Analysis of Debt
Total Debt (Carrying Amount)
United States Steel Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
Total debt experienced a period of significant expansion between 2018 and 2020, followed by a correction and relative stabilization through 2022. The carrying amount of total debt grew from US$ 2,381 million in 2018 to a peak of US$ 4,887 million by the end of 2020, before declining and leveling off near US$ 3,977 million by the end of the period.
- Total Debt Trajectory
- A sharp upward trend was observed from 2018 to 2020, with debt increasing by approximately 105% over these three years. This growth peaked in 2020 at US$ 4,887 million. A subsequent reduction occurred in 2021, where total debt fell to US$ 3,891 million, representing a decrease of approximately 20% from the peak. In 2022, the total debt remained relatively stable, ending the year with a slight increase to US$ 3,977 million.
- Long-term Debt Analysis
- Long-term debt, excluding current maturities, serves as the primary component of the overall debt structure. This balance rose from US$ 2,316 million in 2018 to US$ 4,695 million in 2020. The subsequent contraction to US$ 3,863 million in 2021 and the modest rise to US$ 3,914 million in 2022 closely mirror the movement of total debt, confirming that long-term financing is the dominant driver of the company's leverage profile.
- Short-term Debt and Current Maturities
- Short-term obligations remained immaterial relative to total debt for most of the period. A significant outlier occurred in 2020, when short-term debt and current maturities spiked to US$ 192 million, compared to only US$ 14 million in 2019. This figure normalized in 2021 and 2022, recording values of US$ 28 million and US$ 63 million, respectively, indicating that the 2020 spike was a temporary deviation in the company's short-term debt obligations.
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Total Debt (Fair Value)
| Dec 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Debt, excludes finance lease obligations | 3,815) |
| Finance lease obligations | 276) |
| Total debt (fair value) | 4,091) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 1.03 |
Based on: 10-K (reporting date: 2022-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 6.12%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 6.65% | 274) | 18) | |
| 6.63% | 720) | 48) | |
| 6.88% | 475) | 33) | |
| 5.00% | 350) | 18) | |
| 6.75% | 924) | 62) | |
| 4.75% | 752) | 36) | |
| 5.79% | 123) | 7) | |
| Total | 3,618) | 221) | |
| 6.12% | |||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 221 ÷ 3,618 = 6.12%
Interest Costs Incurred
United States Steel Corp., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The total interest incurred exhibited significant volatility between 2018 and 2022, characterized by a substantial increase in the middle of the period followed by a notable contraction. Total costs rose from 175 million US dollars in 2018 to a peak of 342 million US dollars in 2021, before declining to 218 million US dollars in 2022.
- Total Interest Incurred Trends
- A sharp upward trajectory is observed starting in 2020, where total interest incurred increased by approximately 89% from the 2019 level of 162 million US dollars to 306 million US dollars. This growth peaked in 2021 at 342 million US dollars before retreating in 2022.
- Interest Expense Analysis
- Interest expense mirrored the overall trend of incurred costs, peaking at 313 million US dollars in 2021. By the end of 2022, interest expense fell to 159 million US dollars, representing a significant reduction and the lowest absolute value recorded since 2019.
- Interest Capitalization Patterns
- Unlike the volatile nature of interest expense, capitalized interest demonstrated a consistent and steady increase throughout the five-year period. Values grew from 7 million US dollars in 2018 to 59 million US dollars in 2022. In the final year of the period, the proportion of total interest being capitalized increased significantly, which decoupled the movement of total interest incurred from the more drastic decline seen in interest expense.
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Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 3,418 ÷ 159 = 21.50
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest incurred
= 3,418 ÷ 218 = 15.68
The financial data reveals a period of significant volatility in the company's ability to service its debt, characterized by a severe contraction between 2019 and 2020 followed by a robust recovery in 2021 and 2022.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- This metric experienced a sharp decline from 5.60 in 2018 to negative values in 2019 (-1.91) and 2020 (-3.36), indicating a period where earnings were insufficient to meet interest obligations. However, a substantial reversal occurred in 2021, with the ratio climbing to 13.62, and further improving to 15.68 by the end of 2022.
- Interest Coverage Ratio (without capitalized interest)
- A similar trajectory is observed for the non-adjusted ratio, which fell from 5.83 in 2018 to a low of -3.67 in 2020. The recovery phase was more pronounced for this metric, surging to 14.88 in 2021 and reaching a peak of 21.50 in 2022.
- Comparative Impact of Capitalized Interest
- The consistent gap between the two ratios demonstrates that the inclusion of capitalized interest marginally lowers the coverage capacity across all periods. This variance became most prominent during the growth phase, with the non-adjusted ratio exceeding the adjusted ratio by 5.82 points in 2022, compared to a difference of only 0.23 points in 2018.
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