United States Steel Corp. (NYSE:X)

The analysis of United States Steel Corp.'s annual current and deferred income tax expenses over the five-year period ending December 31, 2022, reveals significant fluctuations and notable trends.

Current Income Tax Expense

The current income tax expense shows a variable pattern. In 2018, the company recorded a current tax expense of $26 million, which then shifted to a benefit of $24 million in 2019, and further reduced to a $12 million benefit in 2020. This trend reversed sharply in 2021 and 2022, with current tax expenses of $222 million and $234 million respectively, indicating a substantial increase in taxes payable in these years.

Deferred Income Tax Expense

The deferred income tax component demonstrates considerable volatility throughout the period. In 2018, a significant deferred tax benefit of $329 million was recorded, followed by a substantial deferred tax expense of $202 million in 2019. The deferred tax benefit reappeared in 2020 with $130 million, then decreased to a lesser benefit of $52 million in 2021, before reversing sharply to a deferred tax expense of $501 million in 2022. These fluctuations suggest considerable changes in the company's deferred tax assets and liabilities, potentially driven by variations in temporary differences or changes in tax rate assumptions.

Total Income Tax Provision (Benefit)

The overall income tax provision, combining current and deferred components, fluctuated between benefit and expense positions over the period. In 2018, a net income tax benefit of $303 million was recorded, transitioning to an income tax expense of $178 million in 2019. This reverted again to a benefit of $142 million in 2020. The trend shifted towards consistent tax expenses in 2021 and 2022, with provisions of $170 million and a significant increase to $735 million respectively. The sharp rise in total tax provision in 2022 is primarily driven by increases in both current and deferred tax expenses, pointing to changes in profitability, tax strategy, or regulatory environment impacting the tax liabilities.

The federal statutory tax rate remained constant at 21% throughout the five-year period from 2018 to 2022.

In contrast, the effective income tax rate exhibited notable variability over the same timeframe. Initially, in 2018 and 2019, the effective tax rate was significantly negative, recorded at -37.32% and -39.38%, respectively, indicating tax benefits or credits exceeding the taxable income obligations during these years.

In 2020, there was a marked shift, with the effective tax rate increasing sharply to a positive 10.86%, reflecting a transition to a tax expense that was lower than the statutory rate but positive nonetheless.

The subsequent two years showed a gradual increase in the effective tax rate: 3.91% in 2021, followed by a more substantial rise to 22.55% in 2022. This 2022 value slightly exceeds the constant statutory rate, suggesting the presence of additional tax expenses or adjustments contributing to a higher tax burden relative to the base rate.

Overall, the pattern indicates significant fluctuations in tax impacts over the period, with initial years benefiting from negative effective tax rates, followed by a trend toward alignment with, and eventually exceeding, the statutory tax rate by the final year presented.

The financial data reveals several notable trends and shifts across the periods analyzed. Deferred tax assets before valuation allowance decreased from a high of $1,186 million in 2018 to $469 million in 2022, indicating a reduction in recognized deductible temporary differences or carryforwards. Valuation allowances fluctuated significantly, peaking negatively at -$796 million in 2020 and subsequently improving to -$119 million in 2022, suggesting adjustments in the expected realizability of deferred tax assets. Consequently, net deferred tax assets diminished sharply, turning from positive $431 million in 2018 to a negative $446 million by 2022, highlighting a shift to a net deferred tax liability position.

Tax Carryforwards

Federal tax loss carryforwards displayed volatility, rising substantially in 2020 to $443 million before declining drastically to only $2 million by 2022. Federal capital loss carryforwards increased moderately over the period, with a gap in 2020 but showing growth to $69 million in 2022. State tax loss carryforwards followed a downward trend after peaking at $182 million in 2020, falling to $77 million by 2022. State capital loss carryforwards emerged only in 2021 and rose by 2022.

Employee Benefits

Employee benefit-related deferred tax assets declined consistently, from $337 million in 2018 to $71 million in 2020, with no reported values thereafter. Offsetting negative adjustments appeared in later years with recognition of liabilities associated with employee benefits totaling -$70 million in 2021 and -$31 million in 2022, indicating changes in benefit obligations or assumptions.

Deferred Tax Liabilities and Other Temporary Differences

Deferred tax liabilities grew from -$541 million in 2018 to nearly -$796 million in 2022, signifying increased taxable temporary differences. Other temporary differences fluctuated but trended upward, ending at $53 million in 2022 compared to $26 million in 2018.

Asset and Liability Movements

Property, plant, and equipment related deferred taxes consistently moved toward larger negative amounts, reaching -$589 million in 2022 from -$468 million in 2018. Operating lease liabilities and right-of-use assets appeared starting 2020 but decreased somewhat by 2022. Capitalized research and development assets exhibited irregular amounts, peaking at $35 million in 2022 after a decrease in 2021. Inventory presented a fragmented pattern with limited data but showed a decrease wherever reported.

Other Items

Contingencies and accrued liabilities fluctuated without a clear trend, oscillating between $52 million and $78 million. Receivables, payables, and debt showed minor amounts from 2020 onward, with modest negative adjustments each year. Investments in subsidiaries and equity investees reflected decreases in assets over the last years analyzed, indicating possible write-downs or restructurings.

In summary, the data reflects a general contraction in deferred tax assets, especially driven by substantial reductions in federal tax loss carryforwards and increased valuation allowances starting in 2019. The net deferred tax position worsened significantly by 2022. Deferred tax liabilities increased in magnitude, reflecting growth in taxable temporary differences particularly related to property, plant and equipment. The emergence and fluctuation of new tax credits and liabilities such as operating lease liabilities and state capital loss carryforwards indicate changing corporate tax profile and asset usage. These patterns suggest heightened caution in the realization of deferred tax assets and perhaps shifts in operational or capital structure impacting tax positions.

The analysis of deferred income tax accounts over the five-year period reveals notable fluctuations and a divergent trend between deferred income tax benefits and liabilities.

Deferred Income Tax Benefits

The deferred income tax benefits demonstrate a sharp decline from US$445 million in 2018 to US$19 million in 2019. Subsequently, the values remain relatively low and stable, with minor increases to US$22 million in 2020 and US$32 million in 2021, followed by a decrease to US$10 million in 2022. This overall downward trend suggests a significant reduction in recognized deferred tax benefits after 2018, stabilizing at a much lower level in the following years.

Deferred Income Tax Liabilities

In contrast, deferred income tax liabilities show a generally increasing pattern across the years. Starting from a relatively low US$14 million in 2018, the liabilities reduce slightly to US$4 million in 2019, then increase to US$11 million in 2020. A substantial rise occurs in the two subsequent years, reaching US$122 million in 2021 and sharply increasing to US$456 million by the end of 2022. This pronounced growth indicates escalating obligations related to deferred taxes, which may imply accumulation of taxable temporary differences or changes in tax rates or regulations impacting the liabilities.

Overall, the data presents a scenario where deferred income tax benefits have diminished significantly and remained low, while deferred income tax liabilities have escalated dramatically in recent years. This divergence merits further investigation to understand the underlying causes, such as tax policy changes, adjustments in asset valuations, or shifts in earnings recognition, reflecting an increasing future tax burden relative to deferred tax assets.

The financial data reveals significant fluctuations and notable trends over the five-year period. Total assets on both reported and adjusted bases show a consistent upward trajectory, with reported total assets rising from approximately 10,982 million US dollars in 2018 to 19,458 million US dollars in 2022. Adjusted total assets follow a similar pattern, increasing steadily from 10,537 million to 19,448 million in the same timeframe. This indicates overall asset growth, especially marked by a sharp increase between 2020 and 2021.

Total liabilities, for both reported and adjusted figures, also increase but at a more moderate pace. Reported total liabilities grow from 6,779 million US dollars in 2018 to 9,147 million in 2022. Adjusted liabilities move in close alignment, rising from 6,765 million to 8,691 million over the same period. The narrower increase in adjusted liabilities in recent years suggests some mitigating adjustments that dampen the reported rise in obligations.

Stockholders’ equity exhibits considerable variability. On a reported basis, it declines slightly from 4,202 million US dollars in 2018 to 3,786 million in 2020, then surges dramatically to 9,010 million by the end of 2021 and further to 10,218 million in 2022. Adjusted stockholders’ equity follows a comparable trajectory, with a drop to 3,775 million in 2020 before escalating sharply to 9,100 million in 2021 and reaching 10,664 million in 2022. This pattern suggests a recovery and strengthening of equity positions, likely influenced by underlying earnings performance and tax adjustments.

Net earnings show considerable volatility and are a key driver behind changes in equity. Reported net earnings transition from a positive 1,115 million in 2018 to losses in 2019 and 2020 (-630 million and -1,165 million respectively), followed by a robust recovery to a profit of 4,174 million in 2021 and a solid profit of 2,524 million in 2022. Adjusted net earnings mirror these shifts but show slightly different magnitudes, indicating that deferred taxes and other adjustments impact the recognized profit or loss. The adjusted net loss is more pronounced in 2020 (-1,295 million) but the adjusted profits in 2021 (4,122 million) and 2022 (3,025 million) confirm strong recovery.

Overall, the data indicate that the company experienced a period of financial distress or adverse operational conditions around 2019 and 2020, as evidenced by losses and a decline in equity. However, from 2021 onwards, there is a marked turnaround with substantial growth in assets and equity, accompanied by significant positive net earnings. Adjustments for income taxes and deferred items appear to have a smoothing effect on equity and earnings figures, highlighting the importance of these adjustments for a complete understanding of financial health.

Net Profit Margin

Reported net profit margin exhibited significant volatility, starting at 7.86% in 2018 and declining sharply to -11.96% in 2020. This was followed by a strong recovery to 20.59% in 2021, then a decline to 11.98% in 2022. The adjusted net profit margin followed a similar pattern, though the losses in 2019 and 2020 were slightly more pronounced and the recovery slightly less pronounced in 2021, ending with a higher margin of 14.36% in 2022 compared to the reported figure.

Total Asset Turnover

The total asset turnover ratio showed a downward trend from 1.29 in 2018 to 0.81 in 2020, indicating a reduction in asset efficiency. A partial recovery is observed in 2021 and 2022, where the ratio rose to 1.14 and slightly decreased to 1.08 respectively. Adjusted ratios closely mirrored reported figures throughout the periods.

Financial Leverage

Financial leverage increased from 2.61 in 2018 to a peak of 3.19 in 2020, suggesting rising reliance on debt or other liabilities relative to equity. However, leverage diminished markedly in 2021 and 2022 to levels below those seen in 2018, at 1.98 and 1.9 reported, and slightly lower adjusted values. This indicates a strategic deleveraging or equity increase during the latter periods.

Return on Equity (ROE)

Reported ROE reflected substantial swings, moving from a positive 26.53% in 2018 to a negative -30.77% by 2020, then surging to 46.33% in 2021 before declining to 24.7% in 2022. Adjusted ROE showed a similar trajectory but with a more severe drop to -34.3% in 2020 and a higher level of 28.37% in 2022, indicating adjustments impact on equity profitability evaluation.

Return on Assets (ROA)

The reported ROA declined from 10.15% in 2018 through negative territory reaching -9.66% in 2020, with a strong rebound in 2021 to 23.43%, followed by a reduction to 12.97% in 2022. Adjusted ROA depicted a comparable trend but with lower negative values in 2019 and 2020 and a higher final value of 15.55% in 2022, indicating the adjustments generally resulted in more favorable asset return perspectives in recent years.

The financial results demonstrate considerable volatility over the five-year period. Reported net earnings attributable to the company declined sharply from a positive US$1,115 million in 2018 to a substantial loss of US$630 million in 2019, followed by an even larger loss of US$1,165 million in 2020. A notable recovery occurred in 2021, with earnings surging to US$4,174 million, before moderating to US$2,524 million in 2022. Adjusted net earnings follow a broadly similar pattern but show slightly different magnitudes, with losses deepening further to US$1,295 million in 2020 and improved profits in 2021 and 2022, reaching US$4,122 million and US$3,025 million respectively.

Profit margins, both reported and adjusted, echo the earnings trend. The reported net profit margin fell from a positive 7.86% in 2018 to negative margins of -4.87% and -11.96% in 2019 and 2020 respectively. A strong rebound is evident in 2021, with the margin reaching 20.59%, before declining to 11.98% in 2022. Adjusted net profit margins reveal a slightly different perspective, showing a less pronounced decline in 2019 to -3.31% but a deeper negative margin of -13.29% in 2020. The adjusted margin peaks at 20.33% in 2021 and then decreases to 14.36% in 2022.

The overall analysis indicates significant operational challenges during 2019 and 2020, likely related to broader market or industry factors impacting profitability. The considerable turnaround in 2021 demonstrates a strong recovery, with both earnings and margins reaching peak levels during the observed period. The subsequent decline in 2022 suggests a normalization or moderation of the extraordinary profitability experienced in 2021 but still indicates positive financial performance relative to the losses recorded in earlier years.

Asset Levels

Total assets showed a steady increase over the five-year period, rising from approximately 10,982 million USD at the end of 2018 to 19,458 million USD by the end of 2022. Similarly, adjusted total assets followed a comparable upward trajectory, starting at 10,537 million USD in 2018 and reaching 19,448 million USD in 2022. The close alignment between reported and adjusted total assets suggests limited impact from income tax adjustments on the asset base.

Asset Turnover Trends

The reported total asset turnover ratio exhibited a declining trend from 1.29 in 2018 to 0.81 in 2020, indicating a reduction in asset efficiency or sales generation from assets during this period. After 2020, there was a partial recovery, with the ratio increasing to 1.14 in 2021 before slightly declining again to 1.08 in 2022. Adjusted total asset turnover ratios mirrored these movements closely, confirming consistency between reported and adjusted figures in assessing asset utilization.

Interpretation and Insights

The overall increase in total assets coinciding with the decrease and subsequent partial recovery in asset turnover suggests that asset growth may have outpaced revenue growth during the middle period, especially in 2020. The rebound in turnover in 2021 indicates improved efficiency or revenue generation relative to assets, although not reaching earlier levels seen in 2018. The alignment between reported and adjusted figures indicates that deferred and annual reported income tax adjustments did not materially affect these key financial efficiency metrics.

The financial data reveals several notable trends over the five-year period ending December 31, 2022. Total assets, both reported and adjusted, display a steady increase, with a significant jump occurring between 2020 and 2021. The reported total assets grew from approximately 10,982 million US dollars in 2018 to 19,458 million US dollars in 2022, while the adjusted figures followed a similar pattern, increasing from 10,537 million to 19,448 million US dollars during the same period.

Total stockholders’ equity exhibits more variability. Both reported and adjusted equity decreased gradually from 2018 through 2020, reflecting a decline from 4,202 million to 3,786 million US dollars (reported) and from 3,771 million to 3,775 million US dollars (adjusted). However, from 2020 onwards, equity reversed course sharply, nearly doubling by 2021 and continuing to increase in 2022. By the end of 2022, reported equity reached 10,218 million US dollars, and adjusted equity was slightly higher at 10,664 million US dollars.

The financial leverage ratios, both reported and adjusted, also reflect these changes in asset and equity structure. Initially, financial leverage increased from 2018 through 2020, reaching a peak ratio of 3.19 in 2020. This indicates a higher reliance on debt relative to equity during this period. Subsequently, leverage ratios decreased substantially in 2021 and 2022, falling below 2.00 and reaching approximately 1.9 in 2022. This decline suggests a strengthening equity base relative to total assets and a reduction in leverage.

Total Assets

Consistently increased over the period with a notable surge between 2020 and 2021, nearly doubling the growth rate compared to prior years.

Reported and adjusted figures align closely, indicating minimal impact of tax adjustments on asset values.

Stockholders’ Equity

Experienced a downward trend from 2018 to 2020, signaling possible operational or market difficulties during this timeframe.

From 2021 onwards, equity increased dramatically, more than doubling, which contributed to improved financial stability.

The adjustment for deferred income tax appears to slightly reduce equity values in the earlier years but results in higher equity by 2022.

Financial Leverage

Increased steadily until 2020, reaching a peak ratio indicative of rising debt levels relative to equity.

Subsequent decline in leverage ratios suggests a strategic reduction of debt or growth in equity, resulting in lower financial risk.

Adjusted leverage closely tracks reported leverage, confirming the consistency of leverage trends after tax considerations.

Overall, the data depicts a company that experienced moderate asset growth and declining equity through 2020, followed by robust equity growth and reduced leverage in the subsequent years. The adjustments for deferred income tax do not materially change the observed trends but slightly affect the specific values reported. The financial position as of 2022 appears significantly improved with stronger equity support and reduced financial leverage.

Net Earnings (Loss) Attributable to United States Steel Corporation

The reported net earnings demonstrate significant volatility over the five-year period. After a positive earnings figure of 1115 million USD in 2018, the company experienced substantial losses in 2019 and 2020, reaching -630 million USD and -1165 million USD respectively. A strong reversal occurred in 2021 with reported earnings surging to 4174 million USD, followed by a decline to 2524 million USD in 2022. The adjusted net earnings follow a similar trajectory but with consistently lower magnitudes, indicating that adjustments reduced reported profit figures in most years. Notably, the adjusted losses in 2019 and 2020 were somewhat less severe than the reported figures, while the adjusted earnings in 2022 exceeded the reported equivalent.

Total Stockholders’ Equity

The reported total stockholders' equity displayed a slight downward trend from 4202 million USD in 2018 to 3786 million USD in 2020, followed by a considerable increase in 2021 to 9010 million USD, and further growth to 10218 million USD in 2022. Adjusted equity amounts closely mirror the reported figures but differ slightly in magnitude each year. Similar to reported values, adjusted equity decreased marginally in the initial years and then demonstrated substantial growth through 2021 and 2022. This pattern suggests enhanced capital base or retained earnings growth during the latter periods, potentially tied to improved profitability.

Return on Equity (ROE)

The reported ROE values reveal pronounced fluctuations, echoing the trends found in net earnings. Starting at a strong 26.53% in 2018, ROE turned negative in 2019 and 2020, reflecting the net losses during those years, reaching a low of -30.77%. A notable recovery is seen in 2021 when ROE peaks at 46.33%, before declining to 24.7% in 2022. Adjusted ROE figures follow a similar pattern yet generally show smaller absolute values during years of negative returns and a more moderate peak in 2021. The adjusted ROE in 2022 is higher than the reported at 28.37%, suggesting the effect of tax and other adjustments on profitability measurements.

Overall Trends and Insights

The data reflects a challenging period in 2019 and 2020 characterized by losses and declining equity, followed by a pronounced recovery in 2021 and further consolidation in 2022. The adjustments applied to earnings and equity metrics generally moderate extremes, leading to less pronounced negative performance and somewhat higher positive returns during recovery years. This pattern indicates that reported figures may be influenced by significant one-time items or deferred tax effects, which adjustments attempt to normalize. The sharp turnaround in profitability and equity after 2020 suggests either operational improvements, market conditions favoring the company, or accounting treatments that recognize deferred benefits. The stability in equity growth and sustained positive adjusted returns in 2022 point to a restoration of financial health and improved shareholder value generation.

Net Earnings (Loss) Attributable to United States Steel Corporation

The reported net earnings exhibited considerable volatility over the five-year period. Starting with a positive value of 1,115 million USD in 2018, earnings declined sharply to a loss of 630 million USD in 2019 and further deepened to a loss of 1,165 million USD in 2020. A notable recovery occurred in 2021, with net earnings rising substantially to 4,174 million USD, followed by a decrease to 2,524 million USD in 2022. The adjusted net earnings reflect a similar pattern, albeit with slightly different magnitudes, showing initial profit, followed by two years of losses, a strong rebound in 2021, and a smaller decline in 2022.

Total Assets

Total assets showed a consistent upward trend across the period. Reported total assets increased steadily from 10,982 million USD in 2018 to 19,458 million USD in 2022. The adjusted total assets followed an almost identical trajectory with marginally lower absolute values, increasing from 10,537 million USD to 19,448 million USD over the same timeframe. This indicates sustained growth in asset base despite fluctuations in earnings.

Return on Assets (ROA)

Return on assets (ROA) displayed significant fluctuations. The reported ROA started strongly at 10.15% in 2018 but turned negative in 2019 (-5.43%) and 2020 (-9.66%). A strong recovery was observed in 2021 with ROA surging to 23.43%, followed by a decline to 12.97% in 2022. Adjusted ROA figures align closely with reported percentages but show a slightly less negative performance in loss years (e.g., -3.69% adjusted vs. -5.43% reported in 2019) and a higher value in 2022 (15.55% adjusted vs. 12.97% reported). The overall pattern indicates an initial period of operating difficulties, a remarkable performance rebound in 2021, and a moderate decline in profitability relative to assets in 2022.