Where Will United States Steel Corporation Be in 3 Years?
During U.S. Steel's (NYSE: X) second-quarter conference call, CEO Dave Burritt made it clear that the company's focus over the next few years will be to revitalize its assets. He spent the bulk of his prepared remarks detailing the company's plan to invest in itself so it can improve its operational performance, which should significantly boost earnings. Here's a look at how U.S. Steel expects those investments to transform the company by 2020.
U.S. Steel intends on measuring its operational success by improving in four areas, with Burritt noting, "It's about safety, quality, delivery, and cost -- like the beating of a drum -- safety, quality, delivery, and cost." To improve in those four areas, the company will invest capital to revitalize its assets. U.S. Steel currently expects to spend $1.2 billion on this pursuit from 2017 through 2020, including $200 million to $250 million this year and nearly double that rate next year, with the bulk of this spending earmarked for its 13 most critical assets.
That said, U.S. Steel won't have to wait three years to start seeing a payoff. The company has already completed 65 projects in the first six months of this year, totaling $30 million of investment, which has already yielded notable improvements. For example, it did some work on one of the blast furnaces at its Great Lakes Works facility, which resulted in that furnace achieving the highest daily production in its 65-year history in July. Meanwhile, in aggregate, the company expects these investments to boost 2017's quality 7% above last year's base, while downtime should decrease 3%. These steps forward should start contributing some incremental EBITDA by next year.
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