US Steel President and CEO Dave Burritt said the company’s record $4.174 billion profit last year was just the start.
“2021 has been an exceptional year. This puts us on track for another strong year in 2022,” Burritt said on a conference call with investors. “We delivered for our stakeholders in 2021, delivering record performance in nearly every area of our business, record earnings, record EBITDA and record EBITDA margin, record free cash flow and record performance in safety, quality and reliability. Collectively, we pursue the best here at US Steel, and 2021 is a great example of our progress.”
Amid record steel prices, US Steel ended a record year with fourth quarter earnings of more than $1 billion. Burritt said the steelmaker remained optimistic despite lower hot-rolled steel prices 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 on the earnings conference call with investors. “While the market is certainly looking for every reason to be negative about the outlook for this year, we remain extremely positive. As expected, the first quarter will be seasonally weak, including normal impacts from our mining operations, but we believe that it’s just temporary.As the markets continue to correct themselves, the macro backdrop is favourable.
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US Steel exceeded expectations last year and was able to pay off $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 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 more than $1 billion in the fourth quarter alone. We also expect to generate significant levels of free cash flow. available cash in 2022.”
US Steel expects demand to remain robust. The steelmaker, which has operations in Gary and Portage, serves a wide range of customers, including automotive, appliance, service center and construction industries.
The automotive industry, for example, expects to manufacture an additional 2 million units this year as the shortage of semiconductors is finally resolved.
“Supply chain issues will ease, inflationary pressures will ease, savings rates will remain high, liquidity will remain on the sidelines and demand will remain pent up for the markets we serve,” Burritt said. “It’s a recipe for success in steel, and we’re optimistic that demand will pick up in 2022. We’ve, after all, doubled cycle prices. Obviously a great place. We know the risks, the Fed raising rates too fast, unexpected changes in import restrictions, geopolitical risks, existential risks The risks are many but we have seen them all before.
Long more focused on integrated steelmaking, such as at its mills along the shores of Lake Michigan, the steelmaker is investing in new mini-plants in Arkansas.
“We know where we’re going and we know how to get there. When you’re constantly striving for the best, you’re never satisfied and the challenges will always remain,” Burritt said. “We’re taking the steps necessary to become less capital-intensive and less carbon-intensive. We’re making strategic investments to expand our capabilities, capabilities that will make us a better steel company, not bigger. And we’re going to move faster, not bigger. slowly into 2022 because, as we like to say, we can’t move forward fast enough.”
The steelmaker is building a new $3 billion mini-plant in Arkansas.
“This is no longer your big, big highway for US Steel. The future for US Steel is incredibly bright,” Burritt said. “The solution remains the same, executing our Best for All strategy by building a second plant facility and expanding fishing lines through our investments in an electric steel line and coating line in Big River while returning capital to shareholders.When we execute, we expect to unlock an additional $850 million in EBITDA throughout the cycle from state-of-the-art steelmaking and mini-mill finishing line capabilities of technology… Our integrated operations continue to perform well to drive what should be another impressive year in 2022.”