United States Steel Corporation
Fourth Quarter and Full-Year 2016
Earnings Presentation
January 31, 2017
© 2011 United States Steel Corporation
2
Forward-looking Statements
These slides and remarks are being provided to assist readers in understanding the results of operations, financial condition and
cash flows of United States Steel Corporation for the fourth quarter and full-year of 2016. They should be read in conjunction with the
consolidated financial statements and Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
This presentation contains information that may constitute “forward-looking statements” within the meaning of Section 27 of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-
looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have
identified such forward-looking statements by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,”
“forecast,” “aim,” “should,” “will” and similar expressions or by using future dates in connection with any discussion of, among other
things, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements
relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future
operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-
looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future
events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the
Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition
indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the
time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such
statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our
Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not
limited to the risks and uncertainties described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2015, and those described from time to time in our future reports filed with the Securities and Exchange Commission.
References to "we," "us," "our," the "Company," and "U. S. Steel," refer to United States Steel Corporation and its Consolidated
Subsidiaries.
United States Steel Corporation
Explanation of Use of Non-GAAP Measures
We present adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, earnings (loss) before interest, income taxes,
depreciation and amortization (EBITDA) and adjusted EBITDA, which are all non-GAAP measures, as additional measurements to
enhance the understanding of our operating performance.
Net debt is a non-GAAP measure calculated as total debt less cash and cash equivalents. We believe net debt is a useful measure in
calculating enterprise value. We believe that EBITDA considered along with the net earnings (loss), is a relevant indicator of trends
relating to cash generating activity and provides management and investors with additional information for comparison of our
operating results to the operating results of other companies. Both EBITDA and net debt are used by analysts to refine and improve
the accuracy of their financial models which utilize enterprise value.
Adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share are non-GAAP measures that exclude the effects of
restructuring charges, impairment charges, losses associated with U. S. Steel Canada Inc., losses on debt extinguishment, certain
postemployment actuarial adjustments, and charges for deferred tax asset valuation allowances that are not part of the Company’s
core operations. Adjusted EBITDA is also a non-GAAP measure that excludes the effects of restructuring charges, impairment
charges, losses associated with U. S. Steel Canada Inc., and certain postemployment actuarial adjustments. We present adjusted
net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA to enhance the understanding of our ongoing
operating performance and established trends affecting our core operations, particularly cash generating activity, by excluding the
effects of restructuring charges, impairment charges, losses on debt extinguishment, certain postemployment actuarial adjustments,
charges for deferred tax asset valuation allowances, and losses associated with non-core operations that can obscure underlying
trends. U. S. Steel’s management considers adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted
EBITDA useful to investors by facilitating a comparison of our operating performance to the operating performance of our
competitors, many of which use adjusted net earnings (loss), adjusted net earnings (loss) per diluted share and adjusted EBITDA as
alternative measures of operating performance. Additionally, the presentation of adjusted net earnings (loss), adjusted net earnings
(loss) per diluted share and adjusted EBITDA provides insight into management’s view and assessment of the Company’s ongoing
operating performance, because management does not consider the adjusting items when evaluating the Company’s financial
performance or in preparing the Company’s annual financial outlook. Adjusted net earnings (loss), adjusted net earnings (loss) per
diluted share and adjusted EBITDA should not be considered a substitute for net earnings (loss), earnings (loss) per diluted share or
other financial measures as computed in accordance with U.S. GAAP and is not necessarily comparable to similarly titled measures
used by other companies.
United States Steel Corporation
United States Steel Corporation
2017 Outlook
If market conditions, which include spot prices, raw material costs, customer
demand, import volumes, supply chain inventories, rig counts and energy prices,
remain at their current levels, we expect:
• 2017 net earnings of approximately $535 million, or $3.08 per share, and
EBITDA of approximately $1.3 billion;
• Results for our Flat-Rolled, European, and Tubular segments to be higher than
2016;
• To be cash positive for the year, primarily due to improved cash from
operations; and
• Other Businesses to be comparable to 2016 and approximately $50 million of
postretirement benefit expense.
We believe market conditions will change, and as changes occur during the balance
of 2017, our net earnings and EBITDA should change consistent with the pace and
magnitude of changes in market conditions.
6
We are starting 2017 with much better market conditions than we faced at the beginning of 2016. Our
Carnegie Way transformation efforts over the last three years have improved our cost structure, streamlined
our operating footprint and increased our customer focus. These substantive changes and improvements have
increased our earnings power. While we will benefit from improved market conditions, they continue to be
volatile and we must remain focused on improving the things that we can control. Pursuing our safety
objective of zero injuries, revitalizing our assets, and driving innovation that creates differentiated solutions for
our customers remain our top priorities.
See the Appendix for the reconciliation of the Outlook net earnings to EBITDA.
Carnegie Way – Accumulating Benefits
55%
12%
United States Steel Corporation
$745 million of Carnegie Way
benefits realized in 2016
• Flat-Rolled $551
• U. S. Steel Europe $124
• Tubular $ 62
• Other Businesses $ 8
2016 is now the new base year for
comparison
$150 million of carryover impact in
2017 from projects that were
implemented at various points
throughout 2016
8
We continue to increase our capabilities and train more of our employees on our Carnegie Way
methodologies to support our growing pipeline of projects and accelerate the pace of project completion,
allowing for it to be more self-sustaining. The Carnegie Way methodology remains a powerful driver of new
value creating projects as our employees gain better insight into the potential sources of new opportunities.
Including benefits from projects completed during the fourth quarter, our full-year benefits in 2016 as
compared to 2015 as the base year were $745 million dollars, and reflects the tremendous effort from all of
our employees.
2016 is now our base year for measuring our progress and we are starting 2017 with $150 million in
Carnegie Way benefits from projects that we implemented throughout 2016.
Carnegie Way benefits in 2016 include significant contributions from:
• overhead reduction efforts at our Headquarters and operating facilities;
• yield improvements at raw materials, steel producing and finishing operations; and
• improved blast furnace fuel mix and usage rates in both our Flat-Rolled and European segments.
Our pace of progress on The Carnegie Way transformation continues to exceed our expectations. The
continuing benefits are improving our ability to earn the right to grow and then drive sustainable profitable
growth over the long-term as we deal with the cyclicality and volatility of the global steel industry. With over
4,000 active projects, we have many opportunities ahead of us.
United States Steel Corporation
Flat-Rolled
Auto sales set new record in 2016
Appliance unit shipments up 5.6%
in 2016 according to the
Association of Home Appliance
Manufacturers (AHAM6)
The December Architectural
Billing Index (construction leading
indicator) at its highest level in 18
months
Carbon flat-rolled inventory
increased 3.4% in December
compared to November, only 45%
of the average December
inventory build between 2009-
2014
U. S. Steel Europe
V4** car production is
expected to grow 4% in 1Q
compared to 1Q 2016
Appliance sector in Central
Europe expected to grow
0.8% in 1Q versus 4Q, while
the broader EU is expected
to decline 2.1%
EU construction grew 2% in
2016 – 1Q growth is
expected at 0.6% compared
to 1Q 2016
Tubular
Increased drilling rates
during 4Q
WTI oil prices averaged
$49/barrel in 4Q
OCTG inventory continues
to decline – months supply
is below 6 – lowest level
since 1Q 2015
Imports of OCTG remain
high
Market Updates*
Major industry summary and market fundamentals
** Visegrad Group – Czech Republic, Hungary, Poland and
Slovakia
*See Appendix for additional detail and data sources.
10
We constantly monitor trends in the markets we serve, and receive updates in those markets directly from our customers as well
as external publications. This information indicates:
• The U.S. automotive market set a new sales record in 2016 of 17.5 million units. January 2017 auto inventories remain
in-line with the five year average.
• MSCI data suggests carbon flat-rolled inventory build in December was only half of what it is normally.
• Rig counts continue to climb higher in 1Q. Oil prices have remained above $50/barrel throughout January. Low selling
prices remain a significant headwind.
• In Europe, modest growth is expected in the first quarter of 2017 compared to the prior year in key end-markets
including automotive, tin, and construction. The appliance market is expected to be mixed in the first quarter compared
to the fourth quarter, as central Europe will likely see slight growth, while the EU as a whole could decline.
United States Steel Corporation
Business Update
Steelmaking facilities
Flat-Rolled finishing facilities
Iron ore mining facilities
Tubular facilities
U. S. Steel Europe
Operating updates
12
We had several significant changes to our operating configuration in the fourth quarter as we announced the restart of certain
facilities in our Flat-Rolled segment and the permanent shutdown of certain facilities in our Tubular segment.
In our Flat-Rolled segment, we are in the process of adjusting our hot strip mill operating configuration to support our asset
revitalization plan. We currently expect to begin converting slabs on the hot strip mill at Granite City Works in mid-February. We
are making this adjustment to our hot strip mill operating configuration to provide better alignment with customer needs
and improve service while increasing the pace of our asset revitalization plan. We plan to take periodic outages at hot strip mills
at Gary, Great Lakes and Mon Valley Works to improve the capabilities, productivity and reliability of those hot strip mills.
We are currently operating the steelmaking and finishing facilities at our Gary, Great Lakes and Mon Valley Works. We continue
to operate finishing facilities at our Granite City Works, and expect the hot strip mill to begin converting slabs in mid-February.
We continue to operate the finishing facilities at our Fairfield, Midwest, East Chicago, and Fairless Hills locations. We
continuously review market conditions and the restart of idled facilities in the context of sustainable increases in steel demand
that would support operating rates at profitable levels.
At our Flat-Rolled segment iron ore mining operations, we continue to operate our Minntac facility and we are in the process of
restarting our Keetac facility to fulfill pellet supply agreements we have entered into with third parties. We currently expect to
start producing pellets at Keetac in early March.
While we are starting to see some recovery in the energy markets, our Tubular operations continue to face very difficult market
conditions. We announced the permanent shutdown of the #4 seamless mill at Lorain, the #1 welded mill at Lone Star, and the
welded mill at Bellville. We are currently operating the seamless mill at Fairfield and the #3 seamless mill at Lorain, the #2
welded mill at Lone Star remains idled at this time. We have included an updated description of our Tubular operations in the
Appendix of this presentation that shows the capacities and size ranges for our current operating configuration.
Our European operations are seeing stable market conditions and are running at high levels at this time.
Carnegie Way transformation
Phase 1: Earning the right to grow:
• Economic profits
• Customer satisfaction and loyalty
• Process improvements and focused investment
Phase 2: Driving profitable growth with:
• Innovation and technology
• Differentiated customer solutions
• Focused M&A
Strategic Approach
United States Steel Corporation
14
Our sights are set firmly on our future – a future we believe is filled with many exciting opportunities. All of those opportunities
are made possible by our thoughtful, disciplined approach to transforming our company through what we call The Carnegie Way.
The Carnegie Way is the framework for who we want – and need – to be as a company and how we can get there. At its heart,
The Carnegie Way is about creating real and sustainable value for all of our stakeholders.
It’s about differentiating ourselves from our competition through the development of innovative products, processes and
approaches to doing business; to be a true business partner and solutions provider to our customers. It’s also about creating a
culture that is rooted in time-tested principles and commitment to collaboration, accountability and results at all levels.
Our Carnegie Way transformation is a true journey, not a sprint. We have now completed the third year of our transformation and
our progress continues to exceed expectations. The hard work of The Carnegie Way transformation is translating into stronger
financial results and better performance for our investors, customers, and employees. Our aspiration to become sustainably
profitable, of earning economic profit across the cycle and being profitable across the trough remains unchanged, and The
Carnegie Way is helping us get closer to that goal. At the beginning of our journey we identified the three areas we needed to
address to achieve our goal:
1) reduce our fixed costs and create a more flexible cost structure
2) improve the capabilities, productivity and reliability of our facilities
3) improve our product mix by creating differentiated solutions for our customers
On the next two pages we will highlight the asset revitalization plan we are implementing to accelerate the pace of progress on
improving the capabilities, productivity and reliability of our facilities.
Asset revitalization plan
A comprehensive plan to:
• Improve our profitability and competitiveness
• Meet the increasing expectations of our customers
A structured and flexible plan:
• Smaller and less complex projects to reduce execution risk
• Adaptable to changing business conditions
Multi-year implementation timeline to:
• Minimize disruptions to our operations
• Ensure we continue to support our customers
Carnegie Way transformation
United States Steel Corporation
16
Our asset revitalization plan is a comprehensive investment plan, anchored in The Carnegie Way, to improve our profitability and
competitiveness through projects designed to improve product capability and quality, and our operating reliability, efficiency and cost.
The program focus is on investments in our existing Flat-Rolled segment assets, our people, and our processes. This targeted
investment program will ensure maximum impact to our stockholders, customers and employees.
The performance expectations of our customers are constantly increasing, and we need to be investing in our assets at a pace that
will allow us to keep up with these increasing standards. On the quality side, we need to reduce our existing diversion, retreat and
claim rates, and on the delivery side, consistency is the key. We will increase our spending on critical infrastructure in order to
reduce major events that disrupt our entire supply chain, and to reduce our unplanned downtime and improve our reliability centered
maintenance capabilities.
Importantly, while this is a large program, the majority of projects are not large, complex projects. Forty percent of the total program
spend is expected to be on projects that cost less than $10 million, and sixty percent of the total program spend is expected to be on
projects that cost less than $20 million. This means that assumptions are more accurate, and projects are easier to execute. Due to
the smaller nature of many of the projects, we do not have to complete the entire program in order to start seeing benefits. Also, by
breaking the program down into a series of smaller projects we have greater flexibility to adjust the scope and pace of project
implementation based on changes in business conditions.
In order to ensure that we obtain the desired results from our asset revitalization efforts, it was necessary to properly plan and
schedule a large number of projects. The development and scheduling of these projects required the input and coordinated efforts of
hundreds of people from across the Flat-Rolled segment footprint. Once the project portfolio was prepared and optimized, actual
implementation efforts needed to be coordinated with production and maintenance schedules to minimize the disruption to production
operations. The work requires outages on many facilities and we are making sure we can support our customers at the same time as
we revitalize our assets. As a result, we expect the implementation schedule will stretch over a period of at least three years.
We currently expect our investment in asset revitalization in 2017 to be approximately $200 million higher as compared to 2016. As
noted above, we have the ability to adjust the scope and pace of implementing our plan based on changes in business conditions, so
we are not in a position to speculate on annual investments in future years at this time.
Asset revitalization plan
A comprehensive plan to:
• Improve our profitability and competitiveness
• Meet the increasing expectations of our customers
A structured and flexible plan:
• Smaller and less complex projects to reduce execution risk
• Adaptable to changing business conditions
Multi-year implementation timeline to:
• Minimize disruptions to our operations
• Ensure we continue to support our customers
Carnegie Way transformation
United States Steel Corporation
18
Our asset revitalization plan is not just sustaining capital and maintenance spending; these projects will deliver both operational
and commercial benefits, with most of the benefits coming from operational improvements. The commercial benefits we expect
to realize will be driven primarily by things we can control, such as better product quality, improved delivery performance, and
increased throughput on constrained assets.
After we complete our full asset revitalization plan, we will have well maintained facilities with a strong core infrastructure, and
strong reliability centered maintenance organizations. We will deliver products to our customers with improved reliability and
quality.
Executing this plan is a critical milestone in The Carnegie Way journey to take us from “earning the right to grow” to “driving and
sustaining profitable growth.”
Proactive efforts to reduce risk
Strengthening our cash and liquidity position
Improving our debt maturity profile
Reducing our exposure to defined benefit pension plans
Minimizing market risk related to OPEB
Reducing risk
United States Steel Corporation
20
We took significant actions in 2016 to improve the risk profile of our company, and we continued to proactively manage our
exposure to our legacy obligations.
Cash from Operations
$ Millions
3Q 2016 2Q 2016 1Q 2016 FY 2016 4Q 2016
Total Estimated Liquidity
$ Millions
YE 2015 YE 2014 YE 2013 YE 2016
Financial Flexibility
United States Steel Corporation
Cash and Cash Equivalents
$ Millions
Net Debt
$ Millions
YE 2013 YE 2014 YE 2015 YE 2016
YE 2013 YE 2014 YE 2015 YE 2016
Increased cash and
liquidity from equity
issuance, improved
operating results
and continued
working capital
reductions
Strong cash and liquidity positions
Refinancing of near-
term debt maturities
and equity issuance
improved financial
flexibility and
reduced refinancing
risk
Note: For reconciliation of non-GAAP amounts see Appendix
Lowest net debt
since 2Q 2009
22
We ended 2016 with $1.5 billion of cash and total liquidity of $2.9 billion.
We generated cash from operations of $727 million and reduced working capital by $596 million in 2016. The working capital
reduction in 2016 was primarily driven by improved inventory management.
This is the second straight year that we have made significant improvements in our working capital management. In 2015, we
reduced working capital by $551 million, primarily driven by improvements in our accounts receivable and accounts payable
management.
Since the end of 2014, our cash conversion cycle has improved by 22 days.
Our net debt at the end of 2016 was $1.5 billion, its lowest level since the second quarter of 2009.
Maintaining strong cash and liquidity is a competitive advantage for us given the volatility in the steel industry.
While working capital and capital spending are two areas we control that can have the greatest impact on our cash and liquidity
position, we are working to identify and maximize cash benefits in all areas.
We are working to strengthen our balance sheet and we are constantly evaluating all options to improve our position so that we
are prepared to act quickly when the right opportunity presents itself.
Financial Flexibility
$50 $165 $59
$435
$1,184
$410
$766
$2,899
$ millions
12/31/15 Liquidity & Debt Maturity Profile
Strong liquidity & reduced near-term refinancing risks
United States Steel Corporation
24
This chart shows how our liquidity position and debt maturity profile improved from year-end 2015 to year-end 2016. Our debt
maturity profile has substantially improved.
Our Secured Debt offering and Equity capital markets actions during 2016 bolstered liquidity and addressed near-term financing
risks.
In May of 2016, we issued $980 million of Secured Notes due in 2021, and retired $944 million of debt scheduled to mature in
2017, 2018, 2020 and 2021. We also purchased $88 million of our Senior Notes during 2016 as a part of our liability
management program to de-leverage the balance sheet longer term.
In August of 2016, we issued 21.7 million shares of stock, receiving net proceeds of approximately $482 million.
Pension
Expense and funded status
Participants by Type of Plan
Type of Plan 12/31/2003 12/31/2016
Increase/
(Decrease)
Defined Benefit 15,574 4,710 (10,864)
Multiemployer 6,043 9,730 3,687
Defined Contribution 1,627 3,535 1,908
Total 23,244 17,975 (5,269)
Major Assumptions:
Discount rate expense: 4.50% for 2012, 3.75% for 2013, 4.50% for 2014, 3.75% for 2015, 4.25% for
2016, and 4.00% for 2017E
Expected rate of return on assets: 7.75% in U.S. & 7.25% in Canada for 2012 through 2014, 7.50% in
U.S. for 2015 and 2016, for 2017E: 7.25%
Includes U. S. Steel Canada up until the deconsolidation on September 16, 2014
Pension – Benefit Obligations
$ Billions
Pension – Underfunded Status
$ Billions
Pension – Service Cost
$ Millions
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
Pension – Expense
$ Millions
2012 2013 2014 2015 2016 2017E
United States Steel Corporation
26
Our exposure to defined benefit pensions continues to decrease.
We closed our main defined benefit pension plan to new participants in 2003. At the end of 2003, 67% of our North American
employees were in defined benefit pension plans and 33% were in either a multiemployer plan (represented employees) or
defined contribution plans (non-represented employees). We make defined contributions to the multiemployer plan as specified
in our collective bargaining agreements. As of the end of 2016, only 26% of our active North American employees remain in
defined benefit pension plans.
As the number of employees participating in defined benefit pension plans has decreased, our pension expense and pension
benefit obligations have also decreased.
Our pension expense continues to decrease as service costs drop as the number of participants in our defined benefits pension
plan decline. The significant decrease in service costs in 2016 was the result of our decision to implement a hard freeze on
benefit accruals for all non-represented employees that remained in our defined benefit pension plans at the end of 2015.
The large decrease in pension benefit obligations over the last five years has significantly reduced the market risk associated
with our defined benefit pension plans. We currently do not have any mandatory contributions for our defined benefit pension
plans, the continuing improvement in our funded status and our history of making voluntary contributions, reduces the potential
for mandatory contributions in future years.
OPEB
Expense and funded status
Major Assumptions:
Discount rate expense: 4.50% for 2012, 3.75% for 2013, 4.50% for 2014, 3.75% for 2015, 4.25% for 2016, and 4.00% for 2017E
Expected rate of return on assets: 7.75% in U.S. & 7.25% in Canada for 2012 through 2014, 7.50% in U.S. for 2015 and 2016, for 2017E: 3.25%
Includes U. S. Steel Canada up until the deconsolidation on September 16, 2014
OPEB – Expense
$ Millions
2012 2013 2014 2015 2016
OPEB – Benefit Obligations
$ Billions
2012 2013 2014 2015 2016
OPEB – Service Cost
$ Millions
2017E
OPEB – Underfunded Status
$ Billions
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
United States Steel Corporation
28
The risks associated with our OPEB obligations have decreased significantly over the last five years.
Our OPEB benefits obligations and service costs have decreased approximately 40% and 30%, respectively, since 2012. Over
the same period the funded status of our OPEB benefit obligations has increased from 44% to 82%.
In 1994, we created a Voluntary Employees’ Beneficiary Association Trust (VEBA) to hold assets to be used to fund future retiree
healthcare and life insurance benefits associated with our United Steelworkers represented population. Over the years, through
a combination of company contributions and investment returns, our VEBA assets have grown to approximately $2 billion dollars.
These assets are required to be used exclusively to pay retiree benefits. We have a reasonable degree of certainty regarding the
future cash outflows from the VEBA to pay retiree benefits. The VEBA assets had previously been invested approximately 60%
in equities and 40% in bonds.
Based on the overfunded status of the VEBA, significant exposure to equities is no longer prudent and we recently took steps to
invest in high quality Corporate and Government bonds whose maturities approximate the projected cash outflows of the VEBA.
This is part of our on-going risk mitigation activities.
The VEBA assets are currently invested approximately 80% in bonds with maturities out through approximately 2046. Based on
this shift in the investment portfolio of the VEBA assets, we have lowered our Return on Asset (ROA) assumption from 7.5% to
3.25%. As a result of this reduction in our ROA assumption, our OPEB expense will increase by approximately $83 million in
2017 as compared to 2016.
Segment Earnings (Loss) Before Interest and
Income Taxes
$ Millions
Adjusted EBITDA
$ Millions
4Q 2016 2Q 2016 1Q 2016
1Q 2016 2Q 2016 3Q 2016
Note: For reconciliation of non-GAAP amounts see Appendix
2Q 2016 1Q 2016 3Q 2016
Fourth Quarter and Full-Year 2016 Results
United States Steel Corporation
Adjusted Net Earnings (Loss)
$ Millions
1Q 2016 2Q 2016 4Q 2016
Improved earnings despite commercial headwinds
3Q 2016 FY 2016 4Q 2016 FY 2016
3Q 2016 FY 2016 4Q 2016 FY 2016
Positive adjusted
EBITDA despite
lowest full-year
average realized
price since 2004
Reported Net Earnings (Loss)
$ Millions
Continued progress
on higher value add
product mix
improving margins
We reported a net loss of $105 million, or $0.61 per diluted share, for the fourth quarter. For the full-year, we reported a net loss
of $440 million, or $2.81 per diluted share
We reported operating income for the fourth quarter of $62 million at the segment level, due primarily to positive results from our
Flat-Rolled and European segments, partially offset by weakness in our Tubular segment. We reported a segment operating loss
for 2016 of $59 million, as continued weakness in the energy markets negatively impacted our Tubular segment, and our Flat-
Rolled segment faced lower volumes and lower average realized prices.
EBITDA, adjusted to exclude unfavorable charges totaling $152 million, was $211 million for the fourth quarter. Adjusted EBITDA
for 2016 totaled $510 million, which excludes unfavorable adjustments totaling $168 million.
Our fourth quarter results were weaker than the third quarter in part due to volume constraints in our Flat-Rolled segment
resulting from planned outages as part of our asset revitalization plan. Also negatively impacting the quarter were lower average
realized prices, particularly in our Flat-Rolled and Europe segments. For the full-year 2016, we were subject to commercial
headwinds across all three segments, but we were able to offset a significant portion of those with $745 million of additional
Carnegie Way benefits realized in 2016.
Earnings (Loss) Before Interest and Income
Taxes
$ Millions
Average Realized Prices
$ / Ton
1Q 2016 2Q 2016 3Q 2016
Fourth Quarter and Full-Year 2016 Flat-Rolled Segment
1Q 2016 2Q 2016 3Q 2016
Shipments
Net tons (Thousands)
1Q 2016 2Q 2016 4Q 2016
United States Steel Corporation
EBITDA
$ Millions
1Q 2016 2Q 2016 3Q 2016 4Q 2016 FY 2016 4Q 2016 FY 2016
4Q 2016 FY 2016 3Q 2016 FY 2016
Improved second half as headwinds began to decrease
Average selling
prices to improve in
the first quarter due
to better spot and
contract pricing
Improved results in
2016 despite lower
volumes and
average realized
prices compared to
2015
Note: For reconciliation of non-GAAP amounts see Appendix
32
Fourth quarter results for our Flat-Rolled segment declined as compared with the third quarter primarily due to a decrease in
average realized prices, fewer shipments, as well as increased outage spending. Planned outages as part of our previously
announced asset revitalization process limited the amount of tons we could ship in the quarter. Full-year Flat-Rolled segment
results for 2016 improved from 2015 largely due to lower raw material costs, lower spending, and benefits provided by our
Carnegie Way efforts. These improvements were partially offset by lower average realized prices and shipments.
Loss Before Interest and Income Taxes
$ Millions
Average Realized Prices
$ / Ton
1Q 2016 2Q 2016 3Q 2016
Fourth Quarter and Full-Year 2016 Tubular Segment
1Q 2016 2Q 2016 3Q 2016
Shipments
Net tons (Thousands)
1Q 2016 2Q 2016 3Q 2016
United States Steel Corporation
EBITDA
$ Millions
1Q 2016 2Q 2016 3Q 2016 4Q 2016 FY 2016 4Q 2016 FY 2016
4Q 2016 FY 2016 4Q 2016 FY 2016
Energy market conditions remain challenging
Historically low
utilization levels
and low prices
continue to
negatively impact
the segment
Imports remain at
high levels
Note: For reconciliation of non-GAAP amounts see Appendix
34
Fourth quarter results for our Tubular segment declined as compared with the third quarter largely due to an unfavorable lower of
cost or market (LCM) adjustment for obsolete inventory related to the prolonged downturn in the energy markets. Full-year 2016
results for our Tubular segment decreased from 2015 due to a combination of lower average realized prices and shipments, as
well as the LCM adjustment for obsolete inventory, only partly offset by lower substrate costs and improved spending.
Earnings (Loss) Before Interest and Income
Taxes
$ Millions
Average Realized Prices
$ / Ton
1Q 2016 2Q 2016 3Q 2016
Fourth Quarter and Full-Year 2016 U. S. Steel Europe Segment
1Q 2016 2Q 2016 3Q 2016
Shipments
Net tons (Thousands)
1Q 2016 2Q 2016 3Q 2016
United States Steel Corporation
EBITDA
$ Millions
1Q 2016 2Q 2016 3Q 2016 4Q 2016 FY 2016 4Q 2016 FY 2016
4Q 2016 FY 2016 4Q 2016 FY 2016
Europe continues its strong operating performance
Note: For reconciliation of non-GAAP amounts see Appendix
Highest annual
segment EBITDA
since 2008
Improving results
despite lowest
average realized
prices since 2003.
36
Fourth quarter results for our European segment declined as compared with the third quarter primarily due to rising raw material
costs, particularly for coking coal and iron units. These adverse impacts were partially offset by increased shipments and
reduced spending. Full-year European segment results for 2016 improved from 2015 due to lower raw materials and energy
costs along with better operating efficiencies from running at higher utilization rates, partially offset by lower average realized
prices.
Source: Company Filings
Flat-Rolled Segment
Average realized prices below post-financial crisis average
with increased profitability
Flat-Rolled Segment
$ / short ton
United States Steel Corporation
38
The Flat-Rolled segment chart above highlights our improving earnings power despite lower average realized prices. The
decisions we have made to exit unprofitable businesses, aggressively address our cost structure, optimize our facility footprint
for current market conditions, and generally address the things we can control, is resulting in a more profitable business. Our
average realized price is just beginning to move towards our average levels since the financial crisis started in 2008, yet our
EBITDA/ton is significantly higher. In pursuit of higher margins, we have also moved our product mix up the value chain. We
remain focused on value, not volume.
© 2011 United States Steel Corporation
Appendix
United States Steel Corporation
Major end markets summary
Flat-Rolled Segment
United States Steel Corporation
Automotive
December sales increase to 18.3 million SAAR, best month since 2005. 2016 sales of 17.5 million set new record,
beating 2015 by 0.6%.
January 1 inventory falls 11 days from December to 62 days, and remains in line with typical days supply on hand
levels the last five years to begin 2017.
Industrial
Equipment
With the 2016 raw material increase and infrastructure possibilities, there is sentiment that this end market might
be at the low point and could slowly begin to improve as 2017 progresses.
Tin Plate
Based on December preliminary data, 2016 tin mill product imports top 1.1 million tons for the year, up
approximately 17% year over year (y-o-y), and place imports as larger than any single domestic supplier.
Domestic mill shipments are down 12% through November, yet AISI data shows that for the first time in 2016,
domestic producers shipped more material than the year ago month.
Appliance
December major appliance unit shipments increased by 14% y-o-y; up 14% m-o-m
AHAM6 shipments total 46.3 million units in 2016, up 5.6% y-o-y.
Pipe
and Tube
Structural tubing demand tracking with changes in flat-rolled market and improved construction market; sentiment
good going into 2017.
Any OCTG optimism that develops with increasing rigs counts seems to be offset by high pipe imports.
Line pipe inquiry activity has improved slightly.
Construction
November construction spending increased 0.9% to a $1.2 trillion SAAR, the best rate in 10 years.
The November Housing Market Index score of 70 is best since Jul 2005.
Dodge Momentum Index score of 136.7 is best since 2007, supporting better Non-Res demand in 2017.
December Architectural Billing Index increases 10.5% to 55.9; highest level in 18 months.
Service
Center
December shipments fell 15.7% month-over-month to lowest December since 2012.
However, carbon flat-rolled inventory only increased 3.4% month-over-month (m-o-m) in December, which is only
45% of the average December inventory build between 2009 – 2014. Months supply of 2.7 months to begin 2017,
and is 819,000 fewer tons versus year ago period.
Sources: Wards / AHAM / US DOC / Customer Reports / AISI /
US Census Bureau / FW Dodge / Dept of Commerce / AIA / MSCI / worldsteel
Market industry summary
Tubular Segment
United States Steel Corporation
Sources: Baker Hughes, US Energy Information Administration,
Preston Publishing, Internal
Oil Directed
Rig Count
U.S. energy companies continued to increase drilling rates during 4Q. The oil directed rig
count averaged 470 during 4Q, an increase of 21% quarter over quarter (q-o-q). As of
January 27, 2017, there were 566 active oil rigs.
Gas Directed
Rig Count
Improving natural gas market fundamentals and outlook resulted in increased drilling during
4Q. The natural gas directed rig count averaged 116 during 4Q, an increase of 32% q-o-q.
As of January 27, 2017, there were 145 active natural gas rigs.
Natural Gas
Storage Level
The y-o-y surplus of gas in storage changed into a deficit during 4Q. As of January 20, 2017,
there was 2.8 Tcf of natural gas in storage, down 11% y-o-y.
Oil Price
The West Texas Intermediate oil price averaged $49 per barrel during 4Q, up $4 or
10% q-o-q. Prices have remained above $50 per barrel since December 2016.
Natural Gas Price
The Henry Hub natural gas price averaged $3.04 per million btu during 4Q, up $0.16 or 6%
q-o-q. The outlook for 1Q prices remains positive during the high demand period for
residential heating.
Imports
Imports of OCTG remain high. During 4Q, import share of OCTG apparent market demand
is projected to exceed 50%.
OCTG Inventory Overall, OCTG supply chain inventory continues to decline. Months supply is below 6.
Major end markets summary
United States Steel Corporation
U. S. Steel Europe Segment
Sources: Eurofer, USSK Marketing, IHS, Eurometal, Euroconstruct
Automotive
EU car production reached 18.7 million units in 2016, an increase of 3.5% y-o-y. EU car production is
projected to grow by 3.7% y-o-y in 1Q to 5.1 million units. Total V4 car production reached 3.5 million
units in 2016, an increase of 4.3% y-o-y. V4 car production is anticipated to increase by 4.0% y-o-y in
1Q close to 1 million units.
Appliance
The EU appliance sector is projected to grow by 5% y-o-y in 2016. In 1Q, the appliance market is
anticipated to decline by 2.1% q-o-q in the EU, but to grow by 0.8% q-o-q in Central Europe as a result
of expected stronger residential construction sector performance and increased demand for home
appliances in the area.
Tin Plate
Due to weak results in the European agriculture sector throughout the year and due to seasonal
slowdown in 4Q, consumption in the EU in 2016 remained unchanged y-o-y. In 1Q, tin consumption is
projected to increase by 9% y-o-y.
Construction
Total construction output growth in the EU reached 2% in 2016. The growth was driven by both
residential and also non-residential sectors. Civil engineering sector has stagnated as most EU
structural funds projects had been finalized last year. For 1Q, Eurofer expects 0.6% y-o-y growth of
construction sector output.
Service
Centers
Flat steel service centers (SSC) shipments have grown by 1.4% over the first 11 months of 2016 in the
EU. Stock volumes within EU SSC are forecasted to return to normal levels after usual destocking
process at the end of the year. Strengthened consumption in manufacturing and construction sectors is
now being reflected in sales volumes and the market is expected to remain firm for much of 1Q.
U. S. Steel Commercial – Contract vs. Spot
Contract vs. spot mix – twelve months ended December 31, 2016
Firm
29%
Market Based
Quarterly *
22%
Flat-Rolled
Market
Based
Monthly *
15%
Tubular U. S. Steel Europe
Spot
22%
Cost Based
10%
Contract: 78%
Spot: 22%
Firm
40%
Market Based
Quarterly*
2%
Spot
36%
Cost Based
10%
Program
40%
Contract: 64%
Spot: 36%
Market Based
Monthly*
12%
Spot
60%
Program: 40%
Spot: 60%
United States Steel Corporation
Market Based
Semi-annual *
2%
*Annual contract volume commitments with price adjustments in stated time frame
United States Steel Corporation
Other Items
Capital Spending
2016 actual $306 million
2017 estimate $475 million
Depreciation, Depletion and Amortization
2016 actual $507 million
2017 estimate $460 million
Pension and Other Benefits Costs
2016 actual $101 million
2017 estimate $180 million
Pension and Other Benefits Cash Payments
(excluding voluntary pension contributions)
2016 actual $150 million
2017 estimate $125 million
Safety Performance Rates
Global OSHA Recordable Incidence Rates
2010 through December 2016
United States Steel Corporation
Frequency of Injuries (per 200,000 manhours)
Data for 2010 forward includes Lone Star Tubular Operations, Bellville Tubular Operations, Rig Site Services, Tubular Processing Houston, Offshore Operations Houston, and
Wheeling Machine Products. Data for 2011 forward includes Transtar. Data for 2010 through 2011 includes U. S. Steel Serbia. Data for 2010 through 2014 includes Canada.
BLS = U.S. Bureau of Labor Statistics
AISI = American Iron and Steel Institute
Global Days Away From Work Incidence Rates
2010 through December 2016
86%better than BLS 65% better than AISI 73% better than BLS 44% better than AISI
Source: Company Filings
U. S. Steel Europe Segment
U. S. Steel Europe Segment
$ / short ton
Increased profitability on lower average realized prices
United States Steel Corporation
Source: Company Filings
Tubular Segment
Tubular Segment
$ / short ton
Margins starting to recover from historic lows
United States Steel Corporation
Size range of OCTG and standard and line pipe product capabilities
1” 5” 10” 15” 20” 25”
Lone Star, TX #2
Fairfield, AL
Lorain, OH #3
Capacity (NT)
750,000
380,000
390,000
Total: 1,520,000
ERW
Seamless
Tubular Segment
Footprint after recently announced facility shutdowns
United States Steel Corporation
Flat-Rolled
$ Millions
Tubular
$ Millions
Note: For reconciliation of non-GAAP amounts see below
Carnegie Way Transformation Improving Earnings Power
United States Steel Corporation
2015
EBITDA Commercial
Costs & Other
Income
2016
EBITDA 2015
EBITDA
Commercial Costs & Other
Income
2016
EBITDA
2016 vs. 2015 segment EBITDA
U. S. Steel Europe
$ Millions
2015
EBITDA Commercial
Costs & Other
Income
2016
EBITDA
($115)
Price
($233)
Volume
($206)
$256
($236)
$162
Volume
$67
Price
($143) $55
$124
$265
$62
$28/ton ̶ Carnegie Way Benefits
$155/ton ̶ Carnegie Way Benefits
Carnegie
Way Carnegie
Way
Carnegie
Way
$55/ton ̶ Carnegie Way Benefits
$155 Volume
($334)
Price
($307) $281
$551
$346
United States Steel Corporation
Adjusted Results
Segment EBITDA – Flat-Rolled
($ millions)
YE 2016 4Q 2016 3Q 2016 2Q 2016 1Q 2016 YE 2015
Segment earnings (loss) before interest and income
taxes
($3) $65 $114 $6 ($188) ($237)
Depreciation 349 82 87 89 91 392
Segment EBITDA $346 $147 $201 $95 ($97) $155
Reconciliation of segment EBITDA
Segment EBITDA – Tubular
($ millions)
YE 2016 4Q 2016 3Q 2016 2Q 2016 1Q 2016 YE 2015
Segment earnings (loss) before interest and income
taxes
($304) ($87) ($75) ($78) ($64) ($179)
Depreciation 68 17 17 17 17 64
Segment EBITDA ($236) ($70) ($58) ($61) ($47) ($115)
Segment EBITDA – U. S. Steel Europe
($ millions)
YE 2016 4Q 2016 3Q 2016 2Q 2016 1Q 2016 YE 2015
Segment earnings (loss) before interest and income
taxes
$185 $63 $81 $55 ($14) $81
Depreciation 80 20 21 20 19 81
Segment EBITDA $265 $83 $102 $75 $5 $162
United States Steel Corporation
Net Earnings and EBITDA Included in Outlook
Reconciliation of net earnings to EBITDA included in Outlook
($ millions) FY 2017
Projected net earnings attributable to United States Steel Corporation included in Outlook $535
Estimated income tax expense 60
Estimated net interest and other financial costs 245
Estimated depreciation, depletion and amortization 460
Projected annual EBITDA included in Outlook $1,300
United States Steel Corporation
Net Debt
Net Debt
($ millions)
YE 2016 YE 2015 YE 2014 YE 2013
Short-term debt and current maturities of long-term debt $50 $45 $378 $323
Long-term debt, less unamortized discount 2,981 3,093 3,086 3,576
Total Debt $3,031 $3,138 $3,464 $3,899
Less: Cash and cash equivalents 1,515 755 1,354 604
Net Debt $1,516 $2,383 $2,110 $3,295
Reconciliation of net debt
United States Steel Corporation
Adjusted Results
($ millions)
FY 2016 4Q 2016 3Q 2016 2Q 2016 1Q 2016
Reported net earnings (loss) ($440) ($105) $51 ($46) ($340)
Supplemental unemployment and severance costs and other
charges
(2) (4) ─ (23) 25
Loss on shutdown of certain tubular pipe mill assets 126 126 ─ ─ ─
Loss on debt extinguishment 22 ─ ─ 24 (2)
Granite City Works temporary idling charges 18 18 ─ ─ ─
Impairment of equity investment 12 12 ─ ─ ─
Impairment of intangible assets 14 ─ 14 ─ ─
Adjusted net earnings (loss) ($250) $47 $65 ($45) ($317)
Reconciliation of reported and adjusted net earnings (losses)
United States Steel Corporation
Adjusted Results
($ per share) FY 2016 4Q 2016 3Q 2016 2Q 2016 1Q 2016
Reported diluted EPS (LPS) ($2.81) ($0.61) $0.32 ($0.32) ($2.32)
Supplemental unemployment and severance costs and
other charges
(0.01) (0.03) ─ (0.16) 0.17
Loss on shutdown of certain tubular pipe mill assets 0.80 0.73 ─ ─ ─
Losses associated with U. S. Steel Canada Inc. ─ ─ ─ ─ ─
Loss on debt extinguishment 0.14 ─ ─ 0.17 (0.03)
Granite City Works temporary idling charges 0.11 0.11 ─ ─ ─
Impairment of equity investment 0.08 0.07 ─ ─ ─
Impairment of intangible assets 0.09 ─ 0.08 ─ ─
Loss on retirement of senior convertible notes ─ ─ ─ ─ ─
Postemployment benefit actuarial adjustment ─ ─ ─ ─ ─
Deferred tax asset valuation allowance ─ ─ ─ ─ ─
Adjusted diluted EPS (LPS) ($1.60) $0.27 $0.40 ($0.31) ($2.18)
Reconciliation of reported and adjusted diluted EPS (LPS)
United States Steel Corporation
Adjusted Results
($ millions)
FY 2016 4Q 2016 3Q 2016 2Q 2016 1Q 2016
Reported net earnings (loss) ($440) ($105) $51 ($46) ($340)
Income tax provision (benefit) 24 (2) 19 (7) 14
Net interest and other financial costs 251 43 62 81 65
Reported earnings (loss) before interest and income taxes ($165) ($64) $132 $28 ($261)
Depreciation, depletion and amortization expense 507 123 126 129 129
EBITDA $342 $59 $258 $157 ($132)
Supplemental unemployment and severance costs and
other charges
(2) (4) ─ (23) 25
Loss on shutdown of certain tubular pipe mill assets 126 126 ─ ─ ─
Granite City Works temporary idling charges 18 18 ─ ─ ─
Impairment of equity investment 12 12 ─ ─ ─
Impairment of intangible assets 14 ─ 14 ─ ─
Adjusted EBITDA $510 $211 $272 134 ($107)
Reconciliation of adjusted EBITDA
