United States Steel Corporation

Good morning, everyone, and welcome to United States Steel Corporation's third quarter 2023 earnings conference call and webcast. As a reminder, today's call is being recorded. I'll now hand the call over to Kevin Lewis, Vice President of Finance.

Thank you, Tommy. Good morning, and thank you for joining our third quarter 2023 earnings call. Joining me on today's call is U.S. Steel President and CEO Dave Burrett, Senior Vice President and CFO, Jessica Graziano, and Senior Vice President and Chief Strategy and Sustainability Officer, Rich Ruhoff. I would also like to take the opportunity to welcome Emily Chang, who recently joined U.S. Steel as our Investor Relations Officer. Emily brings tremendous experience from her time as a Southside Analyst covering metals and mining. I know many of you already had the chance to meet Emily in her new role, and we look forward to your continued engagement with her and the Investor Relations team. This morning we posted slides to accompany today's prepared remarks. These can be found on the USTO Investor Relations page under the Overview section. Before we start, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties, as described in our SSE filings, and actual future results may vary materially. Forward-looking statements in the press release that we issued yesterday, along with our remarks today, are made as of today, and we undertake no duty to update them as actual events unfold. With that, I would like to turn the conference call over to U.S. Steel President and CEO, Dave Burritt, who will begin on slide four.

Thank you, Kevin, and good morning to all of you joining us. We appreciate your continued interest in U.S. Steel and look forward to this morning's discussion. But as we begin, We are deeply saddened by recent events in Ukraine, the Middle East, or earlier this week in Maine. Our thoughts and prayers go out to those impacted by these tragedies. But this morning, we'd like to focus on three key messages that will shape our commentary. First, the high level of interest in U.S. steel that has come to light from the strategic alternatives review process. Second, the continued strong performance of the business today, as Jess will discuss in our third quarter results. And third, the opportunity we have today to bridge the market to higher expected EBITDA than what we currently believe is being projected by the street for 2024. Throughout the call, we hope you'll hear the enthusiasm we have for maximizing stockholder value. Let's start with the first point, the strategic alternatives review process. We announced in August that after receiving multiple unsolicited proposals from credible bidders ranging from the acquisition of certain production assets to the entirety of U.S. Steel, the U.S. Steel Board of Directors had initiated this strategic alternatives review process. The company's board of directors, with the assistance of the management team and its advisors, is progressing a robust, fair, and rigorous review process. The board's North Star is and will continue to be maximizing stockholder value. The process remains ongoing, and therefore we must respect our confidentiality obligations and the work the board is doing. Rest assured, steady progress is being made as we continue to support the due diligence efforts of the bidders in the process. To be very clear, again, our board is fully committed to maximizing stockholder value. While I can't speak to the specifics of the process, I can tell you this, there is evidence serious interest from many highly credible bidders in the board's competitive process. Guided by our code of conduct, known as our steel principles, once the process is complete, the U.S. Steel Board will make a decision that is in the best interest of our stockholders. With that update, we will not answer any questions about the process or participants. We are flattered by all the interest in our company, flattered but not surprised. We know that U.S. Steel is strategically positioned for tremendous value creation in the months and years ahead. We've been climbing a mountain of strategic capex, and now that we're coming down the other side of the mountain, we're not surprised so many see it won't be long before these new world-class assets generate strong free cash flow. In fact, we are creating value today as we continue to deliver on our best-for-all strategy, the second point of enthusiasm for stockholders. To that end, we are very pleased to have safely delivered a strong third quarter performance, our 12th consecutive quarter of profitability. And even with elevated capital spending, we generated another positive free cash flow quarter. Consistency has become our middle name. Our results reflect a solid operational performance. Our position in the heart of the USA, the world's most robust steel industry. Our resilience and flexibility in the face of shifting business conditions and our continued laser focus on safety. In fact, we're on pace for another record best year of safety performance. I say another because our exceptional safety record follows record safety performances in 2020. in 2021 and in 2022. Our stellar safety record is part and parcel of our stellar operations. We have a culture of caring. Safety has always been and always will be one of our core values. The way we see it, if you aren't operating safely, you aren't operating well. Our safety performance, enabled by the best employees in the steel industry, allowed us to deliver strong financials in the third quarter. Our best-for-all strategy is paying off. We've talked about this before. U.S. steel is well-positioned to leverage megatrends that favor our industry. We're up to the challenge to harness these megatrends with our competitive advantages. With much of the global steel industry stagnant at best when you consider industry dynamics in China and in Europe, we are bullish on American steel. Why? On our last call, I mentioned the three global megatrends that will provide tailwinds for American steel and our business in the months and years to come. One is accelerating deglobalization. In a world impacted by conflicts like those in the Middle East and Ukraine and emerging from a global pandemic that stretched supply chains to the limit, we are witnessing a stark reversal after decades of globalization. The upshot? and enabled by legislation like the bipartisan infrastructure law, the CHIPS Act, and the Inflation Reduction Act, what we like to call the Manufacturing Renaissance Act, the United States is experiencing a once-in-a-generation on-shoring boom. The globalization boom means U.S. steel's nearly 123-year history of producing steel that is mined, melted, and made in the USA. is paying significant dividends with more to come and significant room for continued growth in North American steel demand. Fundamental to the deglobalization trend is the USA's achievement of energy independence. Between our strong segment and tubular steel and our line pipe products coming out of North American flat rolled, we are seeing and we will continue to see a robust order book supporting America's energy markets. Another mega trend is decarbonization. There is a strong global commitment to reducing greenhouse gas emissions. With our electrical steels that are empowering the transition to EVs, plus our exposure to sustainable steelmaking at Big River, U.S. Steel is well positioned to harness the decarbonization trend. And the last is digitization. Tools like generative AI are enabling us to improve safety and efficiency and capture value in truly unprecedented ways. For instance, at our Minnesota mining operations, we are using AI to improve the maintenance of our truck fleet. AI applications are assisting crews with truck repairs, ordering parts, and distilling complex information. We believe these mega trends will provide strong tailwinds for the domestic steel industry and especially for U.S. steel. And finally, we're excited for what lies ahead as our best-for-all strategy unlocks significant value in the next 12 months. This is an exciting time. We are in the heart of, if not the world's best and brightest steel industry, the United States of America. Of course, it's up to us to harness these mega trends to strengthen our business and ride the tailwinds, and that's exactly what we're doing with our strategic investments. This leads us to the third key message of today's call, bridging to 2024. As mentioned at the start of the call, our best-for-all strategy unlocks significant value, value we don't believe the street is fully projecting into their expectations for next year. Consider our new non-green oriented or NGO electrical steel line, which just had its completion celebrated with a ribbon cutting this month at Big River Steel. Our new index branded electrical steel is now officially out in the market, enabling us to leverage both the decarbonization and deglobalization trends. And by the way, we delivered NGO on time and on budget. Next, our dual galvanized galvalume coating line, or CGL2, at Big River is nearing its anticipated startup in 2024. This line will leverage the sustainable steelmaking at the Big River complex to offer value-added construction and appliance steels. And then there's Big River II, our state-of-the-art mini mill that remains on track for a second half 2024 startup. As we shared during the last call, Big River II, in combination with the existing Big River Steel, will form a cutting-edge 6 million ton mega mill, supplying the most advanced and sustainable steels in North America, with up to 70 to 80 percent fewer greenhouse gas emissions than the traditional integrated steelmaking route. Our progress at Big River II is tangible. When we last spoke in July, we just had a quarter of the equipment on site. Today, almost two thirds and our experienced construction team is progressing us closer to first coil in the second half of 2024. Today we'll spend time unpacking 2024 and helping bridge the gap between best for all and 2024 street estimates. This is time well spent given the transformation in our business model and the benefits we expect to see next year. Simply put, we believe that the trajectory of our performance, both today and tomorrow, has not been fully appreciated by the market. We are 12 months away from the scheduled launch of Big River II, which means incremental strategic EBITDA creation and about a billion-dollar reduction to CapEx in 2024 relative to 2023. After years of heavy investment, we are finally coming down the capex mountain and ready to collect the bounty of free cash flow and unlock stockholder value. Even as we invest in strategic projects that will reshape our footprint and drive our best for all strategy forward in 2024, we are taking necessary actions today in the face of volatile market conditions. We have recently had to make some tough decisions related to reducing fixed costs. In September, we made the difficult decision to temporarily idle our last operating blast furnace at Granite City Works. I say this was a difficult decision, and it truly was, but it was a necessary one. With the autoworker strike impacting the order book in the fourth quarter, we acted to ensure that our melt capacity is in line with demand. We remain nimble, enabling us to maintain profitability as we manage through uncertain market conditions. Now let's turn things over to Jess, who will go over the financials and 2024 expectations. Jess?