U.S. Steel President and CEO Dave Burritt said the record $4.174 billion in profit the company turned last year was just the start.
“2021 was an exceptional year. It puts us on a path for another strong year in 2022,” Burritt said in a conference call with investors. “We delivered for our stakeholders in 2021, achieving record performance across nearly every part of our business, record earnings, record EBITDA and record EBITDA margin, record free cash flow, and record safety, quality, and reliability performance. Collectively, we are pursuing the best here at U.S. Steel, and 2021 is a great example of our progress.”
Amid record-high steel prices, U.S. Steel capped a record-breaking year with a profit of more than $1 billion in the fourth quarter. Burritt said the steelmaker remained optimistic despite cooling prices for hot-rolled steel and the rollback of more tariffs in favor of quotas with trading partners.
“This is just the beginning. Our progress will continue in 2022 and beyond,” he said in the earnings conference call with investors. “While the market is certainly looking for every reason to be negative about the prospects for this year, we remain overwhelmingly positive. As expected, the first quarter will be seasonally weak, including the normal impacts of our mining operations, but we believe this is just temporary. While markets continue to self-correct, the macro backdrop is favorable.”
U.S. Steel outperformed expectations last year and was able to pay down $3 billion in debt, putting it in a strong financial position, Chief Financial Officer Christie Breves said.
“2021 was a year of record financial performance. We ended the year with an adjusted EBITDA of approximately $5.6 billion and an adjusted EBITDA margin of 28%,” Breves said. “This translated into record free cash flow generation of approximately $3.2 billion, including over $1 billion in the fourth quarter alone. We expect to generate meaningful levels of free cash flow in 2022 as well.”
U.S. Steel expects that demand will remain robust. The steelmaker, which has operations in Gary and Portage, serves a broad-based array of customers, including in the automotive, appliance, service center, and construction industries.
The automotive industry for instance expects to make 2 million more units this year as semiconductor shortages finally get resolved.
“Supply chain issues will ease, inflationary pressures will abate, saving rates remain high, cash remains on the sidelines and demand remains pent up for the markets we serve,” Burritt said. “This is a recipe for success in steel, and we are optimistic that 2022 demand will accelerate. We have, after all, double through cycle prices. A great place to be. We know about the risks, the Fed taking rates up too fast, unexpected changes to import restrictions, geopolitical risks, existential risks. The risks are many but we’ve seen it all before.”
Long more focused on integrated steelmaking, such as at its mills along the Lake Michigan lakeshore, steelmaker has been investing in newer mini-mills in Arkansas.
“We know where we’re headed, and we know how to get there. When you are in pursuit, constant pursuit of best, you were never satisfied and challenges will always remain,” Burritt said. “We are taking the necessary steps to become less capital and carbon-intensive. We are executing on strategic investments to expand our capabilities, capabilities that will make us a better, not a bigger steel company. And we are going to move faster, not slower in 2022 because as we like to say, we can’t get to the future fast enough.”
The steelmaker is building a new $3 billion minimill in Arkansas.
“This isn’t your great, great grand path for U.S. Steel anymore. U.S. Steel’s future is incredibly bright,” Burritt said. “The solution remains the same, execute our Best for All strategy by constructing a second mill greenfield facility and expanding fishing lines through our investments in an electrical steel line and coating line at Big River while returning capital to stockholders. When we execute, we expect to unlock $850 million of additional through-cycle EBITDA through state-of-the-art mini-mill steelmaking and finishing line capabilities… Our integrated operations continue to run well to drive what is expected to be another impressive year in 2022.”