Dan Lesnak - General Manager, Investor Relations David B. Burritt - EVP and CFO Mario Longhi - President and CEO.

Anthony Rizzuto - Cowen & Company Luke Folta - Jefferies & Company Sal Tharani - Goldman Sachs & Company Matt Murphy - UBS Nathan Littlewood - Credit Suisse Evan Kurtz - Morgan Stanley David Gagliano - BMO Capital Markets Timna Tanners - Bank of America Merrill Lynch Brian Yu - Citigroup Phillip Gibbs - KeyBanc Capital Markets Matthew Vittorioso - Barclays Capital Charles Bradford – Bradford Research Aldo Mazzaferro - Macquarie Research Gordon Johnson - Axiom Capital.

Ladies and gentlemen, thank you for standing by and welcome to the United States Steel Corporation 2014 Fourth Quarter Earnings Call and Webcast. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to turn the conference over to our host, Mr. Dan Lesnak. Please go ahead..

Thank you, Katie. Good morning and thank you for participating in our conference call webcast for fourth quarter and full year 2014. For those of you participating by phone, the slides are included on the webcast are also available under the Investors section of our website at www.ussteel.com.

And there is also a question-and-answer document addressing frequently asked questions on our website for your reference. On the call with me today will be U.S. Steel President and CEO, Mario Longhi and Executive Vice President and CFO, Dave Burritt. Following our prepared remarks, we'll be happy to take your questions.

Before we begin, I must caution you that today's conference call contains forward-looking statements and that future results may differ materially from statements or projections made on today's call.

For your convenience, the forward-looking statements and risk factors that could affect those statements are referenced at the end of our release and are included in our most recent annual report on Form 10-K and updated in our quarterly reports on Form 10-Q in accordance with the Safe Harbor provisions.

Now to start the call, I would turn it over to our CFO, Dave Burritt..

Thank you, Dan and good morning everyone, and thank you for joining us. Turning to slide 3, we reported income from operations for our reportable segments and other businesses of $420 million. Full year 2014 results are at a level we have not seen since 2008.

Our results improved in both our tubular and European segments and our flat rolled segment, and very good results in a quarter that included three significant blast furnace maintenance projects that increased the cost significantly and limited our shipment levels.

The ability of our flat rolled operations to generate operating income of $82 per ton on much lower shipments reflects the significant improvements to our cost structure. Our business model which focuses on profitable volume rather than just filling up the blast furnaces and the increased earnings power that has come from our Carnegie Way efforts.

Our employees remained focused on the execution of projects that improve our business model and develop solutions that create value for our customers. We made significant progress on our Carnegie Way transformation in 2014 and our strong second half results validate that.

Looking at the full year, our segment operating income nearly tripled from 2013, our adjusted EBITDA was almost $1.7 billion, and adjusted earnings per share for the year was $4.47. While market conditions which we cannot control were better for our flat rolled segment in 2014, they were more difficult for both our tubular and European segments.

While the overall impact of favorable market conditions in 2014 as compared to 2013 contributed to our improved results, a larger portion of our improved earnings are the result of our Carnegie Way efforts.

Now turning to cash flow on slide 5, we have significantly improved our ability to generate cash both from improved earnings and effective cash management strategies. Cash from operations was almost $1.5 billion, a $1 billion improvement over last year and our free cash flow for the year was over $1 billion.

We remained focused on generating strong cash flows and maintaining a disciplined cash management strategy. This will position us to more effectively deal with the short-term cyclicality that is common in the steel industry and also to take advantage of the opportunities that can arise at different points in the longer term industry cycles.

Now turning to our balance sheet on slide 6, our balance sheet continues to get stronger and our credit ratios continue to improve. We reduced our net debt by almost $1.2 billion in 2014 by paying off debt as it matured without going out to the credit markets for funding and growing our cash balance at the same time.

Our liquidity has increased to $3.1 billion, a level we have not seen in quite some time.

A strong cash position, substantial liquidity, and an improved balance sheet will keep us positioned to invest in our facilities and support our increasing focus on innovation and technology as we grow our research and development capabilities to support the development of the steel solutions that will create value for both our customers and our stockholders.

As we earn the right to grow we become better positioned to take advantage of profitable growth opportunities as they arise. Dan will now provide additional details about our segment results. .

Thank you, Dave. Our flat-rolled segment had operating income of $709 million and EBITDA of almost $1.2 billion in 2014. This is the second highest earnings that we have generated in our flat rolled segment in the last 10 years, second only to 2008 when hot-rolled coil prices averaged $859 per ton.

The significant improvement over last year's results included the favorable effects of higher selling prices and lower on sales cost partially offset by adverse effects of the extreme weather conditions and significant facility outages early in the year and higher industry costs.

But these items are represent a portion of the improved results the Carnegie Way benefits providing more than half of the improvement over 2013 results. Turning to slide 8, our tubular segment had operating income of $261 million in 2014.

The improvement from 2013 was primarily due to Carnegie Way benefits, higher average oil prices, and lower maintenance cost partially offset by higher servicing costs for hot rolled purchased from our flat rolled segment. Our European segment had operating income of $133 million in 2014.

The improvement from 2013 was primarily due to the realization of over $100 million in Carnegie Way benefit and the effect of lower selling prices was mostly offset by the lower raw materials prices. Before I turn the call back to Dave I’d like to provide an update on our pension and OPEB obligations.

The slight decrease in our pension OPEB expense that we have seen since it hit its peak in 2011 will continue in 2015 as we expect our pension OPEB expense to decrease by $68 million as compared to 2014, with the largest portion of the decrease coming from lower pension expense for our defined benefit plans in the United States.

We decreased our discount rate from 4.5% to 3.75% when we re-measured our pension OPEB plans as of December 31, 2014. The funding status of our U.S. pension OPEB plans has improved by $1.4 billion as compared to 2012 when our discount rate was also at 3.75%.

Now I’ll turn the call back to Dave for some additional comments on our Carnegie Way transformation..

Thanks, Dan. Turning to slide 11, as promised we will update you every quarter on our progress on the Carnegie Way transformation as we continue to implement projects and realize meaningful savings. We ended the year with 575 million of Carnegie Way benefits for 2014.

These benefits primarily include improvements in our manufacturing processes, supply chain and logistics, and SG&A reductions.

A couple of examples of projects contributing to substantial amounts of our growing Carnegie Way benefits include new magnetic separators at our Minntac iron ore operations are providing higher concentrate yield, more efficient operations, and increased pellet making capability resulting in $10 million of annual improvement resulting from lower pellet production cost.

Improvements to facility loading decisions at our flat rolled plants are resulting in increased volumes of higher margin products on our finishing lines, improving margins by approximately $10 million on an annual basis.

Early in the year we disclosed $30 million in savings related to blast furnace improvements at our Košice [ph] plant and as improvement in these operations have continued throughout the year, the annual benefit from these projects has reached $40 million.

While these projects have resulted in large contributions to our total benefits, there are thousands of smaller projects that have helped us reach the impressive levels we achieved in 2014. 2014 is now our new base year for measuring our Carnegie Way progress.

As we start 2015, we have a tailwind from the carrier impact of projects implemented throughout 2014. Realizing the full year run rate of benefits from these projects will result in an improvement in 2015 of $150 million as compared to the new base year of 2014.

As we did in 2014 we will continue to complete and implement projects from a substantial and growing pipeline of potential opportunities and will provide quarterly updates on our total benefits for 2015 as compared to 2014. As a reminder these Carnegie Way figures are not targets or objectives and they are not speculative.

These are the results of projects and improvements that have been implemented. The impact of our Carnegie Way transformation is showing through in our results and will be an important weapon for us as we deal with the significant market headwinds we are currently facing.

Now on slide 12, I would like to provide an update on our Carnegie Way transformation process.

As we have discussed in the past, the Carnegie Way is focused on value creation through a disciplined and structured improvement process with the objective being to earn an economic profit throughout the business cycle and deliver above market returns to our stockholders.

I highlighted earlier our focus on increasing our ability to generated cash and maintaining a strong cash position. Our cash deployment strategy is aligned with our Carnegie Way transformation objectives as we continue to earn the right to grow and drive profitable growth.

Maintaining a strong balance sheet, continuing to improve our pension and OPEB position, maintaining and continuing to enhance the competitive advantage of our mining operations, and completing a significant transformational project such as the EAF project at Fairfield on time and on budget will help us earn the right to grow by closing the gap to delivering economic profit across the business cycle.

We will drive profitable growth through our investment in advanced high strength steels for our automotive customers and by getting closer to our customers and creating value enhancing solutions across all of our newly formed commercial entities. And now I will turn it over to Mario to cover several important areas. .

Thank you, Dave. Good morning everyone.

Although the Carnegie Way transformation is a multi year journey we must still deal with intense short-term volatility that affects our markets and at times must make temporary adjustments to our operations to address rapidly changing order rates as well as adjustments that allow us to properly maintain our facilities and make facility upgrades to improve our capabilities.

We will have blast furnace outages starting soon at several of our operations related to normal maintenance, facility upgrades, and customer order rates. The most significant outage will occur at our Granite City Works. As we have disclosed previously, we acquired a caster from the former Sparrow's Point facility.

Replacing one of the existing casters at Granite City with this caster will increase the range of products that we can produce at Granite City, giving us the ability to serve a broader range of customers from this location.

The demolition of the old caster and installation of the new caster will take several months and during this period we will be limited to operating only one of the two blast furnaces at Granite City. We started this project yesterday and currently expect to complete this project in late June.

We have a scheduled maintenance outage for one of the smaller blast furnaces at Gary Works and that will start in February, with the maintenance work currently expected to be completed in approximately 30 days. The restart date for this furnace will be determined by our steel making needs after the maintenance work is completed.

At our Fairfield Works, based on customer order rates we have sufficient inventories of slabs and rounds to serve the current needs of our flat rolled and tubular customers. It will idle the blast furnace until order rates recover. The timing of the main improvement in the flat-rolled and tubular markets will determine the duration of this outage.

We’re also adjusting the operating levels at several of our finishing and tubular operations. We currently expect to idle a Tin line at our East Chicago facility and we will fill customer orders from the five other Tin lines that we have at Gary Works and our Midwest facility.

And we will adjust the operating levels at our Fairfield flat rolled finishing operations consistent with the Fairfield blast furnace outage. We’re also adjusting operating levels at our tubular operations as declining rate counts reduced demand for OCTG products.

We currently expect vital to seamless pipe mills are out of the rain works and consolidate seamless pipe production to our Fairfield tubular operations. We will also adjust seamless pipe operations at Fairfield and welded pipe operations at Lone Star also in line with customer needs.

Customer order rates will determine the size and duration of any adjustments that we make at our tubular operations. The actions we take in response to shorter term market conditions will not distract us from important long term strategic initiatives that are underway.

Our chance to a commercial entity OEM and management structure is in place and we are focused on creating value by providing innovative and differentiator solutions to our customers as we strive to become trusted business partners and not just sellers of steel.

The implementations of a reliability centered maintenance program is underway, it will drive value creation through improving our safety performance, and increasing the consistency and reliability of our operations.

This will enable us to be much more effective in our production planning and facility loading and improve our quality and delivered performance, as well as providing the foundation for achieving operational excellence.

Now before we take your questions I would like to give a brief summary of what we are seeing in our markets and our guidance for 2015. Our Carnegie Way progress so far has exceeded our expectations in this multi-year journey.

We expect to continue to generate benefits from our transformation which focuses on creating value through sustainable improvements in our business model and earnings power. We anticipate that the global economy in 2015 will expand at a moderate rate with the U.S. economic growth of approximately 3% and European economic growth of approximately 1%.

Steel demand tracks directionally with GDP. And our view is that we will continue to see low single-digit growth rates in each region which is broadly consistent with World Steel Association projections. We expect that depressed oil prices will have a negative impact on our tubular segment.

Although this could also be a headwind for our flat rolled segment, we are encouraged by the potential that improved consumer spending could provide to our flat rolled demand. We may continue to experience high levels of imports which we believe in many cases are unfairly traded.

Moreover our earnings from USSK are likely to be negatively affected by foreign exchange rate particularly the strengthening of the U.S. dollar.

We believe that value creation comes from a sustained improvement in earnings power across the business cycle and to achieve our ultimate goal of delivering economic profit, we cannot be deterred by short-term volatility in our markets.

Focusing on short-term fluctuations in a volatile environment is contrary to the foundations of the Carnegie Way transformation.

Consistent with this strategy, we will provide quantitative annual earnings guidance as we believe it provides all of our stakeholders with a more informed view of our earnings potential as compared to a short-term quarter-to-quarter perspective. We are focused on creating economic profit throughout the business cycle.

Our balance sheet and liquidity are stronger and our healthy cash flow, given the strategic flexibility to continue to improve our performance under this set of market conditions. We are confident that the Carnegie Way will continue to deliver meaningful improvements helping us to somewhat offset headwinds throughout 2015.

With our strong balance sheet and continued Carnegie Way improvements we are in a much better position to respond quickly to challenging market conditions and our improved earnings power will enable us to be more profitable during these market conditions than we have ever been in the past.

We proved in 2014 that we can respond to challenging headwinds. As we enter 2015 with this volatile market we face significant challenges from dramatically lower oil prices, lower steel prices, and the impact on the stronger U.S. dollar and global over capacity on imports and in our operations.

But we expect our Carnegie Way journey to continue to generate additional benefits in 2015 including healthy cash flows, strong liquidity, and sustaining our improved balance sheet. Based on all of the factors described above, we expect full year EBITDA for 2015 of between $1.1 billion and $1.4 billion. .

Thank you Mario. Jane, can you please queue the line for questions..

[Operator Instructions]. And our first question comes from the line of Tony Rizzuto from Cowen and Company. Please go ahead. .

Thank you very much.

Hi, Mario, David, and Dan, how are you guys?.

Good morning Tony. .

Good, good. So a couple of questions here, first of all just trying to -- first of all one of the things we noted when we looked at your fourth quarter flat rolled performance and I was very pleasantly surprised.

Your volumes were down sharply sequentially, production was down 20%, shipments were down 18%, the cost per ton was only up just $10 per ton.

So is that sustainable because as we look forward as you indicated there is a lot of pressures out there and it seems as if the Carnegie Way benefits clearly coming through, but I thought that was an extraordinary performance, perhaps a little bit more color on that number?.

Well, the performance is a direct consequence of all the efforts that folks are placing into the non-financial indicators and all the KPIs that are comprised in performing those operations Tony.

And the majority of what has been put in place definitely is a sustainable condition which will be enhanced as we move forward with the reliability centered maintenance that does have an impact on our operations on every single day.

So there is a lot more work to do when it comes to operational improvement that will translate into cost reduction, but that is giving you a glimpse of the opportunities that we have ahead of us and also an idea of the improvements that we can expect to have out of the efforts that are being put in place. .

Could you help us understand, I mean, the assumptions a little bit further that go into your plan for 2015 and the EBITDA guidance, just if you can give us an idea of the kind of tubular shipment levels with all the moving parts and idling and shutdowns and also if you can discuss a little bit about what kind of base hot rolled coil and maybe tubular pricing assumptions that you are making as well, that will be very helpful from a modeling perspective?.

Yeah, I am sure it would be very, very interesting for you to have all that Tony but unfortunately that first of all is not going to be provided. What I believe should be perceived from all this is that we are also providing a lot more flexibility to our operations because nobody really knows where this is going to end.

I mean when you have oil prices falling by half in such short period of time and you are seeing that we are creating a condition to better accommodate this situation so that we can maintain the focus on all of the elements that are crucial for the mid to long-term, that is really the important factor here. .

And Tony I guess what I would add is, I guess my perspective it is probably very inappropriate for us to tell our competitors what we think pricing in the market should be. So, for me that's really one of the main reasons that you really can't go there in that type of discussion for us. .

And our next question comes from the line of Luke Folta with Jefferies. Please go ahead. .

Good morning. .

Good morning Luke..

I mean I don’t want to push too hard on this but if you are going to provide full year guidance I mean, how are we supposed to I guess have much conviction in that without some sense of what steel price forecast, at least some sort of range that you’re assuming in the upside and downside scenarios?.

I guess Luke, I mean I guess when we look at it from our perspective I said we can’t tell our competitors what we think price should be.

But if I look and we are looking at -- if we look at that there have been 10 updated 2015 estimates posted in the last couple of weeks and if we look two of those fall below our range, four of them fall within our range, and four actually fall above. So I mean that tells us that we are not taking some contrary position here.

I mean that would tell us that our assumptions are very much in line with the general market expectations that the people are using. .

Well, I mean yes and no, I mean because there is a difference between what changes in your earnings between what drives like steel will do to your earnings versus internal initiatives like additional cost cuts and the impacts from these outages and things like that?.

But at the end of the day our results are the sum total of all those moving parts. And to try and isolating one piece of it could actually be very misleading.

You can try to put the equation together, and we can’t go to extreme detail of our business plan in public for the benefit of our competitors, and certainly talk for the benefit of our stockholders..

Right, I guess what I am saying it will at least allow us to, if we wanted to change our own assumption of what the steel price could be to at least understand the rest of how you’re thinking about your business but don’t mean to beat the house totally to death there but?.

I don’t think, Mario gave some pretty fulsome description of all the operating actions we are taking in response to these conditions. So I mean all that is kind of really comprehending our guidance. We see what’s going on, we think we’re not out of line with the consensus view of the world.

We’ll take this as a pretty extreme action and to face some very tough conditions at the start of the year. But as we look back to 2014, we started 2014 with extreme headwinds in the first half and still deliver a very solid year and that kind of gives us the perspective that we are comfortable and we can do this. .

Okay. Thanks for that and if I could just on tubular, can you talk about just what the order book looks like and how sharply we are seeing orders fall off with the pull back in oil prices here and in terms of what you’re expecting in terms of the shape of recovery.

I would think that maybe I mean -- I would think that shipments probably fall in the first quarter maybe looking like a second quarter type drop with maybe some recovery baked into the second half, is that the right way to think about it?.

I think generally, yes. I mean if you look at the falling rig counts, if you look at what customers and the distributors, the service centers will do in terms of inventory adjustments it’s been very intense so far and I think they will also accommodate their situation based on how much lower prices can go.

So it’s a very, very volatile thing and it’s been a very intense decline so far..

Next question comes from the line of Sal Tharani with Goldman Sachs. Please go ahead. .

Good morning. .

Good morning Sal..

Wanted to ask you a couple of things. First is, when you talk about adjusted EBITDA are you going to adjust the earning cost in there because generally in the past you have not.

I am not talking about the restructuring cost where you permanently shut down the plants but in terms of the idling because idling cost historically has been very costly for your company?.

Hi Sal. I think if you look at the back at our slide that we have some reconciliation tables that go back for several years. And I think you can see the type of items we would typically adjust out, but I mean temporary idling those are clearly concrete cost belonging there. We would not be doing that. We’ll be adjusting out.

I mean if we have for example, we’ve had non-cash write offs on the permanent sort of assets, those kind of things we typically adjust but temporary fluctuations in operating rate certainly will not be an adjustment now. .

Great, that’s what I thought because that has been your history.

On CAPEX side Dave, what’s that $200 million increase driving from 2014 to 2015?.

Well I think we are moving forward on some of the bigger projects. Certainly the F project is moving forward. So there are those type of things that start to gain some momentum and the spending starts on those.

We have also taken the opportunity to look at projects we can -- shorter term projects, high return projects that we can implement quickly and we are trying to ramp up our efforts on that because there is much less risk and there is better opportunity for quick return on very high ROIs in those projects.

And we are trying to get our people in position to do much more of those type of projects which are smaller but can add up. .

I have one more question on the pricing, you had mentioned that Carnegie Way besides on the cost improvement you are moving towards what is going on in the commercial side.

And one thing which surprises us is that your price realization in fact compared to the last quarter or even from last year fourth quarter has been pretty significantly better than what the market price was.

I look at -- if I look at the SBB or flat price HRC that fall almost $45 year-over-year or even quarter-over-quarter and your prices was only couple of bucks less in fourth quarter versus third quarter.

I am just wondering is it part of your strategy like you said that don’t make steel just for the filling the baskets [ph] but on the value added, you look at the value added product, is that what we should see going forward also?.

Yes, you should see that continue. .

Okay, great. Thank you very much. .

Sure. .

And our next question comes from the line of Matt Murphy with UBS. Please go ahead. .

Good morning..

Good morning Matt. .

I guess given your focus on looking through the quarters to the longer term, I am just wondering how you look at the current market and how you make your longer term decisions on capacity as we look more and more globally or supplied and volatile.

So I am just wondering how you are using current markets to evaluate your long-term capacity decisions, are you assuming healthier markets as a benchmark there or do you look at soft market as a time to capture investment opportunities?.

Well Matt, just the beginning of the journey I believe you heard me say that we do not believe that markets in general will be helping us to better position the performance. So, the effective volatility was going to exist was always present in the way that we think about the future.

So two elements were there, the first one was definitely we need to figure out how to be more flexible to accommodate the cycles that are very volatile, sometime very, very short. And that we need to better be able to respond to that.

And the second one, through the creation of the commercial entities now is to have a much more profound and clear view of where we should be playing, and to what level.

So this is a continuous assessment that we keep making and we are making slow tweaks as you can see towards the abilities of being able to profitably go through these cycles and it doesn’t change in general terms the strategy that we set forth for the future. .

Okay, thanks.

And then maybe just one modeling on the European business, what percent of cost and revenues would be in Euro?.

I mean, -- segment data is really there in the segment detail and footnotes of the Qs and Ks. I mean it is going to obviously -- the relationship will change based on whether the markets here get stronger or weaker related to markets there. So, I mean that's I think pretty much detail in the 10-Q footnotes, 10-K footnotes price guide.

It gets you pretty close to what you are looking for. .

Okay, thanks. .

Next question comes from the line of Nathan Littlewood with Credit Suisse. Please go ahead. .

Good morning guys. Congrats on the results.

I just had a couple of questions for you, the first on this whole Carnegie Way transformation, I guess what I am interested in is whether a 500 to 550 HRC price environment perhaps generates a reason to maybe accelerate some of the Carnegie Way initiatives that may have already been on the cards and do we perhaps see the business emerge here as a sort cleaner, leaner, meaner entity as a result of what's going in the markets at the moment?.

Thanks for the question Nathan. Certainly anything that can expedite and accelerate our ability to create improvements is going to be seized. And the important thing though as you do this you need to make sure that the execution cadence is such that what you do is very well done.

And not all of the things that we deal with can be fed up without some sacrifice to the quality of what’s done. So the most important thing is that whatever we do is going to have to have to be done very well.

The sense of urgency though certainly grows and I couple that with the fact that after a year of the efforts in the Carnegie Way, our organization is getting stronger, better prepared, the alignment grows, and their ability to execute certainly gets better.

The -- I like the leaner meaning concept because that should be a visible outcome when we get further down in the journey. .

That makes sense, thanks Mario.

The other question just on pricing, avoiding the subject of precisely what your expectations are, I guess I was hoping we could talk a little bit about some of the factors which will determine pricing and clearly one of the surprises over the last couple of years has been a very, very large spread between international and U.S.

process and of course that’s come down a little bit of late. I guess some of the reasons for that spread having been as high as it has been the only thing to do is trade cases which you’ve obviously been very involved in.

And also the degree of import penetration, late last year we were hearing lot about the inability to effectively move important steel on trucks and trains because there were just too many backlogs. There was record inventories accumulating at the ports and that sort of thing.

So could you just talk a little bit about how you see those two dynamics playing out over the course of this year, so your strategy I guess with respect to trade cases and also is it getting easier do you think to move imported steel around the country in light of perhaps what’s happened in the oil markets recently?.

Well I would offer to you that I feel very good about our improved ability to deal with trade cases that’s really important. Internally we have made a more robust effort to be able to analyze quicker, assess quicker, and be better prepared because that pressure is not letting up.

If you look at the market share that imports that have been garnering inside of our country is meaningful, its significant, and then we really have enough evidence to give us the feeling that a lot of it is on fair trade.

So we are going to even increase our efforts and see how much quicker we can move to create a case with validity that we can move forward.

The other part of it is the overall context that certainly do affect prices and I believe that the service level, with domestic producers, that closer connectivity to the customers, and the ability to respond to their own needs that is going to be a match by any importer.

So I believe that what we are doing is creating a much better quality of service to hedge value that certainly will support whatever price differentiation we are going to see. .

Our next question comes from the line of Kevin Kurtz with Morgan Stanley. Please go ahead. .

It’s actually Evan. .

Thanks, good results guys. Just a couple of questions here one on project Carnegie, I was a little surprised to see that carryover number at 150 is such a large number for 2014 and I know a good portion of that was backend loaded in the year.

So I just wondered if there is any sort of cushion there and when you think about 2015 Carnegie Way, did you capture lot of the low hanging fruit in 2014, do you think you could see a number near the same magnitude in 2015 and I guess what’s baked in the guidance if you can give us any color on that will be great?.

I guess Evan starting with the carry over number, since we have for this new base year, there are some gives and takes in there. Certainly in the first part of 2014 we had benefits that were related to our Canadian operations. Those were actually negative carry over because they won’t be repeated in 2015.

Benefits we had like the [indiscernible] up to August when we end up with those plants we both won’t repeat. So there are some negative offsets that aren’t going to carry over that kind of go into that blended number. But that blended number -- that number is our -- I mean it is based on the projects we have out there.

I mean at least not -- we are not trying to manipulate that number at all but there is some give and take. We are not going to -- as we say we are not going to give guidance on Carnegie Way benefits but we do say, I mean we have thousands of projects and process and thousands more in pipeline.

And we have somehow carried more benefits than other but it is in a really, really wide ranging. And we spent thousands or not [Multiple Speakers] that is the real number that is going on. So we have mobilized lot more people, we continue to mobilize more people and train more people. We completed the first year of a multi-year event.

The pace will be what it is but certainly our guidance does comprehend the expectations of what we will accomplish. .

Great and then maybe just following up on something Sal asked on CAPEX.

If out of the 650 can you give us a little bit of breakdown about at least what is growth versus maintenance and what sort of maintenance number we should think about going forward?.

I wouldn’t consider real growth as a source of the CAPEX at this point. It is really about more effectiveness, more efficiency, more different specification to the products and service. That's where it is really more focused on. .

And then on the maintenance part, maybe not maintenance CAPEX but maintenance expense in general. Right now what you view is a maintenance expense in 2015, it is fairly to similar to 2014, not any kind of difference where you think we would call out. .

Okay, and one more if I may, just on coal cost this year, what sort of savings do you think you will get from lower nickel?.

We look at our blends, we look at our transportation, we look at our freight and we look at it all in number and based on what we have given in prior years we expect to be down roughly $8 a ton on our coal cost. .

And our next question comes from the line David Gagliano with BMO. Please go ahead. .

Hi, thanks for taking my questions. I just have a couple of follow-ups first of all on the 2015 outlook.

I was wondering if you could quantify the idling costs that are included in the $1.1 billion to $1.4 billion guidance for 2015, that's my first question?.

Well actually at this point no because we are giving advance notices we are required to give on expectation that we will have idling of certain level that is going to require layoffs. But really how big the idling is and how deep it goes will really be determined by the status of the markets two months out.

So, that is really something we really don’t -- will be able to quantify this point because like I said that's something that we will determine by the markets two months from now. .

Okay, I think I misunderstood.

So then is there any numbers included, any idling costs included in the guidance for 2015?.

Certainly because we know we are going to take action, so yes we do have that built in. We certainly want to ignore that but we know we are taking actions. We have given our employees notice, we expect to take actions. .

Okay, I will like to follow up and on -- if on a related note, are you including any assumptions for resource on the tubular side within your 2015 targets?.

We are keeping the flexibility intact so that we can respond at a very short notice Dave, that you can take that to the bank or if the market turns we are ready. .

Okay, but does the range, the $1.1 billion to $1.4 billion include or exclude restart assumptions?.

It includes the flexibility to do that. .

Okay, I guess it is a good answer.

So, let me ask you one last question, what about the strong tubular margins per ton in the fourth quarter, can you give us a little more color on what was behind, what drove that, those are very impressive number and I am just wondering with a little more color on what drove those margins there?.

Yeah, the flow through of the declining order rates and pricing takes longer tubular because you certainly longer lead times and pricing is more quarterly. So that is why you didn’t see that drop in the fourth quarter and that's the guidance we gave on our third quarter call. We did see an improvement in mix.

We did more advising [ph] of pipe because that is where demand stayed strongest. So there is definitely good mix benefit for us in the quarter..

Our next question comes from the line Tim Tanners with Bank of America Merrill Lynch. Please go ahead. .

Hey, good morning guys. Hey Dan.

Wanted to just ask how you fared in the annual negotiations for contact customers and just update us on your contract mix into 2015 please?.

I think we fared well. They responded very well. I think the discussions were over value to a very large degree and why is that our sales and themselves can benefit from a more profound level of collaboration.

And this has been the tone and I think it sets a pretty good reference for what we should expect out of the newly created commercial entities that will be really focused much more on this kind of value creation with them. .

And then I don’t think we are seeing any dramatic change in our mix, and our strategy on the type of different contracts we employed. .

Can you break that out in the presentation so that’s still intact yes?.

There is chart on the back of the presentation, yes..

Okay, got it. Another question I wanted to ask is just I understand that you don’t want to tell us about your HRC assumption buts its helpful to think about maybe it being in a range of where recent estimates have been? But then on volumes into 2015, you have taken leadership on cutting back some production.

We haven’t seen other mills necessarily do that and a lot of this is because of the import.

So if import stay high because of the strong dollar, are you prepared to respond with keeping mills offline and seeding market share to imports or how are you thinking about managing your production longer term if imports stay high?.

Well, the stronger dollar certainly doesn’t favor a consideration that imports could be less and that is being exact one of the reasons as to why flexibility is so important. And I think we are demonstrating that we are prepared to deal with those conditions as effectively as can be done. .

Question comes from the line of Brian Yu with Citi. Please go ahead. .

Great, thanks and then good quarter guys.

My first question and I think you guys mentioned the DEA project on the more in the couple of occasions, would you have a CAPEX budget for that and is that essentially certain and it will be built?.

We have – project and we would just estimate the project is in the range of 200 million. It is not, we are seeing some pretty lofty projections but we are not building many and we are just building a like a -- inside of our facility. So if 200 million is not a bad range for where these projects should come out. .

Okay and what’s the annual capability of that to furnace?.

About 1.5 million tons. .

Okay, got it.

And then secondly, just on the Carnegie Way so, embedded in your EBITDA look for this year that includes the 150 million in carry over but anything that gets announced throughout the year it would be additive to that number, is that correct?.

Yes very much same to what we did this year, yes. .

Okay, got it. Great, thanks. .

Thank you..

The question comes from the line of Phil Gibbs with KeyBanc Capital Markets. Please go ahead. .

Good morning. .

Good morning Phil..

Just wanted some clarification on the production curves that you’re taking; so Fairfield is idle, Granite City sounds like indefinite outage until the order book picks up on one of the blast furnaces, and then Gary likely number 8 is also on outage for a bit of time?.

Actually Phil, Granite City is the big outage for the cash flow replacement. The furnace in Gary is actually number 6 and like I said when we completely work there, then the market will tell us when we ride back up, and the Fairfield outage is based on when we will -- we have flats and rounds on the ground right now.

Same thing, the order book will tell us when do we need to bring that back online so that we continue to serve the customers effectively. So those are the three pieces, Granite City being the most -- of the longest one because the capture project will take four months or so to complete.

And while we have one cash flow off we can only run one furnace at one field shop. .

Okay and how are you guys viewing networking capital for this year as far as what you’re anticipating it to be as far as a user of source?.

I haven’t seen any significant changes in operating rates year-over-year. We’d expect to be reasonably neutral and we’re still certainly focused on Carnegie Way projects that can deliver improvements in our working capital management., So that is definitely something that is in the pipeline for us.

absent any of that, we would not change a thing that would cause it to be significantly higher or lower but our focus will be on things we can find improvements to improve the efficiency of our working capital management..

Okay and then on the tax benefit side I know that you had some carry over’s from some tax management actions that you did as a company over the last year too, is there any of that will likely to see come forth in 2015?.

There shouldn't be any material model left over from that now. .

So that’s largely done at this point?.

Yes. Fortunately the earnings of 2014 were good enough to really take care most of that. Other than that our tax rate is generally a little bit below statutory because we can access depletion rounds from mining operations but other need three times might come up that’s the only difference that really make us different from statutory. .

Okay and then just lastly here if I could, a total pension expense this year 2.44, is the majority of that non-cash?.

We have some cash guidance in the back of the debt there. Last year for pension OPEB excluding -- contribution or monetary fund [ph] contributions we had about 400 million off the door and our projection for this year is that number will cross to 300 million. .

Our next question comes from the line of Matt Vittorioso with Barclays. Please go ahead. .

Yes, thanks for taking my question and great job on the cost side. Just you can maybe help us think about maybe specific to the flat-rolled segment, how we should think about fixed versus variable cost given all the action that you’ve taken.

As we model 2015, integrated is still a pretty fixed cost business but you guys have taken a bunch out, can you help us quantify that at all?.

I don’t know top of head we can, but I think your point certainly when you look at our [indiscernible] is a great example that to see that kind of operating income for ton and low shipment environment certainly our fixed cost position has been improved significantly and lot of Carnegie Way effort is really fixed to address towards fixed cost because we will focus on things we can control the best we can.

So I would say that we look at our Carnegie Way benefits that is clearly a big improvement on our fixed cost structure..

Is there any maybe big picture guidance that you would guide people to as far as running of a blast furnace, two thirds fixed to a third variable or anything that you said in the past that might be helpful on that point?.

No I don’t think we have ever tried to break it out that way. .

Okay and then just digging a little bit deeper on the flat-rolled price realizations, they have held pretty steady over the past three quarters despite the broader generic steel price having come down pretty meaningfully.

What specifically -- is it a different contract mix or contract type that’s allowing you to withstand the drop in generic steel prices.

And as we think about 2015, understanding that you don’t want to provide guidance but it seems like historically you have been realizing roughly $100 over the quoted price of hot rolled coil, is that relationship going to breakdown in 2015 based on some change to your business?.

Well the pursuit of value that won’t change. And having more flexibility in closeness to customers to properly address what is good for both, if that is going to continue and we’ll see what else that will deliver. .

Our next question comes from Jorge Beristain from Deutsche Bank. Please go ahead. .

Hi, good morning guys and great quarter. My question I guess here is what is your general assumption for your guidance for 2015 as it relates to market volumes for the entire U.S.

market, do you see the end demand growing 3%, 4%, 5% that’s my first question?.

I think we made out and the kind of the description, we expect the U.S. technology growth is like 0.3% but that was -- they translate into a single or low single digit growth rate on fuel consumption. So that’s generally our expectation..

And within that are you baking in the assumption that imports are holding the line as they ended in 2014 or are you already assuming further losses in the U.S.

market import penetration?.

I think our thinking is imports are going to be a top competitor for the time being. .

And maybe a question for Mario because I know he’s been doing a lot of -– spending a lot of time in Washington but is there a ratio of imports penetration to the U.S.

market that starts to set alarm bells off in Washington and is that number 35% or 40%, could you talk a little bit about what you’re hearing in Washington?.

Well, the alarm has been sounding quite hard and we have to hammer on it all the time Jorge. We are going to increase that noise and that sound so there is no doubt about it. You have GPP [ph] efforts going on and there is a lot embedded in it that poises a condition that is not favorable.

All that we want is a level playing shield and there is no question that, that message is beginning to come across. We’re asking for more clarity on the part of the -- the broader industry is feeling the same thing.

So we are maintaining the leadership position that we have created in order to bring forth the real facts that will help us have an opportunity to revisit the way in which the law is prescribed today.

And we need to show that the injury standards that are in place today definitely are not applicable nor appropriate for the level of trade that is taking place in this globalized environment..

Our next question comes from the line of Charles Bradford with Bradford Research. Please go ahead. .

Good morning. .

Good morning Chuck. .

The income from investees last year was almost $1 a share, was that in cash and what can we expect for this year?.

Chuck the income from investees, that represents our share of our joint ventures income and certainly when we look at our foot notes where we break it out by how efficient these segments, it is virtually all in flat. That is where all our big JVs are and within that the two biggest ones are obviously ProTek and the UGIJ on the West Coast.

Our markets have been very strong so ProTek is doing very well. In addition with the addition of the CA line of ProTek, ProTek's overall size has increased. So that makes a difference and then the mining JVs we have as long as just we have some of the first mines to add some value.

UPI themselves you wouldn’t say was Carnegie Way rates but UPI themselves have done a very good job of working on their cost structure and their performance and we are getting the benefit of that too. So those will be the big pieces feeding outline, ProTek, UPI, and mining was certainly the strong motive business ProTek does it very well. .

Okay Pasco’s has been telling people in Korea that you all have sold the Untied Spiral Pipe to Everost and they expect to recover their cost, is that accurate?.

We don’t get into negotiations or progress. I mean they will do what they can, but I would say that from our perspective whatever happens with that asset there will be really no material impact on us either way..

And one last area, the labor contract is up this year, in your profit sharing do you recover losses earlier in the year before the profit sharing cuts in or is it just discrete each quarter at 7.5%?.

Our resident employees get their profit sharing quarterly and if they -- yield based on how much money we make in that quarter. But there is no offset or crossover, its quarter-by-quarter calculation for them but it is slightly steel based on profitability..

And our next question comes from Aldo Mazzaferro from Macquarie. Please go ahead. .

Hi, good morning Mario, how are you?.

Good morning Aldo. .

I had just two quick questions, first one I think is on the tax rate should we assume about 35% in tax rate, is that what you’re suggesting when you made the comment that you had nothing left on the carry forwards? And then second question is when you announced the coke haven’t changed in the last couple weeks, you commented that it represented the culmination of some of the changes in your raw material strategy and I am wondering if you could just update us on the changes in that raw material strategy as you see them now? Thanks..

Well I’ve give you on a tax piece, I said -- we would expect to come actually the street items. We’d expect to come in slightly below statutory because we do get an excess depletion allowance that helps us there. But nothing dramatic, maybe we come in 30% range somewhere in that line.

And I think on the co-barriers to Granite City, I mean basically when we look at our companies we are doing a better job of using coke, more efficient use of coke. We’re looking at a switch of taken blast furnace out of the equation in 2017.

We just look and say we don’t need this coke and it’s certainly a benefit to not maintain coke facilities you don’t need. That takes money, take maintenance to the extent the offside is about to be long curve. I guess it’s the way we look at it. .

Right, so nothing on your strategy on iron ore change then?.

No, and then we’ll keep flexible in terms of what we do with the footprint going forward. .

Right, you’re no longer going to be buying a final going forward or is that likely to continue?.

The last contract we had inherited -- did expire. So we do not get more contractual obligations with those guys. .

Your final question comes from the line of Gordon Johnson with Axiom Capital Management. Please go ahead. .

Thanks for taking my call and congrats on a good quarter guys. .

Thanks Gordon. .

Just a couple of questions, first, previously you guys had stated that your flat rolled division is breakeven at roughly $620 per short ton..

We have never said that. People have said that and we have never said that. .

Okay, I guess are you guys willing to provide at what price level your division is breakeven now?.

Can you give me 50 other market assumptions to work from on all the other moving parts. .

Okay, maybe I can ask it a bit differently. You guys are saying that maybe this year is going to be similar to last year with respect to how it started out with some of the headwinds.

Assuming that prices stay flat from here for both oil and steel, can we assume that given similar to last year at some point you potentially lose money in either the first or second quarter?.

We are not giving segment by segment quarterly guidance. That said we just think that totally defeats the purpose. It is totally inconsistent with how we run the business. I mean we could -- I guess we can go back to historical periods and say I mean, in the fourth quarter if average prices would have been $82 lower we would have broken even..

We have a very healthy focus through the Carnegie Way of making sure that our breakeven points keep improving. I mean that's part of the Carnegie Way in earnest. .

Okay, with respect to I guess the OCTG division and market, it seems like imports from Korea is really starting to pile up here. Is there any -- do you guys see any changes in I guess the original ruling by the U.S. because it seems like I guess globally that, that rolling maybe seen as wrong.

Do you guys see any potential changes there over the near term?.

We don’t see any changes. I mean their behavior, I think it just validates immediately that they have designed the business to come and attack our markets when they don’t consume any meaningful portions of what they make. And nor do they export to other countries in any meaningful way.

It is all targeted towards the United States and even after the determination of fees on them they are budgeted. Their goal is really solely focused on keeping the market share..

I would like to now turn the call over to Dan Lesnak. Please go ahead. .

Thank you. Before we end, Mario has a final comment that he would like to updating you. .

Well so before we sign off, I just would like to acknowledge the effective work of our employees and their extraordinary efforts to improve our company while remaining fully committed to our core values.

Slowly but surely all of the initiatives being pursued will make us stronger and better positioned to serve our customers and will result in a better and safer work place for all of our employees. Thank you so much for staying with us for this call. .

Alright, we would like to thank all of you for joining us. Thank you for your interest in the company and we look forward to getting back to you in April to give you updates on our progress. Thank you. .

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