United States Steel Corp. (NYSE:X)

The financial performance over the observed period presents several noteworthy trends in profitability and capital efficiency. The net operating profit after taxes (NOPAT) demonstrates significant volatility. Initially, there was a positive figure in 2018, followed by consecutive negative results in 2019 and 2020. This marked decline culminated in the most substantial negative NOPAT in 2020. However, the company experienced a strong recovery in 2021, achieving the highest value in the period, before seeing a decrease in 2022, though still maintaining a robust profit level compared to previous negative years.

The cost of capital exhibited fluctuations but generally trended upward from 2019 to 2022. It reached its lowest rate in 2019 and progressively increased each subsequent year. By 2022, the cost of capital was at its highest point over the observed timeframe, suggesting an environment of higher capital costs, which could impact investment and financing decisions.

Invested capital steadily increased throughout the period, showing a consistent growth trend. From 2018 to 2022, invested capital nearly doubled, with particularly notable increases between 2020 and 2021. This expansion reflects ongoing investment into the company’s operations or asset base, which could support future growth but also implies higher capital commitment and associated risks.

The economic profit, which reflects the value created beyond the cost of capital, mirrors the fluctuations seen in NOPAT but exhibits large negative values in the early years. Economic profit was negative in 2018, worsening further in 2019 and especially in 2020. In 2021, there was a dramatic turnaround with a sharp increase to a positive figure, indicating substantial value creation. However, in 2022, economic profit declined again, though it remained positive, signaling that the company was still generating returns above the cost of capital despite the reduction.

Overall, the data indicates a period of challenging financial performance through 2019 and 2020, followed by a strong recovery in 2021. The rise in invested capital suggests ongoing investment efforts, while the upward trend in the cost of capital highlights a potentially more demanding financial environment. Although the economic profit improved markedly in 2021, the decline in 2022 signals some erosion in value creation, warranting close monitoring in subsequent periods.

The financial data over the analyzed periods exhibit notable fluctuations in profitability metrics for the entity. The net earnings attributable to the company reveal a volatile trajectory, characterized by a significant loss phase between 2019 and 2020, followed by a pronounced recovery and peak in 2021, and a subsequent decrease in 2022, though remaining positive.

Net Earnings (Loss) Attributable

In 2018, the company reported net earnings amounting to 1,115 million US dollars, followed by a sharp decline to a loss of 630 million in 2019. This adverse trend intensified in 2020 with a deeper loss of 1,165 million. The year 2021 marked a substantial turnaround with net earnings reaching 4,174 million, representing the highest value in the dataset. In 2022, earnings declined to 2,524 million, which, despite being lower than the previous year, remained robust and positive.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values mirror the net earnings trend closely, confirming the operational profitability challenges faced during 2019 and 2020. In 2018, NOPAT was recorded at 893 million US dollars, declining sharply to a negative 121 million in 2019, and further deteriorating to a negative 1,095 million in 2020. A significant recovery occurred in 2021, with NOPAT peaking at 4,449 million. Although there was a decrease in 2022 to 3,060 million, the figure remained strongly positive, indicative of sustained operational improvement relative to the loss years.

Overall, the data indicate a period of financial stress and operational difficulty during 2019 and 2020, likely reflective of external or internal challenges during those years. The strong rebound in 2021 signifies effective recovery measures, enhanced profitability, or favorable market conditions. The subsequent decline in 2022, while noteworthy, does not negate the positive turnaround, suggesting a period of stabilization at an improved profit level compared to the negative earnings years.

The data reveals notable fluctuations in the income tax provision (benefit) over the five-year period. Initially, there was a substantial tax benefit recorded in 2018 at -$303 million, indicating a negative tax expense or a tax benefit. This shifted to a positive income tax provision of $178 million in 2019, signaling a tax expense rather than a benefit during that year. The year 2020 once again saw a tax benefit of -$142 million, suggesting a reversal or reduction in tax obligations. However, in 2021 and 2022, the trend changed significantly, with the income tax provision increasing to $170 million and then sharply rising to $735 million. This indicates progressively higher tax expenses in the later years, with 2022 showing the most substantial tax charge over the period analyzed.

Cash operating taxes displayed a different pattern. From 2018 to 2019, there was a marked decrease from $60 million to $6 million. This was followed by a recovery to $49 million in 2020, and a substantial increase in 2021 to $290 million, suggesting a significant rise in actual cash payments for taxes in that year. In 2022, the cash operating taxes slightly decreased to $260 million, yet remained considerably higher than the levels observed in the earlier years.

Overall, the data points to considerable volatility in both the income tax provision and cash operating taxes, with a general trend towards higher tax expenses and cash tax payments in the most recent years. The divergence between income tax provision and cash operating taxes in certain years, such as 2018 and 2020 where provisions were negative but cash taxes positive, may indicate timing differences, tax credits, or adjustments impacting accounting and cash tax reporting differently.

The financial data exhibits notable fluctuations in key measures over the five-year period ending in 2022.

Total Reported Debt & Leases

There is a general upward trend from 2018 to 2020, with debt rising from $2,624 million to $5,109 million. This is followed by a decrease in 2021 to $4,085 million, after which the debt level stabilizes in 2022 at $4,131 million. The initial increase suggests a phase of leveraging or increased borrowing, while the subsequent reduction and stabilization indicate efforts to manage or reduce debt obligations.

Total United States Steel Corporation Stockholders’ Equity

Equity demonstrates a mixed trajectory. The equity declined from $4,202 million in 2018 to $3,786 million in 2020, possibly reflecting losses or distributions exceeding earnings. A significant reversal occurs in 2021 with equity surging to $9,010 million and further increasing to $10,218 million in 2022. This sharp rise in equity suggests substantial profits, capital injections, or retained earnings during these years, strengthening the company's financial position.

Invested Capital

Invested capital has consistently increased year over year, growing from $6,762 million in 2018 to $12,723 million in 2022. The steady rise indicates ongoing investment in assets or operations that support the business. The substantial jump between 2020 and 2021 aligns with the marked increase in equity, implying financed growth and asset expansion during this period.

Economic profit

The economic profit displayed a significant downward trajectory from 2018 to 2020, declining from a negative $361 million to a negative $2,402 million, representing increasing losses in that period. However, there was a pronounced reversal in 2021, with economic profit turning substantially positive to $2,323 million. This positive trend continued into 2022 but at a lower magnitude, with economic profit recorded at $725 million.

Net sales

Net sales showed volatility during the analyzed period. From 2018 to 2020, there was a consistent decrease, dropping from $14,178 million to $9,741 million, indicating a contraction in sales. This trend was reversed sharply in 2021, with net sales nearly doubling to $20,275 million. The upward momentum persisted into 2022, albeit at a slower pace, with sales reaching $21,065 million.

Economic profit margin

The economic profit margin mirrored the fluctuations seen in economic profit. It started at a negative 2.55% in 2018 and worsened to -24.66% in 2020, reflecting declining profitability during the early years. A strong turnaround occurred in 2021, with the margin increasing to a positive 11.46%, indicating a more profitable period. In 2022, the margin decreased but remained positive at 3.44%, suggesting profitability was retained but at a reduced level compared to the prior year.

Summary of trends and insights

The data reveals a period of significant financial challenges between 2018 and 2020, characterized by declining net sales, increasing economic losses, and deteriorating profit margins. This was followed by a sharp recovery in 2021, marked by substantial increases in sales, a return to positive economic profit, and improved profit margins. Despite a slight retreat in certain profitability measures in 2022, the company maintained a profitable position compared to the earlier loss-making years. The trajectory suggests successful efforts or favorable market conditions contributing to financial improvement after 2020.