United States Steel Corporation reported first quarter 2020 net loss of $391 million, or $2.30 per diluted share. Adjusted net loss was $123 million, or $0.73 per diluted share. This compares to first quarter 2019 net earnings of $54 million, or $0.31 per diluted share. Adjusted net earnings for first quarter 2019 were $81 million, or $0.47 per diluted share.
“Our goal during these unprecedented circumstances is to protect lives and livelihoods, which means keeping our employees and communities safe and healthy and the business resilient,” said U. S. Steel president and chief executive officer David B. Burritt. “Over the past several weeks, we have announced a series of actions in response to the coronavirus pandemic (COVID-19) and the significant changes in the global oil and gas markets. We continue to serve customers and the stakeholders who count on us as an essential business.” Burritt continued, “Challenging days are ahead, but I am confident in the men and women at U. S. Steel who are continuing to make steel as a critical part of our nation’s infrastructure and progress our ‘best of both’ integrated and mini mill technology strategy. We remain calm and focused to ensure a stronger U. S. Steel for all of our stakeholders.”
Reflecting on the quarter, Burritt commented, “Market activity was beginning to improve prior to the emergence of COVID-19 and the sudden changes in global oil and gas markets. As the impacts from these unprecedented market dynamics became apparent, we adjusted our footprint, fortified our balance sheet and aggressively cut costs. While these decisive actions helped us exceed our first quarter guidance, we have quickly turned our attention to the second quarter to not only ensure the safety and health of our employees but also to preserve cash and liquidity.”
U. S. Steel granted Stelco Inc. at a purchase price of $100 million the option to acquire a 25 percent interest in the company’s Minntac iron ore mining operations for an aggregate purchase price of $600 million. Under the agreement, $20 million was paid to U. S. Steel upon signing the option agreement and the remaining $80 million will be paid ratably over the remainder of the 2020 calendar year. Once Stelco has completed paying the remaining $80 million, the option can be exercised any time before January 31, 2027 and, upon exercise, Stelco will make an additional payment of $500 million to acquire its 25 percent interest in the new cost-sharing joint venture. This agreement ensures U. S. Steel will continue to be the operator and majority owner of the Minntac mine and implies a $2.4 billion enterprise value for the Minntac operation. Morgan Stanley & Co. LLC acted as financial advisor to U. S. Steel and Jones Day acted as legal advisor to U. S. Steel on the transactions.
Published in the June 2020 Edition
