United States Steel Corp. (NYSE:X)

Net operating profit after taxes (NOPAT)

The net operating profit after taxes exhibited significant volatility over the analyzed periods. Initially, it decreased sharply from a positive value in 2018 to negative values in 2019 and 2020, reaching a substantial low in 2020. This was followed by a marked recovery in 2021, where the NOPAT surged to a strong positive figure, before declining again in 2022, though remaining positive.

Cost of capital

The cost of capital fluctuated within a range from approximately 11% to 18%. It started at a relatively high point in 2018, then decreased substantially in 2019, followed by an increase over the next three years, peaking near the initial level in 2022. This indicates variations in the company's perceived risk or capital structure costs over time.

Invested capital

Invested capital showed a clear upward trend throughout the period, increasing steadily each year. The growth was moderate in the initial years but became more pronounced from 2020 onwards, particularly between 2020 and 2021, and again slightly into 2022. This suggests ongoing investments or asset acquisitions leading to an expansion of the capital base.

Economic profit

Economic profit reflected substantial negative values in the early years analyzed, worsening significantly in 2020. However, a strong turnaround occurred in 2021, resulting in a positive economic profit, though it decreased in 2022 but remained positive. This positive shift indicates improved value creation relative to the cost of capital during the latter part of the period.

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

Economic profit showed a negative trend from 2018 through 2020, with losses deepening significantly each year, reaching the lowest point in 2020. However, a strong recovery occurred in 2021, turning economic profit positive and indicating an improvement in generating returns above the cost of capital. In 2022, economic profit remained positive but experienced a decline compared to the previous year.

Invested Capital

Invested capital displayed a consistent upward trend over the entire period from 2018 to 2022. The capital base increased steadily each year, with a notable acceleration in growth between 2020 and 2021. This suggests ongoing investments or acquisitions aimed at expanding the company's asset base.

Economic Spread Ratio

The economic spread ratio, which measures the return on invested capital relative to the cost of capital, was negative during the first three periods. The ratio worsened markedly in 2020, signaling a significant value destruction. A substantial positive turnaround was observed in 2021, reflecting improved profitability and effective capital utilization. Although the ratio declined in 2022 compared to 2021, it remained positive, indicating maintained, albeit reduced, value creation over the cost of capital.

Overall Insights

The data indicates a period of financial distress or underperformance from 2018 to 2020, characterized by negative economic profit and spread ratios despite growing invested capital. The strong recovery in 2021 suggests strategic or operational improvements that enhanced value creation. The subsequent slight decrease in 2022's performance metrics may warrant further analysis to determine whether this is a short-term fluctuation or indicative of emerging challenges. The steady increase in invested capital highlights continued commitment to growth or modernization initiatives.

Net Sales

Net sales displayed a declining trend from 2018 through 2020, decreasing from 14,178 million USD in 2018 to 9,741 million USD in 2020. Thereafter, a significant recovery occurred, with net sales increasing substantially to 20,275 million USD in 2021 and further to 21,065 million USD in 2022.

Economic Profit

The company experienced negative economic profit from 2018 to 2020, with a progressive deterioration from -355 million USD in 2018 to -2,397 million USD in 2020. However, 2021 marked a notable turnaround, delivering a positive economic profit of 2,333 million USD, though this declined to 736 million USD in 2022, remaining positive but reduced.

Economic Profit Margin

The economic profit margin mirrored the economic profit trend. Negative margins deepened from -2.51% in 2018 to -24.61% in 2020, reflecting increasing losses relative to sales. A substantial recovery occurred in 2021 with a positive margin of 11.5%, followed by a decrease to 3.49% in 2022, indicating reduced profitability efficiency despite remaining above zero.

Overall Analysis

The financial data depict a period of significant downturn culminating in 2020, followed by a strong recovery in 2021. Although profitability improved considerably in 2021, as evidenced by positive economic profit and margin alongside rising net sales, the subsequent year saw a decline in economic profit and margin, despite continued growth in sales. This suggests increased sales volumes were accompanied by reduced economic efficiency or higher costs impacting profitability in 2022.