't don't where the surprised a some that's terms This has markets making we business, chips. gotten see I place. the now, the the for

we markets our it will continue some that years where But shaped longer. for there's stronger and again, sorted thesis clearly, to with be starts of through, kind to be got recovery, but that fits it'll be a and probably take V couple So thing. optimistic and the stops all of

Carlos De Alba

We Understood, you surprised in in - your just clarify be and double that a what response. specifically then had if Is auto of you first the quarter. I sector? the may wouldn't part see to

David Burritt

second we the we just don't unrealistic say think double as though - I would from see the as much XXX, double quarter. that it's could in the EBITDA to first had would think quarter overall for we I

Carlos De Alba

can great. wonderful, Lakes, it you much And to now, spend the idle? of keep Alright, right plant you how can how - that that question remediate And idle the maybe cost without take Great decommission site? then keeping you prior and coming to indefinitely back completely from long just the money is Andreas, you

David Burritt

customers furnaces conditions point. this to plant the dramatically, from it's material willing change at to finishing it coming a operational. for do that's what because they'd those us. And high of And relates the in they'll Well, on. very our be that's keeping still amount to indefinitely with terms idle believe have as keep strength a side good really the don't down were see If see we us we they're until we especially not advanced more We blast right, asset and steel.

to expect fine So are don't environment. And on operating turn today's in again soon. those facilities the furnaces we blast anytime

Operator

Fields the Thank much. on to you Matthew ahead. from question Please with Bank our very We of line next got America. right go

Matthew Fields

that haven't loving I'm acronym. on get to everyone. announcement, the one. I BHAG first Clairton heard the My Hey, a it. sort just questions clarifications wanted few of around

just closing batteries then charge with that then X.X that coke or of there If a with that or So And market? capacity? X, facility X.X capacity that is - kind that XX idling idle permanently is an running X, of environmental and billion lastly, X.X that's the batteries of kind a associated is X. is closing batteries, you're And those batter million coming that's is about anyway consolidating remediation out of facilities? wasn't

Kevin Lewis

so Kevin. is Alright, Matt, this

of Let about three of talk Batteries coke, bit to are Clairton, XXXX million further that targeting capacity X.X so third me as approximately And continue we with about Clairton. manage serve currently. so we of party ton dates QX production overall attrition. operations little a Clairton. Those through batteries XXX,XXX operating one steelmaking and tons are said the at make annual up of capacity XX% customers can that we

in at appropriate don't through three made of of that'll time is comments up but of Clairton about the know batteries. Rich you the XX% overall Clairton. future, about the the capacity I occur if additional had one So

Rich Fruehauf

that project you County of No, we part just this was execute. Health as the said an to alternative Department Allegheny with agreed

Matthew Fields

a in done that regard? remediation permanently there Any has to or CapEx And is closing that? I'm be to that charge cleanup sorry

Rich Fruehauf

Matt. material nothing No,

Matthew Fields

sheet that the and Christie's the that opportunistically about year. like million the appreciate repayment paying I XXX do the further balance Is debt another XXX over still wood and to there's no and and the forward that guys place - XXX? in feel quarter on beyond? down you've debt then you good be down in million. after about in a now comments chop reduction then more balance 'XX another you do And going to Or pay sheet got like guidance needs After do there feel you

Kevin Lewis

execute evaluate plan the continue generation mind de-leveraging. are the that to the an time think kind that I to flow amount of the remark business to term, for think the our I there's against but in sized near think acceleration, Matt, XXX to of the that and opportunity we'll minimum Christie's likely is in Yeah, opportunity extent the million increase of supportive, that us right, cash that is conditions we we

watch the given earnings to to the balance have - of resiliency maintain business, remains kind we the performs. and sheet through the We'll structure how continue the So and kind of it continue sure business ensure the through of debt the making strong. we'll right our view cycle of

think more So potentially do potential do to they're I to it's - and through minimum and beyond. the XXXX

Christie Breves

no future hasn't look for de-leveraging helps strong decision. the just regrets foundation growth. we a Yeah, at It create to

Operator

Thank much. you very

kind closing back Steel Dave would comments. of for over to Burritt I call Now, CEO, US

David Burritt

Steel. US in interest your for everyone Thanks

your you conclude, most safety steel maintaining near and and achieved has are products strong our XXXX distracted me thank quality allow time Year-to-date our environment take demand levels their deliver you for Before to safety on continued the we to on promise customers. what to last year. and matters record employees focus Today's customers. from safety our to not

strong and continued safety to are performance. actions safety our the commitment Your drivers to

that you segments. serving the quarter in first flat-rolled customers. maintained the European same our You've customer In low performance claims to level of and record commitment both achieved

performance segment. delivered record reliability also You our in flat-rolled

focus continues Thank a to be Your and priority. you. customer on safety the

to work Now safely. get let's back

Operator

you does good day for and your call conclude the a ask conference Have you We And your Thank lines. today. rest that participation disconnect that everyone. you thank very the much. for of

United States Steel (X) 30 Apr 212021 Q1 Earnings call transcript