U.S. Steel (X) Sees Q3 Adj-EBITDA of $2B

United States Steel Corporation (NYSE: X) today provided third quarter 2021 guidance. Third quarter 2021 adjusted EBITDA is expected to be approximately $2.0 billion. This compares to second quarter 2021 adjusted EBITDA of approximately $1.3 billion.

“We expect the third quarter to be a quarter of records for U. S. Steel. Supported by strong reliability and quality performance, sustained customer demand, and continued increases in steel selling prices, we expect our Best for All℠ business model to generate record quarterly adjusted EBITDA and EBITDA margins, demonstrating the power of our strategy,” commented U. S. Steel President and Chief Executive Officer David B. Burritt. “We remain bullish that market fundamentals will support a stronger for longer steel market and we’ve accelerated the pace of deleveraging to clear the path to transitioning to our Best for All future faster. Our best days are ahead.”

Deleveraging Update

The Company also provided an update on deleveraging activity for the year. Year to date, the Company has reduced its debt by approximately $2.7 billion, excluding the impact of the debt assumed in connection with the Big River Steel acquisition.

In June, the Company announced the redemption of $718 million aggregate principal amount of its outstanding 6.875% Senior Notes due 2025, which was completed in August. In July, the Company announced an incremental target of up to $1 billion of additional deleveraging by mid-2022. The Company plans to complete approximately half of this incremental deleveraging target by month-end by completing the following actions:

• redeeming $180 million of the 6.625% Big River Steel Senior Secured Notes due 2029; and
• redeeming $370 million of the 6.25% U. S. Steel Senior Notes due 2026.

Year to date deleveraging actions have reduced the Company’s annual run-rate interest expense by approximately $185 million and extended its maturity profile. The Company will continue to evaluate opportunities to accelerate the pace of deleveraging through the remainder of the year. Based on the Company’s significant deleveraging progress and accelerating EBITDA generation over the past 12 months, the ratio of net debt to adjusted EBITDA is projected to be approximately 0.6 times at quarter end.

Adjusted EBITDA Commentary

The Flat-rolled segment is expected to deliver record EBITDA and EBITDA margin in the third quarter driven by the increased flow-through of higher steel selling prices into our adjusted contracts and spot selling prices and continued strong customer demand. The segment’s assets continue to perform exceptionally well, creating efficiencies across the segment and increasing segment profitability.

The Mini Mill segment continues to set records as well. Third quarter EBITDA and EBITDA margin are expected to surpass last quarter’s records reflecting higher steel selling prices and continued operating efficiencies.

The European segment also is expected to deliver record EBITDA and EBITDA margin. Steel demand remains strong. Higher steel prices continue to flow-through the segment’s average selling prices. This benefit is only partially offset by higher raw material costs, particularly for iron ore.

The Tubular segment is expected to continue its upward trajectory. The benefit of higher prices and increased volumes are partially offset by higher scrap input costs.

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