X - Earnings call transcript Q2 2021 | United States Steel Corporation

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Operator

Good morning, everyone and welcome to United States Steel Corporation's Second 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 right ahead.

Kevin Lewis

Okay. Tommy. you, Thank thank and joining second our Good you call. quarter morning, for

We release in had in quarter. strategy discussing and read you of you outlook morning. continued and results, a forward the our our strong our we As our yesterday, press saw execution to materials our very with bullish look this supplemental

section. Sustainability Christie remarks. and found Investor page Officer, Steel accompany Chief Senior Vice Burritt; Events Joining today's me Dave President, morning, This Presentations call the on Fruehauf. and can US today's under Vice and Rich is for Breves; CFO, we CEO, Strategy to be Senior US call the today's and The Steel President slides slides and President on posted link prepared and

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

unfold. to in release call President to remarks slide today, would to that our yesterday, started with as along made CEO, actual are and like conference Burritt, US today, on we X. press statements as events them get Dave undertake now us no and the update turn we duty will the issued Forward-looking Steel I over of who

Dave Burritt

us today your Kevin. you, for thank Good you Thank and morning, with everyone, in being US for interest Steel. and

exceptional strategy. Our and demonstrating our of second is quarter performance the was power

future demand ever remain performance. and many from positioned to continued is optimistic and robust benefit opportunities so We than better ahead. optionality operating the have footprint Our about our with strong today's

nearly delivering our of best are aspect every We in business.

financial XXXX. best our performance in delivering are We

unless maintaining performance in profits We are employees no keep and our are environment safety and XXXX, delivering our Steel's safe. our joys and industry-leading performance. in best are we employees their best There US our delivering quality

and Steel. principles Safety focus our our to US for on value, you employees our for So number your one embodying steel at thank safety. first core continued is

far of to our Both strategy, demonstrates days Our fast delight process power the future original best so amaze to truly product say, and We get performance is now year enough. the can't continue and of can so innovation the Corporation, can record-setting customers. this that a that iconic in has we ahead. US rooted strategy Steel, We our Best its

continue I provide executing our to are to All. position of strength, another from to We transition Best great We've a am this to pleased a update quarter and and progress, from great foundation to forward. for on build which made steps

dig into the Let's X. highlights slide on

business into Our our and cylinders producing all exceptional on put we hard the results. work is business is firing

quarter. best and Quality at Steel segment best record are levels. strong and is for in Steel best for the new productivity margin numerous levels. records We Europe American for River at safely generated in performance US quality our record the customers. on reliability second Big is assets North and portfolio, earnings, that set our is Flat-Rolled at for record a portfolio including We've at levels enterprise Quality also delivering reliability performance for performance quality

Our in and margin EBITDA history XX%, getting second margin company's better. the EBITDA quarter our was best

the Steel we is profitable upside far even River Yet competition. we Big River our quarter Best completion to sustainability team which All. recently knew today. is EBITDA investment, XX% in mini the mill awarded we leader, that a River significant mini Both lofty cycle It's The the Our in the is people were steel financial far. for is took potential XX% is best faster their we XXXX. in when example Steel, mills from Big of electrical bold looks the to the step upon exceeds global purchased has expectations. River of EBITDA month. is further mini planned Daimler, generating Best Big margins and not margin margin further what that mill non-grain-oriented on value grow through second was steel our slide by the expected outperforming planet. acquire only more buying in value X. recognition mill our other mini who The River exceeded River of is best earlier Big performance domestic like to segment's leader line the is stake best the this bold again, position industry action But Big was by Big remaining performance country. with solutions When River detailed in but sustainability, it clear It that a clear comes even for is award it of validated which Big

lot We've to improvements a to with Moving urgency. of sense made X. of slide a business high our

until It's satisfied today's never That sense bigger. us get urgency has positioned goal to from well get be has always value better Our extract market. to of been never been best. better to extremely strong high to and

market, to to sustained us pace to over supporting needs say, a demand past supply this seems for inevitable. about that at at the place, ample the industry, bill increase. and pent-up the times consumption several into along market XXXX. take And for firmly planned fiscal for half allowed outages chain period remain of Demand fundamentals an potential an suggest continues for optimism significant in extended The booming, my including restocking and You've low inventory been several shift levels seen business longer. steel industry a rise, domestic stronger from our infrastructure U.S. recovering the The bullish from heard future. strength and second continued of Expectations still resiliency be for believe continues only to we our the and will change has provide the customers to me we've with a Steel stimulus, Steel we've here time global growth future the market benefit tailwinds market, quarters. has U.S. Steel, lead steel labor long continue are extended. of

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Let's turn to slide X.

said, with we're important more planet. contribute solutions customers, profitable our about and for is what for the stakeholders, customer live Together people from for our all for with future customer. planet. Best employees is for best progress. how people future So steel invest the is making all? and all will for all Simply all communities, our the work about in is about who and our a benefit already daily best great the provide our to for partners, can in we and all best our sustainable facilities, in customers steels produce is most Best and U.S. Steel we

it progress on last we've slide our earnings turn and made to the Christie I call to highlight discuss performance since X. outlook, second me our quarter Before let

for leader NGO is electrical substantial oriented in Steel In We all. a River be include funded flow Steel are non-grain to investing is best of expansion River NGO the planned June, very generating. an cash steels, announced Big of free a investment steel. Big we to electrical investment the This by definition

our customers, meeting of For steel. where you are and the you electrical innovative advanced generation next are headed we with most technologically NGO

electric to a fleet growing of deserve support vehicles. Our their customers like-minded partner

strong we only full after strategic asset highly Big months short differentiated are is River people, and our into investing fit. For few that a of an ownership of has

are rate pursue additional profitably, our by expect For our the and we approximately NGO into industry-leading to and the on run future incremental will NGO $XX EBITDA year which that steel now delivering $XXX technology new quickly million approximately verdeX certification place, line, million do line. brand. our approximately $XX will in spend to we to forward plan expect are Permits We've faster. moving project to XXXX. planet, pull this XXXX million of from it to we further CapEx for been expand And able our sustainable we LEED generate get to of

Transtar Our delivers approximately Transtar stockholders. expected gross we immediate of budget of XXXX of week, Earlier assets. incremental is CapEx total now $XXX for this approximately proceeds sale closed and the sale value The rail generates million $XXX short-line million. on our

And performance, reinforces our recently targets Lastly, U.S. leading our to we performance maintain to our where action emissions the our adding conditions also headed. Steel GHG footprint Steel sustainability We site future revolvers. certification. by our our to lower and industry commitment responsible getting with safety today's differentiate to through a and Big as operating commitment River know faster. market steel furthered tailwind, we're we're This

Christie hand to performance. Let it me now to financial Christie? highlight over our

Christie Breves

Dave. slide XX. Thank on you, begin I'll

the our EBITDA high quarter an for quality that or approximately demonstrates all-time earnings strategy This billion than quarter the was adjusted XXXX and of $X.X performance. higher Our delivering. second first XXX% enterprise is our margin quarterly represents EBITDA

balance We to the also sheet. significantly continue improve

we with in projects June, earnings. electrical to deleveraging that We announced aggregate his amount increasing repurchases best less announce be Deleveraging capital-intensive align million in were and investing we also on River you the the completed intensive. no-regrets open existing for billion all months. another earnings focused grow is and both. or debt earnings, Dave assets billion first of or in And and million debt of at up of we organically. second our capital principal $XXX we Year-to-date, we $XXX repayment can highlighted In not $X.X also investments to to announced $X billion the either where deleveraging. NGO recall, our or our of future, competitive it's we continue with announced we'll we next the remain remarks. the grow will XXXX term, as carbon XX In a while paydowns. notes. additional to through reduced redemption advantages the yesterday, delever $X.X over we've investment where In much approximately Longer As Big in as deploying outstanding can quarter. revolver quarter, a repaid extremely market line that mid-June, we approximately debt will by of so It's less future excited decision,

not stockholders strategy better about our communities, all our of being better pursuit about in of better better for it's our results and environment employees, for for our for better to being our Our better, for best. customers, translates is bigger, this

the talk Let before comments the me up about I third some quarter. about with quarter, second wrap now

So first, in our Flat-Rolled segment.

increase EBITDA segment quarter $XXX a North million, quarter. second of Our first Flat-Rolled posted America the XXX% versus

while environment, demand operating enabled largely its performance keeping to capitalize strong on favorable Our segment cost the profile today's unchanged.

We to EBITDA its from expect from and be prices an to EBITDA offset Steel our perspective. costs. volumes both first stronger, quarter mini generation $XXX performance metallics margin increased $XXX Big quarter million mill the segment, higher than even doubled third Higher and more million. average selling In River

performance third the We quarter. financial expect in continued strong

delivered Our strong European as segment well. financial performance

Second offset ore. higher costs quarter, million, and the quarter of EBITDA $XXX prices from management XX% effective order from the selling iron as first than up higher book was flow-through more

in material We selling primary out to oil higher the to Tubular, $XX demand offset EBITDA expect the the and gas higher similar prices million of higher growing to EBITDA from prices dynamics third uplift costs. additional quarter. driver only raw provide selling in partially quarter, was play by In

the third improvement expect hand record currently EBITDA the a adjusted I'll quarter, closing expect new comments. We quarterly it Dave? the in set In to for enterprise. Dave for we quarter. to third continued back

Dave Burritt

Christie. you, Thank

obligations. Steel, want an underappreciated talked sheet to funded a our to Christie competitive that holistically, move investors. fully important remarks. is we Q&A, her topic topic advantage, Before competitive have. It pension about our to address a think is look spend a both US debt advantage we moment we to plan at is At I a we in and pleased by balance are Having a

facts. Here are some

and pension fully funded. That's plans funded pension greater OPEB XXX% plan. First, our right, are than

in mill our the Second, while pension also we reducing acquired country mini best the obligations.

retirement appreciate their are employees much, less much concerns fully Our about pension. a funded knowing with

prudent cash sheet our Third, approximately to anticipated reduce liability finally, on we once of completed, based balance pension debt the have approximately debt our foreseeable contributions billion no management. deleveraging for to $X.X mandatory will our billion. And plan on funded $X the future

Our continues only sheet to stronger. get balance

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

our business. across we're financial performance. best carries are delivering and best to we We strive safety is starts our Best operational with delivering. and for It what is through and what

the sense strategy executed best to than creates for best both and of of with quarter performance to urgency of best transition all. our high the a And better Our second us success strategy positioned demonstrates and we've has platform power ever. our that

Our steel with towards a customers are future. partner can clear. a company They want they greener

help to faster getting Q&A. their future goals. that to be We are customers let's decarbonization the move Kevin, partner meet own to to

Kevin Lewis

line Dave. Thank Okay. [Operator the you, for Tommy, Instructions] queue questions? you please can

Operator

Instructions] on Karl Operator question first the And get line we'll go Goldman to Sachs. Blunden our with ahead. Please from

Karl Blunden

question. taking Hi, good morning. for the Thanks

you've think the across balance you share have that? River be Steel bond callable color you reduction I in there's Big know any sheet think hear interested do some the in, $X year the done billion US so. about structures? you can Steel When would both and debt if complex, both last about work over debt reduction target. tremendous to derisking Good that where you about or could focus the I

Dave Burritt

question, Well, that thanks for Karl.

about they're important a just sure deleveraging understand, little about less still. to of continues exceptionally convinced continuing The we progress, value-added customers The the capability. with to you well. things. all that's that it those faster. You of profitable can think can do. it's there decision operating The position think we're clear. can why to We just organic way we that business to make, and to us you It's operating future clearly that keep about And here strong. has from We imagine all lot move bit, think than so relationships exceptionally accelerate, the everybody we to We're get is deliver more competitors. our pace kind pursuing much to I'm and also strength. know make the no our that we can want have. is are deepen a growth I say, about change a of be carbon and not if the priorities it's we hearing quickly you solutions. capital And business profitable and relationships made thinking maybe we're more we intensive. of is exceptional the we're high make a best the But lot customer and And only about standing market customers. that's we from regrets And is with we've steels And recap business, sustainable. capability this why it's our solutions And

best Again, as then terms It's the a do path So it's River. that's how mini about and the relationship, our innovation and our assets, customer deep the we are about we're Big priority, are on where which our it's company finishing and model ore headed where there? of we newest and industry. advantage, the we're It's mill about get thinking assets advantages. at best-in-class research, and in the our competitive our about iron in about competitive

us, tiers River the type those But that. deleveraging like with is and for to the NGO future the at pursuing So this see also Steel you are. it's the no that's look debt possibilities about say building why line we what capabilities deleveraging when accelerating and Big due and that ourselves best of regrets. in possibilities can of And is

it want to over I'll specifically, understand to make strong So with sure on we context I market, growth your deleveraging, where pursuing, deleveraging that profitable turn are and back more you the are also Christie. we that question the getting the organic the to

Christie Breves

Dave. Thank Okay. you,

To the continue move path priorities. headed, delever. think said term, know well. about priorities, very going the capital have we opportunity I in talk more we're the is forward. our to we're capital you strategic our confidently it we This to near where to Clearly, allocation and informs allocation that

underway the medium electrical best decision. organic have we're In areas. towards pursuing of longer the And term, also As we or been In $X.X And these we've that best We're criteria term, -- announced through. this advantages to to competitive announced To the we're to we're looking term, that's expand of that all. to that's faster. said, about also carbon we're even get our intensity. so has intensity, a And use think billion more of we for our lower our Dave pursuing producing our growth. reduction the Big And for progress decision-making, capital each regrets NGO Dave opportunities near our moving Steel. no guide River made on far. completed all looking some our -- to debt line at lower went state-of-the-art the

We create also are to between competitive advantages. these looking synergies

explained, And planet. all that so about delivered have for as do unlock customers, for value, best So, And enduring we're we're our will we value Dave when all here, stakeholders. the for be best best. our of investors things we we to communities, working can employees, these our think that's talking and we our

Dave Burritt

and we debt after any XXXX. significant back the Karl, And think And don't can I that see to profile, it's getting until again, XXXX. due have debt you that

I think Kevin, you wanted to add?

Kevin Lewis

Yes.

on think touched So in I you question. Karl, your it

flexibility the to costs next of as pretty practical And I think think, frictional pursue those structure the We'll we entire where to to at some of we about think delever. we're debt, may prepayment with associated identify look going costs billion opportunity. apply have $X what capital look deleveraging we like. priorities simple, I across kind the

we're we'll can mentioned, of of will pretty opportunity those and cost really debt. there's principles be at that confident that maturity absolute of on. quickly the Dave $X kind look we And profile the guiding move we about the use. As billion And

Karl Blunden

coal That's in with some you it helpful. the terms flexibility And of prices. up Yes. very have set

sense a plans, capital to of much mean, to quick wanted lot you of M&A. things do like it follow-up. organically, one and I hear have discussion sounds different a didn't Just just get I about M&A allocation

Dave Burritt

We're developing profitable solutions for it's organic No, repeat here, just planet. people profitable because going let be and growth. and to deleveraging me

curve, capability customers. the on on building We're about for organic cost So growth. curve the low high capabilities, it's our

Karl Blunden

Thanks helpful. guys. very Thank it. I much you. appreciate That's

Operator

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

David Gagliano

Okay. high the a prices also for numbers second producer been Thanks Obviously, record taking helping. phenomenal Clearly, very conversion obviously has in my to hybrid quarter and questions. this impressive.

if So my the as this $X you what's commentary, What plan your That's free do billion specifically $X shareholder to little And to billion be is, months? Thanks. some If going equation? question you terms be cash capital commentary is next where as the a in can cash of quarter. regarding in probably nice. the the specific? could returns with generated basically fits into over XX more read far do of strategy you allocation you

Dave Burritt

for capabilities. Again, I'll no just thanks Well, forward profitable building organic deleveraging, regrets. the moving here reiterate, that. growth then And the and

So is we measured Steel have as mill believe its my best what think that the and remarks, in you as EBITDA by best US especially mentioned mini performance, at, about it is I we margin. its

line So River we to have that that really opportunities continuing you Steel us The well. lines with at can see with possibilities as facility partnership and NGO in PRO-TEC that that space. we're at have the other Kobe. pursue Finishing something we Big good are

possibly well. is on line we we're best the as world. that We believe of what the is moving in and steel the qualified there forward, new have and grades finishing It's largest and completed certainly getting

course, but because Steel we much we market that position, blast outside furnaces, mining our there's And -- of low-cost low-cost So curve. finishing opportunity. and ore of of own our don't also have assets the provide seaborne pretty also US US iron world-class Steel to assets just we line have customers

So advantages, where to want the we those profit. That's to and want where have And capability. we grow we're to competitive going where that's grow. are that's our

those a that I areas look like have growth feel organic the three almost advantages. those checklist so here, competitive that we as areas And at in you

David Gagliano

shareholder is are just thinking you about I follow-up. then -- considering And is -- -- making And organic as growth? you that? then I part part, that talk you returns? want Did secondly, going Okay. are part are of of you you can as to that hear which steel didn't clarify adding the steelmaking to capacity

Dave Burritt

We're it Well, be well, our we that's that we will doesn't believe best we returns, on, we again, in and bigger believe all first sure that we -- focused when rewarded capability. the perform we making have on well, mean shareholder for price. share getting execute

best to are the those our want winners our that things sure And where the that that's so assets money going and for best we put to to perform we're company. make to transition winner, the

both so bunch in of add And to all. build be for growth. for This of capacity, is to looking capability us us best business for becomes don't for look a profitable transition, best

David Gagliano

you. helpful. Okay. That's Thank

Operator

the Sachs. you Thank Emily proceed to our question from much. next Go very ahead. with line Chieng of line on Goldman We'll the

Emily Chieng

again to how sort in internally morning, Thanks how the to and that wanted guidance much everyone. here. remind I ore raw a Steel iron much Good being little strategy a Big rough touch bit you purchase us business? within Can for on you as update. little material the your, of, provide is market? River And have to or sourced open

Kevin Lewis

This Kevin. Emily. happy Sure, to Sure. address is that. I'm

we talked some within So identified, are River optimization that's in Big of itself really the footprint. that manifested Steel. past the kind that of about owners And in of opportunities Steel scrap capture of XXX% the initial we've now those U.S. we've value

displace optimizing our in some expensive really So to is facility where prime focused, of generated order been outside scrap that's scrap, more Big purchases. to their flow of home River the internally we've primarily

Now just structure the scrap. optimize It that doesn't helps outside eliminate their purchased cost really need there. for

value three the highlighted, and iron that's Steel those having incremental area extract how grow of benefit at Dave HBI, an advantages, use ore consuming as like is iron, touched front, their iron arc none Big footprint, as to investing strategy competitive do furnaces, as of in certainly upon, opportunity, U.S. that the they're metallics I things are our EAF, in we assets Steel, the ore iron pig footprint the from that assets market. and to ore of being looking those saying, we currently the procuring electric the On But from core so mean, outside to River the now is U.S. sourced across the Dave enterprise.

Emily Chieng

one if for I Thanks follow-up, And color, Kevin. may. that

less this the status there industry, environment sort reconsider blast furnace you. operational give of the data? prices be of for more for or Granite U.S. at a outlook would maybe idled outlook color around indefinitely certain steel the where steel or healthier demand broader blast environment we some where Should are the updated sort us in Thank or Given furnace anticipate of to is you City. price

Dave Burritt

It will be indefinitely idled.

Emily Chieng

Thanks. helpful. That’s very

Operator

Thank you Please our line get the very your much. ahead We'll to on the Sathish of from from Bank. line question. next Kasinathan Deutsche go question with

Sathish Kasinathan

question automotive Yeah. is Hi. stages, significant XXXX? but color, early what's My the with Thank Thanks. any would you. contracts spot on the move given it's first expectation your annual still pricing? understand the automotive OEMs for and the appreciate I underlying in

Dave Burritt

events. Well, this say, I And our ongoing. discussions industry, a would And for of big have customers and what their in understanding that's towards These are. are all of are our aren't top pivot And that. thanks everyone, of with certainly us them. mind These needs dialogues continuous seen for decarbonization.

mutually with high with beneficial to the together and the we term. ebb and right over the very that work the flow steel, win we're the understand we're And partnering understand high-strength will our recently, green prices able Generation can the we're solution like steel not the that that customers. make, about we're they trademarked, of definitely the the advanced types So are And that steel and discussions customers; X to verdeX, having. of the we've we them steels and kind most our about are out-negotiating prices now, we'll longer that

customers, think the If million that about Big emission our for River had our unique X.X you Steel, you of we proposition have tons value portfolio. think low GHG in we steelmaking about

Steel company is Generation U.S. the So only X producing high-strength advanced steel.

delivers commands premium their goals. and something is this So that decarbonization a on

we've better days ahead. are for and longer, negotiations as while ongoing, do, so, And our stronger we continuous said,

In market fact, of we're it's term, the going greater, enduring. because short going this the records. to strength Certainly, have later to be clearly is in

that will to probably the this that see reversion records quarter, know more people be more but going that time mean, in And are definitely records do being policy, down, time, given at bill strength to a expect we in of we we At expect the and It's than and past, And Fed's comeback likely in every a some the each be given seems good higher we've enduring. not, reset short-lived about point this the economy to monetary the company. for the than infrastructure prices the of for quite opposite. the the place all-time has just prediction a certainly from it's there time. next given been hold this in to cycle fiscal number predict prices going seen is that some be stimulus, debunked. We inevitable

Sathish Kasinathan

Okay. That's color. Thank helpful you.

on Big raw follow-up material one for the Just strategy River.

to being prime in you the scrap tightness operating the Is furnaces -- furnaces Given is prime the blast or iron of considered? market to at operating restarting idle blast -- one that market, are maybe supply idle pig looking converting River? Big something that

Dave Burritt

we're this got a you're hot discussing is everybody a if wonder, I in actually mill. that certainly mini rooms because topic the sometimes for that's Well,

thing going vertically integrated the their us mine being news world-class keeps where at good this to it. is term. get are and night Let's is ore and site. longer face The The having that they for strategy metallic mills and scrap up mini the iron

to We machine. create the a opportunity pig have

We have And that's we as several with. certainly, locations under do that something possible that Best discussion to transition for it's that's towards All.

Sathish Kasinathan

you for quarter. the best Thank and next of Okay. luck

Operator

Alba Carlos We'll De ahead. you, on Morgan Thank take Please very from Stanley. the next line our from question go much.

Carlos De Alba

morning Thank much. you, everyone. Good very

you dividends the directly stage dividends pensions, maybe to your you the in us do at returning do policy? be? to your I strong well fact will money -- obviously when maybe allocation And either are could color has your So what at have how what -- see in that stage shareholders And question give and yes share or more been in capital on, buybacks? you quite given if be you you which is, deleveraging, funded consider continue would more

Dave Burritt

think EBITDA of investing that the that and no there's we organic deleveraging longer are are that current stockholders, for is the our the situation now, are things think But doubt to Well, be solution stockholders. term, right also no we those to best risk I especially will is that where going the in the the longer-term table. give then expansion organic growth, returns right on

Carlos De Alba

growth, And CapEx, but of up to to of of or sort to away you in on see maintenance them notch? deploy maybe level take need the that assets you how CapEx organic your the CapEx do coming good shape sustaining from or sort a years, in the

Dave Burritt

the less certainly best believe Well, focus pursue all that's path for we the of a company. as something good have us couple become for reducing has competitive -- of advantages capital as question we're capital That's both transition front center as intensive best to and on on we we that this high really industry we a challenges those is do intensity. and make intensity decarbonization another because, because that that's lot a on that to that and

transition. place for is best best really It's good that's have a definitely So customers. business the the in we they're It's to on deploy a in world go business our after. perform our The perform that a that that green the capital And ones for world. the those is assets definitely because sustainable stockholders. to

be will customers on that their green we help as demanding those targets. very intensive. we and demanding, long the us nature our going by customers in and We're to have what less in our that that, them we'll there And so capital to go are we are of invest assets all And hit just that are faster. means get

Christie Breves

plants. about mean when for year Steel I'd mill Hey US capital, really just look sustaining the about tremendous Sustaining at like model. for compared $XX capital, we steel is for legacy difference. Dave, River to mini million Big this at example, I XXX us, going the be to add, you

So like there. that And in direction. we moving will what more we're we be really seeing

Carlos De Alba

Thank much. you, very

Operator

question our UBS. It's next from to proceed line. the of We'll line on Andreas the go from Bokkenheuser ahead. Please

Andreas Bokkenheuser

Thank of Thank question you you, medium-term very taking near your my production quick on much. volume question. potential. for growth A outlook

count about idle denominator. your City capacity Lakes the at in the which you at Granite I my and steel, raw financials, think at XX%, flat-rolled Great utilization reported Looking includes capacity by

but more to my like late XX% XX%. percent ability months assuming like XX it over out, makes to into of next if have have closer do capacity And the correct I'm the you kind XXs the you So and me volumes like get me is do was that flat-rolled -- here, if market? ability kind then wonder, from wrong, take the correct of go math more we utilization that looks mid-XXs,

Kevin Lewis

is this Andreas, Thanks, Sure. Kevin.

Your math is indeed correct.

For capacity the calculation. idled our of benefit, included everybody's denominator have that in we footprint the is in

of in in So, range. operations for if furnaces outage of we North was Valley, the the mid-XXs, in you Mon the three were to those our being addition American that second to quarter off-line, took adjust at XX% closer kind flat-rolled our utilization the to

As is a producer, furnace blast utilization the assets. XX% very, level of good a our range for very

volume maybe be as look we think be there QX, mill bit probably going shipment a into it's And lot. a So, to we our incremental mini can well. as some we shipments little could but not segment higher push in

integrated the footprint across US expect that be mini I'd both So, here as our the quarterly in in segment. growth volume mill well as there'll still of kind some

Andreas Bokkenheuser

And follow-up, That's if maybe I very may. clear. one

Just question. to going the back iron pig

consumes in prime to replace scrap? If ability in whether or remind do me the prime have the you the to being need if ability remove River furnace talk do and that scrap if so, replace, there? prime you prime or Big it all tight mill does, in pig, with And you completely Big the scrap reduce kindly market about furnace given could have come, the some the years do to River, you

Kevin Lewis

Thanks. Yes. Yes.

so that metallic that's at metallic to And is going really metallics. of strategy be our optimization we're level scrap our the seeing virgin currently XX% as some evolve, So to continues to occur. substitute, operation about mix there's obviously, going XX% River other scrap, Big

that's Big of the to prime transfer or internally continued the units. Metallic Virgin more self-sufficient So some produced whether River scrap becoming of on

material all cost moving to think I unlock think savings we only continue Big could on things enhance, furnaces raw that our at will forward. and the some that burden look the operations at I additional down those will are River

Andreas Bokkenheuser

Okay.

– it from you mean, versus of profit on So is prime it's the correct consume really that maximization furnace, a whether think strategy to it's to no way about depends is prime? there's that technological I say in reducing it? the fair pig more obstacles

Kevin Lewis

– you're is everything. – certainly the customer it's think I always

But and the sure key you're productivity So and sure the forward. certainly the burn to you considerations moving going get there. cost, when think make right you become products you right it's chemistries about make produce have you to how inputs furnace

we grows to there So the optimize forward have moving Tubular options the River. footprint two some we I big we Big think have improve. I at metallics is as segment in to continue value going of a our what certainly continue and well as as And to EAF to think, driver furnaces be,

Andreas Bokkenheuser

very much my clear. That’s for taking Thank very questions. you

Operator

Gresser Thank our line Tristan question next with Please from ahead the to with you. your BNP go question. Exane Paribas. We'll get on

Tristan Gresser

you question. Thank taking hi. for Yes, my

targets? figure please. with the also to moment, target more Yesterday, TRIF decarbonization probably Thank and you. of and you consider switching already in those strategy. he [ph] reduction you one of one, specifically the any And method? in would – Have where carbon with production CapEx peer timeline associated the more pressure you feel costs you the asked organization Just a your CapEx estimating Europe, at to

Dave Burritt

that for would take be, of And Thanks it's going make answer improvement. think the planet when the a to Yes. I would you decarbonize, question. to course,

possibilities going XXXX. future the to looking to are will to suppliers get the become enduring and ways, for coming government. will the beauty expenses stronger why time. be wonderful counties planet. and the creative this a of greener We together that to our prices BHAG, a at and longer in green. means things advantages order for to It's that's together to So our It's everybody operation hairy additional an way in to there on those and the this take ways and the we come Slovakian collaborating partnerships get we're audacious for create reason companies make be will that's together to And big get that very building comes over we large for unified closely that countries and And for to and additional another will closely all be expenses work there us partner goal with work frequently employees, facilities and more approached long because saves yes, future steel that a partners with we've find X,XXX we been with operation, decarbonize.

degree pretty we're or that's happening well but right be in build we're Biden together, is – be how even We're manufacturing keep United infrastructure with bill We'll it the on have Slovakia base higher and in frankly, see in back up I higher in a more a with United what we in States. in and working manufacturing Allegheny the future So There's in recently, And excited to the decarbonization. going together, of people There's to interest States. a pumped this whether degree out, about County. end going takes with plays better breakthrough and this countries it we're a be thrilled, it because work again, strong for by to effort. when better think work how the a of it's up place. here the to much collaborative counties, companies encouraged interest

and we're also for about for excited So our the planet. potential industry the

Tristan Gresser

Thank right. All you.

Operator

from from go follow-up David next Go much. question line of BMO. a you Thank question on line is Please Gagliano to very the ahead. our now

David Gagliano

Slovakia. then quick around spending just make greener wanted just a commentary about I follow-up there bit operation? talk needs little unrelated. a the capital to it also Can on you the Hi. to a ask And

a in being seeing markets? destruction could like with risk that, Thanks. little of bit this you demand just high end talk prices your key anything any to if about regards you're If steel or

Kevin Lewis

will there. we're side, how in demand kind answer. then, the we'll order really ask on weakness we seeing And think on I'll decarbonization can about address the question, the I certainly not USSK maybe I Rich comment honest book. any of and to demand David. But from be

have I construction. strength that be will remain chain no really we supply bit which weaknesses is to And to found. we end up. that maybe, a continued a books, like way automotive momentum robust means in we're in eventually think pent-up everything works extended, the has it that markets talk here continued only USSK. supply times order resiliency about near-term, the you we're consumer-driven some to chain lead really seeing obviously, order continue demand there I'll But little Rich, seeing, appliance, to its unlocked bit be in as disrupted over think been the But hand with our book the positive

Rich Fruehauf

Sure. Yeah. Thanks, Kevin.

a we reverse in EAF, role North furnace, Slovakia, When what we of USSK we've Europe, partnership because Slovak think So, got with to gear two-thirds in the government, great economy. think got the Slovak decarbonization first the in I think basically you've it's Dave blast about the as interesting is one-third which have of America. said, plays in

Europeans in the Looking at the say, further States ahead are, terms the opportunities of I'd there, public-private than United partnerships.

Sweden ore LKAB in what's EU. and and iron the the You and look that of at HYBRIT going on and SSAB with Vattenfall partner group the government, Swedish

technology. be probably to public private there at So opportunities when And of furnace electric partnership. a going about arc there we are USSK look it's you think need be when decarbonization to

to blast electricity furnace. EAFs, over the GHG there's carbon of right emissions, emissions got from are a any just the quantity there, you'll potential an rates. to a You've opportunity of assume sufficient versus roughly that scrap which EAF from But get DRI switch lot and and in the XX%

So you out have going look get USSK. figure you're to we're to that to if and at to that, with decarbonize going partnership the how government, Slovak

David Gagliano

Is in that there initiative a timeline potential decarbonization swap EAF around and Slovakia?

Rich Fruehauf

their say efforts timeline. a the things wouldn't accelerating goals, EU the there's with Europe. I accelerate Obviously, EU-wide to are decarbonization in in

So we we have as for the future that, about to plan think USSK. of

David Gagliano

helpful. Okay. Thanks. It's

Operator

much. Alba from Carlos next ahead. We'll get Morgan from De Thank to another question our follow-up very Stanley. Go you

Carlos De Alba

NGO on that fair the that EBITDA the EBITDA way the EBITDA your to on on wanted of behind the assume you the assuming is provided ramp-up Is Yeah. sort realized Thanks. provide just to for volumes? the you can also color for that assumptions generation is I generation? investment. And it expect follow-up that there you any you're of ramp-up the that price

Kevin Lewis

This is Kevin. Carlos. Yeah. Thanks,

improvement. a perspective, incremental So we ramp-up, in growing determine EBITDA, up in facility. this we is a how ramp-up itself price pricing EBITDA From what's So HRC that's also looked with what the did the on really right? to volumes, the see but participate the that utilization able incremental ramp-up driving And of this really and of drive going to prices of a of perspective, spread we and $XXX growth a right? NGO at asset the that portion assumed between we're think the things to million why bit a an attractive going that's our productivity a through-cycle the the is of like, I value-added normal is are only be not -- how what's from project. the of ramp to to HRC customers, the to you really addition one market, as product So driving about to excited,

So of value it's kind of the assumptions run EBITDA. that's mix rate effect add of around NGO elevating the, generating the our

Carlos De Alba

you Yeah. very Useful, much. thank

Kevin Lewis

Sure.

Operator

Matthew Thank question you. on Fields America. Go from get We'll with to next ahead. of the line Bank our

Matthew Fields

$X.XX to targets, wanted you you I thanks. amended Hey your I noticed quick sustainability that but to a also one about include some shrunk ABL. it it billion.

ABL was thing. River invest wanted I of I the use going with You've the in financial wondering smaller on more facility. I deleveraging. know, great, keeping why a flexibility of the that both acquisition of gotten you why you're you there's understand, this can but bigger everything's instead in shrink and seasonality know you I Like Steel. one? just to Big business, and lot a

Kevin Lewis

Yeah. Thanks, Matt.

what's our efficiency legacy kind mean the of of which at is we ABL, ABL. I really So looked that

extended its for has credit own River facility, Big was an years. which So additional five

we we we of full also at looked legacy when kind sure of all that So points solving had and industry throughout efficiency access to our it cycle. the were revolver, domestic for making

entered seen to you've cycle. we've is access through lost We've that some ABL. below past something what the in the was So

to have access mind, the one to make liquidity bigger our sense in downside more the it didn't was given limited. So,

and think now. for fit So, this the size efficiency, right have we we the we to solved footprint is

Matthew Fields

yet? XX% covenant been haven't ABL agreement new below have the ABL coverage new Does a lose of credit the Does certain not kind ratio? access where you that a

Kevin Lewis

less think the a likely downside protection that have, we that less it's losing smaller is like I that -- access on is So, facility. footprint now based downside that

Matthew Fields

lot a the mini And Thanks. then side. on the about talk been there's of investment Okay. mill raw material

a a that across more is need as have more in do footprint you than X million now it that your it you three a that Is of of infrastructure a HBI of or DRI iron you Now pigging EAF of or recycling investment machine? lot. tons just part kind footprint? sort some EAFs, substantial Is have substitute your

Kevin Lewis

the good of a it's certainly Matt. important a become obviously, more has question, mini consideration. an It's mill footprint Steel. And Yes, integral part US

purposefully all sorts are we think of I target positioned uniquely metallic very to different strategies.

in if doesn't pig require as existing to So, a iron footprint. you think much furnaces blast about the It leveraging it's order execute. upfront strategy, capital in

move you're talking something you out. quickly more So, certainly we we're about be certainly it think near-term. DRI, on longer about in roll can term, the to not When going that HBI, it's something

but part think right iron sequentially be forward, of them I almost potentially be the opportunity near-term about pig with maybe moving US Steel would time. think could at it important the an I more

Matthew Fields

of or And outlook either you from build that? operation, of on kind you purchased then the scratch. any kind What's recycling

Kevin Lewis

the we're competitive as think talked look existing where I allocate investing and is on yes, I in about we'd Dave existing his to in competitive focused, think ore advantages. Iron is that's mostly Yes, advantage, remarks, we're Matt, capital.

more so think I than new. starting something

Matthew Fields

Thanks Okay, helpful. that’s much. very

Kevin Lewis

Thank you.

Operator

Thank CEO, I'll back you to Dave turn US comments. for Steel's much. Burritt, call very the now any closing

Dave Burritt

I for employees. times this joining for are US morning. by our conclude everyone, exciting to customers thanks, Well, want and And us These thanking Steel.

employees, visions quarter. our thank can and and we to the So, sustainable the for and you working in delivering together. customers safely products achieve on delight and to Stay again. time control, second time what performance that producing And you record our focused forward quality reality. partnership thank can turns We what you. steel for your opportunity you trust, look your to into for our you thank Thank to that the customers, provide

Your US commitment to what your is fellow coworker makes customer best. Steel and the the

safely. work Now, let's to get back

Operator

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

United States Steel (X) 30 Jul 212021 Q2 Earnings call transcript