X 2014.3.31 Earnings Release

PITTSBURGH, April 29, 2014 – United States Steel Corporation (NYSE: X) reported first quarter 2014 net income of $52 million, or $0.34 per diluted share, compared to a first quarter 2013 net loss of $73 million, or $0.51 per diluted share, and fourth quarter 2013 net income of $270 million, or $1.75 per diluted share. Adjusted net income for the fourth quarter of 2013 was $38 million, or $0.27 per diluted share, and adjusted net loss for the first quarter 2013 was $51 million, or $0.35 per diluted share. See the Non-GAAP Financial Measures section for a description of the non-GAAP measures and a reconciliation to net income (loss) attributable to U. S. Steel.



Earnings Highlights

(Dollars in millions, except per share amounts)	1Q 2014			4Q 2013			1Q 2013
Net Sales	$	4,448		$	4,269		$	4,595
Segment income (loss) from operations
Flat-rolled	$	85		$	87		$	(13	)
U. S. Steel Europe	32			12			38
Tubular	24			32			64
Other Businesses	13			15			5
Total reportable segment and Other Businesses income from operations	$	154		$	146		$	94
Postretirement benefit expense	(32		)	(56		)	(56		)
Other items not allocated to segments	—			(319		)	—
Income (loss) from operations	$	122		$	(229	)	$	38
Net interest and other financial costs	69			75			104
Income tax provision (benefit)	1			(574		)	7
Less: Net loss attributable to the noncontrolling interests	—			—			—
Net income (loss) attributable to United States Steel Corporation	$	52		$	270		$	(73	)
-Per basic share	$	0.36		$	1.87		$	(0.51	)
-Per diluted share	$	0.34		$	1.75		$	(0.51	)

Commenting on results, U. S. Steel President and CEO Mario Longhi said, “We are pleased to report an improvement in our first quarter operating results despite extreme weather-related issues. Higher natural gas prices and operational issues due to the weather were offset by better commercial prices and Carnegie Way benefits.”

The $154 million, or $30 per ton, of reportable segment and Other Businesses income from operations for the first quarter of 2014 compares to income from operations of $146 million, or $30 per ton, in the fourth quarter of 2013 and income from operations of $94 million, or $17 per ton, in the first quarter of 2013.

Other items not allocated to segments in the fourth quarter of 2013 consisted of non-cash restructuring and other charges of $248 million, or $1.71 per diluted share; an adjustment to our preliminary non-cash goodwill impairment charge of $23 million, or $0.16 per diluted share; a $32 million, or $0.22 per diluted share, environmental remediation charge and a non-cash charge to write-off an equity investment of $16 million, or $0.11 per diluted share.

First quarter results for our Flat-rolled segment were comparable to the fourth quarter as higher average realized prices and shipments, Carnegie Way benefits, and reduced repairs and maintenance costs were offset by higher energy and raw materials costs. Average realized prices increased as a result of higher contract and spot market prices. Shipments also increased after the fourth quarter holiday down time and a full quarter's worth of production at Lake Erie Works. Repairs and maintenance costs decreased due to the completion of projects at Gary Works and Fairfield Works in the fourth quarter. The extraordinary weather conditions resulted in significantly higher natural gas costs as well as operating inefficiencies and logistical issues that negatively impacted shipments in the first quarter.

First quarter results for our European segment increased primarily due to higher average realized prices and $17 million of favorable effects from transactions to sell and swap a portion of our carbon emission allowances. Average realized prices increased compared to the fourth quarter due to a more favorable product mix while shipments remained comparable.

Results for our Tubular segment in the first quarter decreased compared to the fourth quarter as decreased average realized prices and increased substrate costs were partially offset by the benefits of reduced operating costs. Average realized prices decreased due to pricing pressures primarily from continuing high import levels.

Commenting on U. S. Steel's outlook for the second quarter, Longhi said, “We expect reduced income from operations in the second quarter. We expect our production to be limited which will temporarily slow shipments primarily due to continued weather-related logistical issues affecting both raw materials and finished products.”

reduction in our shipments and higher operating costs as compared to first quarter. Market conditions in North America are improving; however, average realized prices are projected to be comparable to the first quarter. Given our production disruptions, second quarter shipments will be geared to fulfilling contract commitments where prices are not moving at the same rate as the spot market, as well as negatively influenced by lower automotive coated production and shipments this quarter. We expect to have the operational difficulties largely behind us as we exit the second quarter.

This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. Factors that could affect market conditions, costs, shipments and prices for both North American and European operations include: (a) foreign currency fluctuations and related activities; (b) global product demand, prices and mix; (c) global and company steel production levels; (d) plant operating performance; (e) natural gas, electricity, raw materials and transportation prices, usage and availability; (f) international trade developments, including court decisions, legislation and agency decisions on petitions and sunset reviews; (g) the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; (h) changes in environmental, tax, pension and other laws; (i) the terms of collective bargaining agreements; (j) employee strikes or other labor issues; and (k) U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies, including those related to CO₂ emissions, climate change and shale gas development. Economic conditions and political factors in Europe and Canada that may affect U. S. Steel Europe’s and U. S. Steel Canada’s results

include, but are not limited to: (l) taxation; (m) nationalization; (n) inflation; (o) fiscal instability; (p) political issues; (q) regulatory actions; and (r) quotas, tariffs, and other protectionist measures. We present adjusted net income and adjusted net income per diluted share, which are non-GAAP measures, as an additional measurement to enhance the understanding of our operating performance and facilitate a comparison with that of our competitors. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward-looking statements have been included in U. S. Steel’s Annual Report on Form 10-K for the year ended December 31, 2013, and in subsequent filings for U. S. Steel.

The company will conduct a conference call on first quarter earnings on Wednesday, April 30, at 8:30 a.m. Eastern Daylight Time. To listen to the webcast of the conference call, visit the U. S. Steel website, www.ussteel.com, and click on “Current Information” under the “Investors” section.



UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)

			Quarter Ended
			March 31			Dec. 31			March 31
(Dollars in millions, except per share amounts)			2014			2013			2013
NET SALES			$	4,448		$	4,269		$	4,595

OPERATING EXPENSES (INCOME):
	Cost of sales (excludes items shown below)		4,038			3,911			4,242
	Selling, general and administrative expenses		138			161			145
	Depreciation, depletion and amortization		166			170			171
	Loss (income) from investees		4			(9		)	(8		)
	Impairment of goodwill		—			23			—
	Restructuring and other charges		—			248			—
	Net (gain) loss on disposal of assets		(20		)	—			1
	Other expense (income), net		—			(6		)	6

		Total operating expenses	4,326			4,498			4,557

INCOME (LOSS) FROM OPERATIONS			122			(229		)	38
Net interest and other financial costs			69			75			104

INCOME (LOSS) BEFORE INCOME TAXES
	AND NONCONTROLLING INTERESTS		53			(304		)	(66		)
Income tax provision (benefit)			1			(574		)	7

Net income (loss)			52			270			(73		)
	Less: Net loss attributable to the
	noncontrolling interests		—			—			—
NET INCOME (LOSS) ATTRIBUTABLE TO
	UNITED STATES STEEL CORPORATION		$	52		$	270		$	(73	)


COMMON STOCK DATA:

Net income (loss) per share attributable to
United States Steel Corporation shareholders:
	-Basic		$	0.36		$	1.87		$	(0.51	)
	-Diluted		$	0.34		$	1.75		$	(0.51	)

Weighted average shares, in thousands
	-Basic		144,757			144,740			144,353
	-Diluted		156,114			155,692			144,353

Dividends paid per common share			$	0.05		$	0.05		$	0.05



UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)

			Quarter Ended
			March 31,
(Dollars in millions)			2014			2013
Cash provided by (used in) operating activities:
	Net income (loss)		$	52		$	(73	)
	Depreciation, depletion and amortization		166			171
	Pensions and other postretirement benefits		(16		)	(11		)
	Deferred income taxes		4			4
	Net (gain) loss on disposal of assets		(20		)	1
	Working capital changes		363			131
	Income taxes receivable/payable		2			(16		)
	Currency remeasurement loss		7			19
	Other operating activities		12			7
		Total	570			233

Cash (used in) provided by investing activities:
	Capital expenditures		(90		)	(116		)
	Disposal of assets		19			—
	Other investing activities		5			24
		Total	(66		)	(92		)

Cash provided by (used in) financing activities:
	Issuance of long-term debt, net of financing costs		—			578
	Repayment of long-term debt		—			(542		)
	Dividends paid		(7		)	(7		)
		Total	(7		)	29

Effect of exchange rate changes on cash			(2		)	(7		)

Net increase in cash and cash equivalents			495			163
Cash and cash equivalents at beginning of the year			604			570

Cash and cash equivalents at end of the period			$	1,099		$	733



UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)

		March 31		Dec. 31
(Dollars in millions)		2014		2013
Cash and cash equivalents		$	1,099	$	604
Receivables, net		2,384		2,160
Inventories		2,411		2,688
Other current assets		586		626
	Total current assets	6,480		6,078
Property, plant and equipment, net		5,791		5,922
Investments and long-term receivables, net		607		621
Intangible assets, net		266		271
Other assets		250		251

	Total assets	$	13,394	$	13,143

Accounts payable		$	2,000	$	1,754
Payroll and benefits payable		977		974
Short-term debt and current maturities of long-term debt		323		323
Other current liabilities		239		194
	Total current liabilities	3,539		3,245
Long-term debt, less unamortized discount		3,615		3,616
Employee benefits		1,964		2,064
Other long-term liabilities		825		869
United States Steel Corporation stockholders' equity		3,450		3,348
Noncontrolling interests		1		1

	Total liabilities and stockholders' equity	$	13,394	$	13,143



UNITED STATES STEEL CORPORATION
RECONCILIATION OF ADJUSTED NET INCOME (LOSS)

		Quarter Ended
		March 31		Dec. 31			March 31
(Dollars in millions, except per share amounts)		2014		2013			2013
Reconciliation to net income (loss) attributable to United States Steel Corporation
	Adjusted net income (loss) attributable to United States Steel Corporation	$	52	$	38		$	(51	)
	Non-cash restructuring and other charges ^(a)	—		(302		)	—
	Tax benefits ^(b)	—		534			—
	Repurchase premium charge ^(c)	—		—			(22		)
	Net income (loss) attributable to United States Steel Corporation, as reported	$	52	270			(73		)

Reconciliation to diluted net income (loss) per share
	Adjusted diluted net income (loss) per share	$	0.34	$	0.27		$	(0.35	)
	Non-cash restructuring and other charges ^(a)	—		(2.09		)	—
	Tax benefits ^(b)	—		3.69			—
	Repurchase premium charge ^(c)	—		—			(0.16		)
	Additional dilutive effects of securities	—		(0.12		)	—
	Diluted net income (loss) per share, as reported	$	0.34	$	1.75		$	(0.51	)



UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)

		Quarter Ended
		March 31			Dec. 31			March 31
(Dollars in millions)		2014			2013			2013
INCOME (LOSS) FROM OPERATIONS
	Flat-rolled	$	85		$	87		$	(13	)
	U. S. Steel Europe	32			12			38
	Tubular	24			32			64
	Other Businesses	13			15			5

Reportable Segment and Other Businesses Income from Operations		154			146			94
	Postretirement benefit expense	(32		)	(56		)	(56		)
	Other items not allocated to segments:
	Impairment of goodwill	—			(23		)	—
	Restructuring and other charges	—			(248		)	—
	Environmental remediation charge	—			(32		)	—
	Write-off of equity investment	—			(16		)	—

	Total Income (Loss) from Operations	$	122		$	(229	)	$	38

CAPITAL EXPENDITURES
	Flat-rolled	$	55		$	101		$	96
	U. S. Steel Europe	18			8			10
	Tubular	16			27			8
	Other Businesses	1			13			2

	Total	$	90		$	149		$	116



UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)

				Quarter Ended
				March 31		Dec. 31		March 31
				2014		2013		2013
OPERATING STATISTICS
	Average realized price: ($/net ton) ^(a)
		Flat-rolled		761		750		719
		U. S. Steel Europe		710		692		718
		Tubular		1,479		1,509		1,556
	Steel Shipments: ^{(a) (b)}
		Flat-rolled		3,674		3,470		4,018
		U. S. Steel Europe		1,031		1,029		1,048
		Tubular		419		414		428
			Total Steel Shipments	5,124		4,913		5,494

	Intersegment Shipments: ^(b)
		Flat-rolled to Tubular		435		363		441
	Raw Steel Production: ^(b)
		Flat-rolled		4,491		4,474		4,920
		U. S. Steel Europe		1,141		1,205		1,203
	Raw Steel Capability Utilization: ^(c)
		Flat-rolled		83	%	73	%	82	%
		Flat-rolled U.S. Facilities ^(d)		81	%	80	%	90	%
		U. S. Steel Europe		93	%	96	%	98	%


•	Shipments of 5.1 million tons and net sales of $4.4 billion


•	Total liquidity of $2.7 billion, including $1.1 billion of cash