X - Earnings call transcript Q2 2022 | United States Steel Corporation

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Operator

Good morning, everyone, and welcome to United States Steel Corporation’s Second Quarter 2022 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, Investor Relations and Corporate FP&A.

Kevin Lewis

Thank you, Tommy. Good morning and thank you everyone for joining our second quarter 2022 earnings call.

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

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

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

Dave Burritt

support appreciate we future Steel. are and safely. U.S. joining Steel’s And continued because everyone Kevin, good am executing on I importantly, most your to you, executing. Thank morning bullish today. of are we us We U.S.

our When leader safety and in to safety appreciate your great, goals. We is safety first. away are our work take operations to We for consecutive days safety third of At our great. commitment and safety as the to role pace our performance U.S. always which by measured very building shared continued you employees. a record on seriously. is you position, is already as We industry-leading year our second on are Thank Steel, focus from none. industry for

less towards business. and strategy, continue to we execute As carbon-intensive all best for capital we progressing are a our

our to customers. low-cost ore, are our assets prepared the highly our commitment disclosure expanding we and an capable become lowest leveraging iron best, continued share in demonstrates to advantage with our progress capabilities and rapid mills that and latest pleased our sustainability and we’ve the become advantages To on made competitive investing technologically-advanced are best. serves We remarks. cost combining The later finishing by our competitive mini integrated update unique best

said moment to best the enforcement administration. to recognize from we continued all, want a by take all. best become before, As I to the we’ve trade for need the current the

We cold-rolled the recent the steel very anti are pleased ITC’s to years. decision design with five another orders AD/CVD continue on for of eight –

and sustainable. to remains Continued as steel trade security advance the United the embraced government the electrification national States strong the of our industry opportunity States is actions industry sustainable which way from steelmaking process, The in gives United supports leader most sustainable make domestic the more have steel enforcement make our the in to steelmaking the steel. economic that many

our our and stockholders We our for counting what all it. because best doing customers, employees are are on is

returns to macroeconomic As quarter allocation for our highlighting impacts shown remains next and best messages stockholders. second the our and geopolitical shift, record profitable our on framework few direct moments balanced growth all three both X: our and strategy Slide strategy supporting spend capital constant. differentiated performance, We’ll key

record-setting financial Let’s are and XXXX in our to get of year X. We another started pleased company. to on deliver our quarter April ever exceptional performance Slide quarter another first be best continues reported of for performance.

stockholders. quarter performance. the second contributing flow nearly capital EBITDA enterprise Over cash $XXX We billion of record to delivered adjusted million over $X.X EBITDA to with of each four of $X.X free returned meaningfully the past we’ve generated operating quarters, $X billion, billion of segment and

delivered well, and us balance capital July, committed our performance well, Last of quarter, to we we’ve commitment $X.X heard $X you ending billion cash increasing continued the our less stockholders, returns our quarter. Since on and quarter in In a We also and we continue nearly our continued of earnings meaningfully liquidity. to approximately translating have stock. cash April, direct when returns of program the second direct repurchased In generating to today. to XX% quarter, exhausting $XXX drumbeat strong contributed $XXX do that in we flow million approximately I million another year. by our of cash billion in into quarter, million stockholders. October, returned we than we you that do $XXX over free want to the in and of This say

see in our us the another reduce to acquire repurchasing value company, gives announce Steel. share are the of to pleased our and opportunity tremendous own to steel stock U.S. count that million continue further more We $XXX will and program best-valued

metallic that We we our through-cycle lowest of to executing strategy will are the discuss that improvements strategy. our resiliency, the decarbonization are advantage. are our Today, value towards to our X, Slide expand because our differentiated advancing cost the iron confident of improving and on unique business we our decarbonization ore and we’re structural and goals, best XXXX footprint the XXXX

get well-timed EBITDA quarter inception into segment first Since of has nearly $X River of the billion. on acquisition Let’s than paid for Slide itself. The in River outperformed our acquisition more XXXX, Steel X. expectations. its has contributed already has The details mill Big Big mini

to mini EBITDA. our results. and deliver now new steel lowering expected of domestic consistent intensity mill capital It’s and is carbon flat-rolled represents more segment Our our XX% nearly

also Big River While of our Steel has sheet. the transformed our business acquisition transformed balance model, we’ve

Last year, debt we billion to runway over strengthened repaid with maturity and of strategic projects confidence. sheet. we $X complete balance our the cleared Specifically,

We significant have plan. XXXX and upcoming no until maturities debt pension overfunded

X.Xx. customer our net of end the relationships. business A stronger As stronger enables of quarter, is debt the second

automotive, exposure the ever to have appliance and packaging. the tin than diversified like to construction, before customer and end closer markets We’re

serve uniquely segments. are mini to flat-rolled, positioned from tubular our and Importantly, resurging energy we the market mill

annual world-class we’re NGO, order growing steel rate position steel constructing NGO in We compounded investing or future. serve in growth a line to continue the to X%. to growth expected that us grow in at in leader book The for market will the as product The today’s electrical energy in capabilities steels see markets North of while electrical America. is nongrain-oriented,

brand-new produce supplier NGO of steels electrical asset will produce this the through wider will thinner choice. become and We to we

of We the of next the are generation that to electrical required support steels automotive the electrification continued will developing be market.

at this our improved also notably coupled We’re with profitably coating on relationships, River, grow galvanum. expanding our With Big capabilities well in customer capability, to positioned are our we participation expanding market. strong

strategies, Slide programs. as are X, highlights our and advance towards to While decarbonization carbon on investing we’re executing report, we making customers’ improve the progress own in XXXX to Last enterprise, we our goals. XXXX issued and support XXXX week, our sustainability which an footprint we sustainability taken are our steps our On our targets. ESG also

positioned emissions to our greenhouse by reduction reduced gas has XXXX are GHG we Our intensity in and of emissions XXXX, XX% since achieve been intensity. XX% target well

We XXXX. also achieving remain emissions gas committed to by net-zero greenhouse

be our emissions Mill On to materials footprint, advantage furnace iron our ore key lowest will a low GHG XX, As arc Slide segment. we continue Mini to raw electric expand we differentiator. expand our cost

sustainable S. mutually beneficial for forward XXX union agreement securing to facility SunCoke. while U. proposed While in-sourced pig today Steel good transitioning number pig our provide transaction could that and future. XX% to finalizing metallics look collaboration the iron a with of XXXX Works of increase that jobs, is and a are by SunCoke, Gary in City SunCoke to with We a with at more iron win-win Granite XX% addition to

strategy our expanding by also ore our We’re upgrading iron metallic pellets.

to We’re best reduced-grade Keetac’s DR-grade ore quality capabilities. at and for pellet life Keetac capabilities makes pellets. to the upgrade long direct investing our choice high make mine body it

allow metallics Mini produce keeps to Mill blast ability actions both key will virgin awake Access pellets the at metallics. have Mini the self-sufficient what segment will feed in our We competitors increasingly and furnace our to to to at Mill us become Keetac is night. future. These with DR-grade

use U.S.A. approach an mines here compelling our and of difficult competitive Slide our advantage full that advantage capital making final XX efficient replicate. very shown be iron to chain, at for On allocation. on-shoring our We’re will disciplined to the our on is our in competitors right topic ore supply

With didn’t million to positive have free industry-leading allocation met have for capital quarter. our all objectives program, for very our guided funded. fully repurchase returns. cycle that debt place investments the ending strength, balance those are third Mini we continue Our on we and a an next are and past. the well remains capital now completion These track. all than beyond considerations, allocation best remains to CapEx, ensuring strong The are allocation new Mill objective as of direct our through are previously main segment and pleased to months’ the capital flow priorities we our sheet adjusted cash investments are expect XX authorization in cash balance strategic We sheet announced priorities EBITDA three which better balance and announced best stock in into have by our $XXX

we Mill multiple million cash to to segment XXXX, the and and balance to $XXX run capabilities, a increase Our complete solid, sheet those have CapEx deliver and business. all for $X.X we our a of generation expect Supported we by have of position will EBITDA less our investments best rate record rock to our sustaining that of annually. than significantly segment cash $XXX our million expect contribute Mill an Mini through-cycle billion EBITDA Mini By is differentiated investments. attribute liquidity

latest Steel knowledge, her superb supporting greatly are tremendous it a be Now, insight, year me her President through record let acknowledge we but performance. to will Christie, of our U. continue Vice in today’s extremely Transformation she today efforts. us the to company over that have This Executive call, as same her with over turn benefits years, Christy’s Christie’s not and would be all as fortunate role We CFO. of leadership end, will last S. contributed the take before especially the best without the to I for remaining moment to contributions to earnings initiatives. Business be

with With new it Jessica Steel’s Graziano excited is the S. X. Christie? U. the chance as CFO, her you that, get turn cover also for to welcome I’ll August I’m her to over speak to she once We’re on settled to excited role. Christie financials. beginning into directly new to

Christie Breves

experience. the And to and I iconic U. a and our of you as highlight team rewarding the It’s career whole board serve incredible exciting wait to CFO stakeholders. Steel, part of adjusted see I’ll and you, been over Jessica can’t be we’ve To revenue Thank date this been the this at to U. of has how the organization. customers. delivered $X.X thank of S. for $X.X all on that begin Slide best strategy all to succeed for getting in billion. the will nearly confident future. quarter second rest team from its the of delivers EBITDA company’s stockholders, of of you, transformation our generated We our record underway a progress an S. Dave. made XX. our to billion and I’m my Steel

combination Our inflationary Higher first quarter. in to second profitability. Mill by XX% In million the continued performance. second as costs million Tubular, rates partially level, volumes another starting material higher and benefits Flat-Rolled At $XXX the material scrap margins costs. represents the offset overcame costs. $XXX utilization million we significant the The iron in in of $XXX the the EBITDA EBITDA more EBITDA and seasonality million of to improve higher of to efficiencies performance average of XX% through cases, delivered XX% quarter, helped our quarter and margin we’re our than [indiscernible]. resulting second in average higher Higher million see from segment our rising operations quarterly a headwinds, the $XXX $XXX than EBITDA offset prices related more mining second Flat-Rolled quarter, absence EBITDA strong of Mini steel and EBITDA and Higher compared selling XX% of improvements deliver quarter. or additions we as adjusted the segment flow steel-making margin again Slovakian segment, also in and offset of quarter. margins hurdles of XX% selling by with and profitability. compared XX% were prices in raw ore And quarter and to $XXX strong in costs the EBITDA Europe, EBITDA quarter. the quarter. the geopolitical first metallic well trade lower the versus higher outpaced were selling the reported first raw and first Higher totalled in In million prices volumes was margins pending

and our quarter million free in record the nearly second into and This to us translated performance the cash flow of liquidity. contribute EBITDA confidence to $XXX our Our gave to stock accelerate over second another to buybacks cash July. returning the We million quarter, have shares quarterly shares in our quarter repurchased in payout. $XXX cash another repurchased dividend XX million stockholders, of million including seven

buyback announce program. authorized pleased completed XXX repurchase are have to share program our million another and We share

well above declining against expected our for and quarter environment our time continues averages business waiting are is through of to is much greater remains just suggest inquiries on steel the market. monthly lower capital priorities. recent and second Flat-Rolled quarter the lower expected the in allocation with to Unsurprisingly, healthy. segment the the cycle is Flat-Rolled some clearly selling Our buyers market the customer versus prices. segment. market Customers the accelerate track perform kept right based, Conversations customers Mill on through of re-enter In our third flow and result Mini price into to sequentially to segment, demand for contract defined exposure the in through steel EBITDA sidelines. This has

work sequentially In to conflict through Steel reducing the and negative are and third Big Europe, at continue and EBITDA material River inventory costly energy expect more in demand. and the prices impact lower on therefore industrial raw quarter. meaningfully, also in Ukraine We manufacturing

while As material a the in costs margin third remain quarter, have steel softened, is raw experiencing USSE compression significant segment our as prices elevated. result

demand. capture Tubular at running prices customer is higher our and continues utilization to meet elevated segment Lastly, rates to selling strong

quarter. quarter. the trade expected high results With support in the segment increase in falling cases the expect past are Spot third we levels negatively several the meaningful third from the months ongoing over to from EBITDA OCTG impact in prices another

from than and and [indiscernible] in more working business past $X quarter advantage dynamic for in the October the That’s increasingly under also expected expected as recovery and to slowdown in third still. projects to to operations business to temporary why as quarter Our you. September continuing of keep back are flow, moving Mon are scheduled at while expected better EBITDA outage can’t to with resilient cash stand market to billion. prices This advancing taking for cash a The capital diverse third end planned operations anticipated the be just the Opportunities exposure generate prepared market remains steel Dave by strategic decision in resilient the us free flexible allows our planned. Valley. we we’re originally be the to bottom.

Dave Burritt

you, Christie. Thank

get continued second our we let result Before execution across questions, Record today’s each of performance summarize remarks on segments. Slide a operating to of quarter me XX. was

a now Sure, must U.S. environment For $X U.S. Steel, know liquidity strategy, economic know and but record you billion. differentiated we have. just sheet industry-leading a over we rock-solid execute, this few is execute cash execute, with ago. and the and that the we mini mill We a of uncertain, have operations, isn’t balance same Steel from years

EBITDA. run expected our are All cycle All for $XXX of Best factors through rate to support an deliver execution these and million of strategy additional

Kevin, We to are delivering move on our forward of capital let’s and re-rating our Q&A. priorities stock. and objectives allocation to look a earning

Kevin Lewis

Thank you, Dave.

first Our questions come Say Technologies. today from two

demand, steel customers? markets. you end questions several question, outlook and domestic first received about our your perspectives Can on share we markets our The Dave, key across

Dave Burritt

of in it’s can top the Thanks, people I’d And uncertainty. advantage. a there’s line that how many we’re order book the serve. end of In I we dynamics market see couple. turn, The for break growing mind Kevin. creating But diversification, a talking about that lot there’s profitable near a the and it course, so capability, of questioning. different of as growth across of up markets our growth. many near-term, great that’s

upon that Not multiple It’s just for markets market. We we serve. auto We’re just one not dependent not dominates. us. one got

balanced. more lot a We’re

The news bit USA. issues they’re As made appliance, I’d to automotive a chain mine going find We those mixed buying. ourselves I’d and Industrial we’re far trade good have seeing a resilient in say less, but more melted centers, especially position service is as still the challenges. and say with strong persisting. supply much are basically in the or enforcement. construction we’re cautious that

we means we’re bright But spot really everyone. is example, unique that GDP and quarter, ready an in that’s so strong and ever that markets doesn’t and the here. us for much being is U.S. serve. business, tied for a a it’s saw us for exposure second negative and energy. whatever inflation meaningful for we’re future a impact headline than the Tubular to here GDP What the quarter preparing more saw really It’s for those Just than first today. before, Obviously, it is EBITDA. we is Steel But the very different demand ago, year and numbers. on The resilient to in mean while contributor more

matching order inventory, and the our But lot goals, near-term definitely we’re fine. the plans, of our it’s there the will taking, optimizing we’re quarter the going and actions a be production the as third loading So lighter. with is books, managing uncertainty,

Those in There’s passed, growing next in to And in through about see with growth, There’s And as that excited non-automotive high-strength strategic than markets. I’d benefits the bill frankly, profitable far cost There’s low we in these electrification. advanced higher applications. been steels. the we and/or just our future market automotive high being advanced growth, come we say sometime are high winning deals the year. strategy. about things here the growth the know we’re overall rapid pursuing and that for of growth, demand a it’s little a the more that As I’m steel. the capability. and we’re outpacing because strategic expect we’re strategic And green and infrastructure has markets, is – must differentiated market interest win strength

course, the footprint about And we’ve in than many steels the seeing that and we’re the our soon we’ve electrical be of line steels, just world-class will had of steel with carbon lighter out the past. with much sustainable opportunities verdeX and potential there. that line come there. NGO excited got green we’ve We’re Then, really completed

performing again well. very We’re

So we’re capabilities. investing in

we’re serve strategic We’re growing markets in we making markets. the we’re sure in profitable investing talent. and in And the investing that that growth

Kevin Lewis

Okay. you Thank very much, Dave.

related our second The received road the that we to energy adoption is sustainability in map. of question green

you your on Rich, provide question? thoughts please So can that

Rich Fruehauf

that issued to Sure, technologies. first, as week sustainability take to change we’re to sustainable last you U.S. Kevin. part our I Well, decarbonize and now question. wanted steelmaking, on going and that with companies solution. at look address governments report, collaboration climate a our That so on developing a the doing website. for there’s latest We’ve requires and Thank we race steelmaking communities. Look, everyone in we part deploying new advance technologies global to and and of say, to Steel, our encourage just committed right other be

what in this Power, we February, So GE, Tri-State Pennsylvania, Ohio, region the of in Shell, who with doing EQT, start leading announced have been Mitsubishi with the Let vision a Industries an Heavy alliance Equinor, companies, space? of for West our share for we me that likes that Virginia, for towards looking are sources immediate And capture. model that more we’re In providers of the energy. more partnership, future, includes production renewable ways with alliance, like sustainable working energy more sustainable things to Marathon, carbon hydrogen, future. industrial create we utility national and a And for systems.

at electricity like of already way Big also committed And of guess, Big put today, project solar. and X is are the gas, they for they’ve I partner part I OCOR, Entergy our development they X power River supply. to for So already they’ve to more But River significant example, today complex renewable our power non-greenhouse is – Big supplying Steel, it, River. as River Big generation our amounts nuclear supply are

Valley from Works, energy partnership to with utility our at certificates we’re Mon local we forward And continuing looking emission-free our So obtained have Entergy. that partner.

of are on. that’s we’re those working things some So the –

renewable parts say possible energy the well. other I role we of And as market. selling increasing steels, making into have playing the would We then are other in footprint, at generation an on side, looking our customer sustainable in power projects by for example, solar renewable

make a for the with new a tracking month there just new have facility which Granholm systems. was here We ribbon solar to partnership last DOE Secretary opened Energy cutting. Nextracker,

proud partner with Nextracker. we’re really So to

the as in a full we So sector. while of the these across we want standing the of private say U.S, company, what steelmaking I truly aren’t would need green partnerships still we if to public potential is kinds and unlock

need steel It’s profitable money For its just not clear about us, it’s it able these We – solutions. action to in But required. be about to investments. is also making make concept.

examples. few a are these anyway, So

So question. It address the that good helps question. a was hopefully,

Kevin Lewis

Rich. much, Dave. so Thanks thanks, Okay. And

– question if now, morning. you queue so a So may follow-up, participants we phone line the and the questions. And the line a each everyone ask this has remind opportunity one operator, to for ask question please

Operator

from you. Markets. [Operator question our Gagliano And from BMO ahead. line Capital Thank David Go the first Instructions] on Certainly.

David Gagliano

historically strategy transition Hi, My heading But questions. lot thanks Obviously, CapEx and coming the recently. for into is regarding taking down. results high of capital Steel buyback things just authorization generated and the a announced. very of question free my allocation period first obviously U.S. are a changing, cash are

cash So It’s which below is balance, the billion. $X inconceivable. could billion that get now, not $X.X

prior question Steel is aggressive my first in considering That’s question is environment. the my changing the authorization. to the on U.S. question. stock. buying near-term, back shares How on buying So the – be back My

Dave Burritt

question. Well, position our thanks desirable think David, that of because for we’re And purposeful this you highly execution the in strategy. know, of I that

a as being remarks, of to you over heard we how we billion in $X cash And strategy. $X are lot have well billion liquidity, about opportunities. on bullish with of execute of the able So the and some

capital put the capital You’ve that to We framework. deck. in committed seen framework. it allocation our allocation we’re Again,

opportunistic. those we Best individual be by make sure through sheet go get investments, for we’re to And you the going balance All all that, down; going then of the we’re We’re pieces direct we The return. and have the guided strength? to

and of check. one our business, position, free makes strength, earnings the that resilient, our Strong more strategy you those cash Advancing flow you go say, okay, check. of sheet check. and balance cash So each kind through our

So must. was we authorization felt a the

within that we’re so And framework.

We will be opportunistic.

economy are, how quarter, do the certain not and very We’re good we’ll but going be, we within framework. unfolds and a we’ll opportunistic where by to again, we the to amount commit see feel

pace maintains our We’re to a to as dictates investments. active that liquidity of level executed strength as our and support high be a and framework going

the program. think we So last the $XXX this to ago long that that committed exhausted is we million we’ve year. Again, really completely not a good within

we framework do good we’ll So buybacks allocation the to very that these stock we capital to where about stockholders investments need and to how providing because and done, to we make are, and do need rewards unfolds stay feel dividends. economy get that and strategic see sure we’re with our committed we

David Gagliano

two-part Okay. questions That’s that with third press quarter? positive the the improve is until My in release, A, in helpful. B, shutting down are, far follow-up follow-up the back things a Europe? either regards planning to contingency Steel will kind And the or considering My it U.S. as is European operation. in be EBITDA of as was scaling mentioned Europe

Dave Burritt

contributor about now think reach peak the where European the a with months. they USSK. And prices, by obviously, $XXX Northern It’s margin you’ve seen And seen to and U.S. ton. we’ve a there’s I significant ton, last a they’ve of Well, $XXX, numbers Steel. been fallen compression over a few $XXX

So have we been There’s compression. materials doubt This And very basket about ton. a in lot fallen only always war EBITDA, it the think a due we prices margin while to and of to some be positive raw it’s Ukraine. runs definitely the well. has to declined, frankly, very here. uncertainty USSK comfortable is no business, have feel EBITDA, positive EBITDA. positive I I will be continue But going that $XXX

the feel and that extraordinarily that to And exceed a and down. reduction, well. the USSK EBITDA the it still continuing million, here is half So in going we first tubule $XXX to to USSK contribute, about is to won’t while good performance. the half half, was to is business is thing squeeze. think and able that that But in of quite of And be all the think had Tubular perform comes offset you I going to that excess second remember continue is that, first

USSK So hit, very, us business. no Ukraine diversified good But team And very run there our they about people, footprint helps some feel how offsets. ahead that. the sure over And of the terms that well. made excellent again, were war bought is to an disruptions. knows and this when there with supply we These in

now so currently inventories. that. We that target carrying to have bit they’re days, about target but a typically higher days XX little And inventory XX and increased extra we’re than

raw softer the demand to longer. the is of materials So going higher-priced make consumption

that, yes, going business really stress be still on So it’s it’s in to good – but some there’s Europe. a

Operator

Thank much. you now on from line very will with our next ahead. I Chieng to Emily Go proceed Sachs. the Goldman question

Emily Chieng

Good morning. taking And thanks my question. for

instead? one unit, you around pig first facility. maybe big will strategy be constructing Maybe I technical granulated that help between have granulated capital iron pig pig understand help the us differences which you iron And the the us The Granite CD just is SunCoke. the and are could to frame iron sale behind potential what facility and Gary Work

Dave Burritt

thanks U.S. the business. how Rich, but I’m to Steel. again question. turn punctuate much metallics for important is are just advantage to it competitive This a sustainable, our going very for Emily, to to

ore range iron Let’s iron ore the face it. making God’s the They’re range not not anymore. making anymore.

is something So cannot replicated. be that this

the about good headed. where very strategy feel Rich? we it’s So and

Rich Fruehauf

Dave. Yes. Thanks,

So bit a yes, start little context. of let’s Emily, with

steel – So iron as of pig two-thirds HBI an iron to about that and on you’re we market right of produce the these was HBI and talking your and pressure the metallics. a put the warn your Ukraine, pig right? And know, DR now, cutoff ton with pre in coming supply So for the Ukraine, out Russia has it of of EAF iron me, as excuse more XX% cost or of ore DRI.

because huge price supply or iron ups our footprint market as in cut metallics a and So fleet is able ore having advantage these said, the in be and the exposed as foremost, to downs and to won’t of of we EAF pig. scrap the Dave then virgin first off for supply or us spikes

hit pig to think NOLA, to delivered from the Russia New of $X,XXX close year Orleans Ukraine. a this I ton and earlier a cutoff result as

that’s it. with we’re addressing issue the So basic

our for the to we Granite mean, City, furnaces, to low-cost Minnesota iron that able the pivoting So just also produced in supply here we’re EIS be working blast for with I doing on to indicated. already respect I and what is ore reasons

to trades and premium at because DRI iron, a respect with Now over it’s pig pig HBI iron exothermic.

You use. you loading heat it which get that a in by productivity iron the value and furnace, in pig improve means off gives is your furnaces. means What

You times. speed up the tap-to-tap

it’s is iron, pig or Gary win. having City So huge a Granite whether at a

iron Now It what furnace. sort is which smaller at the of Gary, and sort the more the we’re pig evenly City, as distributes in standard pellets. call difference the at what of granulated pig lumpy between doing we’ll Granite granulated

so you we The with and be a a City. go that’s chose unique granulated And iron a granulated North will get so and There’s Granite significant pig melt, to not pig risk better America. faster at here. the iron to why

We’re we way SunCoke possible. because this to get that’s quickly project with underway the as best think as partnering

As you know SunCoke supplier Granite City. at is our coke

the moving we’re it So turning down is of in model into going granulated I vertical moving ore iron benefit today, turn from it we’re of reap fleet. – iron the pig to steel, integration instead EAF the mean But what that doing just our basic doing into Granite Minnesota and City. to having

Emily Chieng

on Or this be that IRR decision just executing to decision? something City, instead yourselves? potentially City of Granite sort clear, project to else Was of might maybe sold facility it the fact SunCoke not triggered And perhaps have follow-up. met as that target? Rich. there iron why capital that granulated your Steel To was pig XX% for Thanks, be U.S. was Granite a that the

Rich Fruehauf

furnaces make coke in the running City would liquid versus into running partnership say, make think blast so thing we’re gets to provider because they’re already blast today pig I Emily, turned main for the with I SunCoke metal to that on-site steel. furnaces a Granite – is

to SunCoke we We’re this to opportunity respect with already as I an the SunCoke level. take and with partnership a in think to next partnership forward, path saw with the that

our our benefit from our what they’ll into We us we’ll good Because ore with into really skills. allows Granite a said, the as And low-cost us ore then mean, going is that’s see think this be steelmaking drove for pig. and great move talents to respect GPI. making this. And turned think iron I this, operator it’s for both So be on for through a I be to as companies. converting City iron really I that GPI. and we a partner, able this win-win to core SunCoke to focus

Dave Burritt

say it U.S. not it maybe win SunCoke, XXX preserving a go for for would that add, win-win-win Rich, I is away. win ordinarily only because I’d Yes. it’s Steel, jobs

remember of March Mexico and up with off the furnaces place. it those was opened of the other we challenge Canada the when that demand came City, and I trade tariffs blast business. That’s at when that [ph] into people XXXX in USMCA challenge, when when Granite aspects came tariffs think

the and So of we this, can. care company the time, jobs at possibly we I think many take as care as make take what And also SunCoke as is the same frankly the do preserve that as well can best to sure employees. of we

Operator

to very line much. Go our the BNP right get ahead. Rosenfeld next We’ll question on you Thank Paribas. with Seth from

Seth Rosenfeld

on on impacting idled please. a side, strong opportunity great competitiveness please recent business? past about one you’ve tubular deal got touch the recovery start can restart years, your there I’ve you an cycles? energy On today. questions our first to Is EAF and CapEx, taking within new facilities? for earnings. Thanks tubular the very Obviously, raw you business [indiscernible] material the capacity. in the with I’ll how How of capacity pipe the the versus tubular there think do obviously, morning. Good welded

Dave Burritt

we talent really EAF. the Yes. Maybe to and performance got that first Great how run some safety I’ll run strong well. the It’s start extraordinarily now being there with EAF. understands

The downturn significantly are in annual million with cost big investments energy $XXX that about paying us. So made that’s providing off EAF through the savings. improvement we a a to

leveraging for big of us. control a and Fairfield at We now deal rounds seamless that’s wide supply that we’re the of we that have. So range capabilities

on say soon that. can So are strong current plans to opportunity enforcement But capabilities, earn anything would like no But we far be so continue create increase that energy in trade the that stockholders. to value open to and EAF to up continue optimistic business. prices too the we’ve anything half, counting domestic selling very invest cost market tubular suggest higher this, again, the serve in for I’d taken second the our or profitably there the I’m to actions we’re frankly, to plus average about

Seth Rosenfeld

prepared inventory. the raw And on second you. question, you Thank costs to working your commented regards Okay. elevated with materials through please, remarks, segment. Mini In Mill

I of back think elevated de-risk discuss months Russia’s some Ukraine. prices invasion prime of In with following that? River spend with through Can inventories Steel is to few effort in a scrap on Big procured think regard stocks. iron supply ago? about or pig back April, you peak iron of pig now How’d we us safety short just potentially walk typically you the to impact that sitting

Dave Burritt

the I think, was an obviously, Well, issue, when Ukraine in this war started.

to had been supply we have critical. surety of it’s So the

shifted have secured from sourcing Brazil we and Ukrainian especially, and from raw course supply, so new away And material pig. the of the India

have And so HBI pig elevated iron we and inventory.

do that we that obviously have so that And to high out cost. and manage

price we’re going and there the business Mini very have some compression that have so And to Mill on to closely. manage with

side, about working new at would Big which spot we there’s through quarter. with falling but $XXX prices expect the doubt be uplift, River a good some of million, the on capital no So nice to release favorable

to We expect lower volumes the Mini versus But quarter. second similar quarter expect segment. EBITDA we’d be at Mill third sequentially the

Operator

next right our the very Thank proceed much. from Go We question you with Glick on line ahead. Michael for JPMorgan.

Michael Glick

morning. Good

going fitting Just on how your picture? beyond the forward, you into DRI are material the pellet strategy investment, thinking about raw

Kevin Lewis

is Yes, so Kevin. I this think Michael,

if matter a when think comes not it it’s it’s and we’ve DRI. said of to that when I where,

materials, however, I making in expands are pellets future, pig the as our actions laid we self in metallic. capital, DR a further advance as it actions to meaningfully light iron out think the articulated to that Rich investment optionality and a strategy, we Keetac prepared underway strategy sufficiency a the to underway increase the DR-grade advance So our we of have produce relatively

that It’s life ore focus term will pig regrets mine. iron, of It’s longest So at to think our on invest capabilities I no in be our best our body. is Keetac. decision where DR-grade near

furnace capability in logical to us to maybe anything production that and choice add So a very to pellet moving else that to their Rich, great DRI, capabilities forward blast explore but add? already position puts kind of

Rich Fruehauf

us touched opportunities, it. the we’re gives foremost what’s into sooner mean, we’ve tell future. the benefit opportunities because had on of pig our DRI of EAF. versus think, that. But And converted to first and pig focused we I as for will you you get iron Keetac allows Yes, near metallics said, furnace. pig float I those And into and Kevin, in on you sooner we DRI saw term tremendous to opportunity is outreach with public get you the went at the started. that plant announcement us that once to the an I

think future of said, in see when Kevin we partnerships look potentials the So as as opportunity that if commercial we at DRI, of not said, it’s which Kevin it’s as well we might there, lot for when a where. in a and about question

Dave Burritt

in again, when number, of a wouldn’t in. necessarily the we have, how this, I was think because that CapEx what related in what sure that though We be lots make options put right the have in word everybody put huge key in that of. optionality. should and think we I terms nothing now to all DRI, and even to we adaptability, flexibility, heard there’s to need of That’s that nimbleness

with footprint make that need make So the allocation to issued that that’s we we sure important bottom and our about pretty where strategy we we care capital line, take to sure good us. stock results live not feel announced, why we do the we show are we sure to That’s CapEx our up And buyback program. that with this our we that and on of make good only we’ve stockholders. but and

reward stockholders. to continue We

Michael Glick

strategic think Europe, Understood. was Slovakian just a papers, the looks the from there on the recent it And side level, I about MOU energy we should I longer-term direction in in then, high think a there. guess like how of USSK,

just get any there. to So thoughts curious your of

Dave Burritt

one a have Well, obviously now, XX in Ukraine, for on been those that from this improvement to border. have we geopolitical concerns. had just any things guys fortunate very an current we disruption we’re get Again, been haven’t kilometers there. These that And I as this. the with through over awesome the of has We’ve is experts. USSK progressive us. said, business are talent we great But right transition Kaizen

have this manage is. Meanwhile, and to that figure We put this has then to and continue. what positive we’ll up that expect we well, business always EBITDA out future

Operator

Karl We Blunden proceed you from our Sachs. line to now Thank right much. with next Goldman very the question Go on ahead.

Karl Blunden

for Thanks morning. good Hi, the time.

if are things CapEx, number sense on investments and your above budget, major you Just right how the When below you planning I are relative now. process what’s wanted a focused for elements your could on about and to or us still comment of buckets that running your uncontracted wonder which to on assumptions, you’re focus think there? give

Dave Burritt

Let me just take part that. the first of

on on I things we’re that ways folks, things on electrical it steel sure really for NGO, going the on the think of time NGO make Big the and these work really procurement whether focus is that on And that’s One we pleased, budget, the are creative and with and with frankly, budget. the coding to plan, time, Galvalume on but everything’s and it’s have X, on was the what our to in. Big the track, work on across strategy the and plan just not This River, really River people, pig on footprints, about costs team machines entire think $XXX inflationary knows on looking million which integrated you or X, come all our metallic be how iron that everything’s the plan. on lines Big the plan there, River

through managing plan is There’s ahead team the about cases. whole way a We this. lot go rigor. You these one it’s of where things on of in the each budget, many of feel good maybe

Christie Breves

think there they, something supplier team just suppliers think items on add base I and early, a they’ve widening there, that our little just have time the more I they of a job long would they been quick choices. I Yes. ago, placed as just create an of so team excellent in well got multiple team’s the for to competition, that They’ve that lead Dave, a really good as does different that so job looking some top it there. done bit long-time

Karl Blunden

That’s helpful. Thanks.

we date of before you the there Or on go a enough just better? that? and want should about see HBI for follow-up accelerate Is investments potential a do progress existing done and could think to and is if investment. that? date after one you get a Or the you flow second that some cash to not good understand The optionality

Dave Burritt

allocation go the keeping think those to I and pieces look strategy at there capital are and back individual sheet. we need to balance Well, healthy the

point. at we We this going that no on. commitment take care the that’s to and need out, are anything to we’ve investments else what get of focused to laid There’s

good don’t we We’re let the very the going what stock. are soon. the big anytime anything executing for to economy delivering value look but strategy our and solution where feel here, to tell about us We is

there’s face of lot Let’s it, uncertainty. a

minimi assets that business always are to Europe’s of we running back. uncertainty running what something than ever been before. the different that Tubular coming got true, well and challenges I’m Some but performing challenging the make we we’ve that’s and to that is assets we need sure there times, people extraordinarily say haven’t do, able times these do integrated going we’re and more and we not to we sure that’s in well. but that spite are now so say the know all do say, are

So look here. I for anything wouldn’t

it, we’re but big committed do we We’re available, whole this keeping there’s isn’t that point. value there a if optionality of opportunity to at here again again course anything adds – a lot of

Operator

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

Carlos De Alba

Yes, very thank everyone. you much. Good morning,

like coming might I then kind And color consumer add and to appliances you exercise the other of more plus the exercise second those optionality you for to that have color back a that two supply? the if there available? the just that strategy, my in sectors future has you is are you soft little comment end bit markets little But markets, auto and you So any more that but could of that opportunity terms you created. an of that what bit option on now timing do when I you the may, with question, little mentioned have related a could that understand – that it bit DRI on key is potential the end on a

Dave Burritt

Okay.

No. color more on part, first can DRI? The I give

I to color the think we give we on it’s say not the talked all going metallic DRI strategy; you about you right soon. now as we’re anytime got inevitable,

at it so leave we’ll that. just And

we’re There as way demand diversified I’ll get to pace make accelerating rates customer of allowed Kevin? needs security. We Congress the we pretty imagined. and entry that increased critically shortages, science self-sufficient lot well maybe close a up seen and USA not optimize the pandemic, to assets and obviously The to learn bottleneck the we’ve markets, stick this mind talk you But bottleneck to good this to it’s of take some ramp very to auto, domestic say is order what’s an going pockets are and the steady the far longer. that. care we’re staying in national like by seeing bit of coming. reassuring auto and made take And important think, got we’re There’s the chips maybe pull and USA. feel positioned about use as auto about the in these. We in in If Everybody to big other alleviating still a in to the Anyway loading. but we of rebound, well this very need semiconductor longer, melted to of has done, from ensuring supportive auto and taken sure auto. is nothing this. each And able oriented act critical foreign it’s I OEMs. what from us we’re and the on consistent it’s inevitable be As like to a hockey industries, we’re ourselves is know. actual semiconductor the service little be so one big but very, than anybody the important to some feels we it’s across might

Kevin Lewis

pockets industrial other and to I pour lines good those across to continue of the second see be expect say, along Dave, in space And half. demand we the that Yes. would stable rates and

construction the Service generally value at of quite construction particularly non-residential good added would been are resilient. centers, you seen mixed. I out acknowledged buying. as market, more If We’ve centers, market service that’s say shipments cautious we speaking earlier but look the

that soon. look start you can’t type and you when So buys imbalance can’t they’ll of continue, that less that shipments more to relationship, continue meaning have where at have buying

before, Big the order to So facility the spot addressed as market. in with certainly and performing serve a particularly brightest today, that the it to River there pipe. area big for couple which our a well and certainly demand that capabilities about line which and today’s we’re And is OCTG is mentioned is also of Works key book, related We’ve positioned the Gary if Tubular Dave extremely differentiation seeing. earlier, unique you we’ve in us that strong well talked the advantage competitive energy, is

given in feel resiliency some, that portfolio manifesting the some have provide dynamics here. So there’s we I balanced different will – certainly products different like of we themselves we’re have balanced book that us pockets, we but think

relationships partners we’ll mutually creating to focused they to together them. on the continuing innovate beneficial provide And and willing forward long-term green with We future. look for value steel with are want So to know build to stay we our customers.

Rich Fruehauf

Yes.

to XX% XX% dependence XX%, XX%. tin of XX%, energies got set appliance think XX%, with on line to too exposure like having We XX%, construction customers. I this does keep diverse us end this; much just market really insulated from one pipe automotive to and something

diversity with of energy well footprint demand this strong and also line but a spot more bright that’s Big Gary River. Tubular just really deal there’s there too. – USSK good with as OCTG with Gary So course then a the in also and lot a There’s and pipe,

said, short-term stockholders. as $X over uncomfortable sure still liquidity, cash time again, the the the we anything book through make Kevin pleasing And uncertainty, $X and what So can but in we’re billion spot to better have in and is navigate brightest energy. the billion

Carlos De Alba

very you right. All Thank much.

Operator

conclude to the for the does call I’ll remarks. It CEO you. back Steel’s Thank Q&A. closing turn now U.S. any

Dave Burritt

this we U.S. to forward look for demonstrate increasing the for incredible and of another been in this It’s None power morning continuing your All Thank of strategy. quarter in our time Best to you interest is and possible. Steel.

However, to the work best employees every are among hard work the top day. commitment the of without a were places awarded deliver and recently score of We index equality for and our inclusion. from XXX who our customers for disability disability

record pleased you and forward appreciate commitment do are it we’re that to safely. to well, business using employees. well recognition workplace record with for and We when reward our works you our We for well, When for, you your performance. the see doing – our all. to talents pay to for drive we do match a do Thank pleased continue you and to to

of entrusting none Thank course, and this with you U.S. products Of could for our do customers. your without reputations us Steel.

strategy. forward and thank growing quality You your your for continue customer’s demand. you meet to and greener need of the mission steel our support investors, our to continued you finally, look a deliver future, to We importantly with own towards you and to

continued becoming direct rewarding and line you with steel in best together. while allocation priorities. We look shared strategy the our returns executing on with success aligned stockholder forward to company the capital We’re our

back get let’s Now to safely. work

Operator

for Thank conclude very lines. the thank your call participation disconnect and please does We that much. for And your you today. you

United States Steel (X) 29 Jul 222022 Q2 Earnings call transcript