United States Steel Corp. (NYSE:X)

The financial data reveals significant fluctuations in the company's profitability and value creation measures over the five-year period analyzed.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows considerable volatility. It starts positive in 2018 at $893 million, turns negative in 2019 and 2020 with values of -$121 million and -$1,095 million respectively, indicating operational losses during these years. A strong recovery occurs in 2021, with NOPAT reaching $4,449 million, followed by a decline to $3,060 million in 2022, though remaining substantially positive.

Cost of Capital

The cost of capital declines from 18.38% in 2018 to a low of 11.08% in 2019. After 2019, it rises steadily each year, reaching 18.18% in 2022, nearly returning to the initial 2018 level. This trend suggests fluctuating risk perceptions or capital market conditions over the period.

Invested Capital

Invested capital increases consistently throughout the period, from $6,762 million in 2018 to $12,723 million in 2022. The growth is steady each year, with particularly notable increases in 2021 and 2022, suggesting ongoing investment or asset accumulation.

Economic Profit

Economic profit, representing value creation over the cost of capital, follows a challenging pattern. It remains negative in the first three years, progressively worsening from -$350 million in 2018 to -$2,392 million in 2020, implying that the returns did not cover the cost of capital. A sharp turnaround occurs in 2021 with economic profit turning positive at $2,342 million, though it declines to $747 million in 2022, still maintaining a positive status.

Overall, the data illustrate a period of operational difficulties and value destruction from 2019 to 2020, followed by a strong recovery phase in 2021 and a slight moderation in 2022. The company's invested capital increased substantially throughout, indicating ongoing commitments of resources. The cost of capital trends suggest varying external or internal factors influencing financing costs or risk perceptions. The positive economic profit in the later years shows improved efficiency in generating returns above capital costs, although with some volatility.

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 demonstrated significant volatility over the five-year period. Starting with a negative value of -350 million US dollars at the end of 2018, it worsened considerably in 2019 and 2020, reaching a low of -2392 million US dollars. However, it reversed course in 2021 with a sharp improvement, achieving a positive economic profit of 2342 million US dollars, before declining again to 747 million US dollars in 2022, though remaining positive.

Invested Capital

The invested capital consistently increased each year from 2018 to 2022. It grew from 6762 million US dollars at the end of 2018 to 12723 million US dollars at the end of 2022, showing a steady upward trend with a notable acceleration in 2021 and 2022.

Economic Spread Ratio

The economic spread ratio followed a pattern similar to economic profit. It started at a negative percentage of -5.17% in 2018, further deteriorating to -12.62% in 2019 and hitting a low point of -27.74% in 2020. A sharp recovery occurred in 2021, reaching a positive 18.97%, after which it moderated to 5.87% in 2022. This indicates the company’s return on invested capital compared to its cost of capital improved substantially in 2021, but the margin decreased in 2022 while remaining positive.

Overall Analysis

The data reveals a challenging period for the company with declining profitability and negative economic spreads through 2020, coinciding with increasing invested capital. The dramatic turnaround in 2021 suggests effective strategic or operational improvements leading to positive economic profit and economic spread recovery. Despite some decline in 2022, the company maintained profitability above zero, reflecting continued positive value creation on invested capital. The ongoing increase in invested capital signals sustained investment activity during the period.

The financial data reveals several notable trends over the five-year period analyzed. Net sales demonstrate a fluctuating pattern with a decline from 2018 through 2020, followed by a significant recovery and growth in 2021 and 2022. Specifically, net sales decreased from approximately $14.2 billion in 2018 to under $10 billion in 2020, before rebounding strongly to over $20 billion in the two subsequent years. This suggests a period of operational challenges or market pressures during 2019 and 2020, coupled with a robust recovery afterwards.

Economic profit trends closely reflect the changes in net sales, albeit with greater volatility. The firm experienced negative economic profit throughout the first three years, with losses deepening substantially in 2020, reaching nearly -$2.4 billion. However, there was a marked turnaround in 2021, where economic profit swung to a positive $2.3 billion and remained positive in 2022, although at a reduced magnitude of $747 million. This indicates improved operational efficiency or profitability starting in 2021, contributing to value generation after a period of negative returns.

The economic profit margin aligns with the economic profit trajectory, exhibiting negative margins in the first three years and turning positive thereafter. The margin deteriorated from -2.47% in 2018 to a low of -24.55% in 2020, reflecting increasingly unfavorable returns on sales during that period. In 2021, the margin improved dramatically to 11.55%, evidencing a strong recovery in profitability relative to sales, before settling at 3.54% in 2022. The reduced margin in 2022 compared to 2021, despite higher sales, might indicate margin compression or increased costs impacting profitability.

Overall, the data demonstrates a challenging environment for the company during the middle years, with significant losses and shrinking sales, followed by a pronounced recovery phase marked by enhanced sales volume and a return to positive economic profits and margins. Nevertheless, the decline in economic profit and margin in 2022 compared to 2021 signals potential emerging pressures that may warrant further investigation.