CLEVELAND, Oct. 27, 2016 /PRNewswire/ -- Cliffs Natural
Resources Inc. (NYSE: CLF) today reported third-quarter
results for the period ended September 30,
2016. The Company reported consolidated revenues of
$553 million during the third quarter
of 2016, a decrease of 7 percent compared to the prior year's
third-quarter revenues of $593
million. Cost of goods sold decreased by 13 percent to
$468 million compared to $538 million reported in the third quarter of
2015.
The Company recorded a net loss of $28
million compared to net income of $6
million recorded in the prior-year quarter. The net loss
during the third quarter of 2016 included an $18 million loss on extinguishment/restructuring
of debt, primarily attributable to the full redemption of the
Senior Notes due January 2018 (the
"2018 Notes"), compared to a $79
million gain on extinguishment/restructuring of debt in the
prior-year third quarter.
Cliffs redeemed the entirety of its 2018 Notes during the
quarter, of which $284 million was
outstanding. The total payment to holders of the 2018 Notes was
approximately $304 million, including
accrued and unpaid interest. The debt extinguishment was funded
primarily from the proceeds of the August
2016 common share issuance, a $288
million net cash inflow.
Total debt at the end of the third quarter of 2016 was
$2.2 billion, approximately
$500 million lower than $2.7 billion at the end of the prior-year
quarter. The year-over-year reduction is attributable to the
exchange offers completed in the first quarter of 2016 and the
redemption of the 2018 Notes in the third quarter of 2016.
The Company had no borrowings on its asset-based lending facility
at the end of the third quarter of 2016 or 2015. Cliffs had net
debt3 of $2.0 billion at
the end of the third quarter of 2016, compared to $2.5 billion of net debt3 at the end
of the third quarter of 2015.
For the third quarter of 2016, adjusted EBITDA1 was
$62 million, compared to $60 million reported in the third quarter of
2015. Cliffs noted that third-quarter 2016 adjusted
EBITDA1 includes $20
million in expenses related to idled mines, a $12 million non-cash accrual as a reserve for
potential retroactive electric power surcharges, and a one-time
$4 million charge associated with the
new labor contract signing bonus. Excluding these expenses, Cliffs'
adjusted EBITDA1 would have been $98 million.
|
|
|
Adjusted
EBITDA1 by Segment (in millions)
|
|
|
U.S.
Iron Ore
|
|
Asia Pacific
Iron Ore
|
|
Corporate/
Other
|
|
Total
|
Q3 2016 Adjusted
EBITDA1
|
|
$
|
65.3
|
|
|
$
|
23.7
|
|
|
$
|
(27.1)
|
|
|
$
|
61.9
|
|
YTD 2016 Adjusted
EBITDA1
|
|
$
|
208.6
|
|
|
$
|
73.2
|
|
|
$
|
(82.1)
|
|
|
$
|
199.7
|
|
Lourenco Goncalves, Cliffs'
Chairman, President and Chief Executive Officer, said, "In the
third quarter, we reduced our debt by another $500 million, bringing our net debt down to
$2 billion. Our flawless operational
performance, commercial accomplishments and financial execution
during the last two years have earned the respect of investors and
banking institutions, allowing us to execute in Q3 another
important transaction: the early repayment of the 2018 Notes. With
that, we have eliminated the last obstacle in our way to better
times." Mr. Goncalves added, "We look forward to finishing out the
year strong in Q4, in what we anticipate to be a quarter with
substantial cash-flow generation."
Cliffs' third-quarter 2016 SG&A expenses were $31 million, of which $8
million were non-cash. This represents a 39 percent increase
when compared to the third-quarter 2015 expenses of $22 million. The increase was driven primarily by
a $4 million bonus agreed to as part
of the United Steelworkers (USW) ratified contract signing, as well
as increased external services costs.
Cliffs' 2016 net interest expense during the third quarter was
$49 million, a 21 percent decrease
when compared to a third-quarter 2015 expense of $62 million. The Company noted that of the
$49 million expense, $40 million was a cash expense and the remainder
was non-cash.
Miscellaneous-net expense of $20
million in the third quarter of 2016 included a non-cash
expense related to a September order from FERC supporting
retroactive surcharges for power at the Michigan operations, for which the Company
recorded a $12 million charge as a
reserve. Miscellaneous-net expense also included $8 million in charges related to the indefinite
idle at Empire mine.
U.S. Iron Ore
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Volumes - In
Thousands of Long Tons
|
|
|
|
|
|
|
|
|
Total sales
volume
|
|
5,287
|
|
|
5,600
|
|
|
11,343
|
|
|
12,791
|
|
Total production
volume
|
|
3,857
|
|
|
4,099
|
|
|
11,059
|
|
|
14,978
|
|
Sales Margin - In
Millions
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
428.3
|
|
|
$
|
471.0
|
|
|
$
|
975.5
|
|
|
$
|
1,152.5
|
|
Cost of goods sold
and operating expenses
|
|
361.8
|
|
|
422.3
|
|
|
825.8
|
|
|
974.8
|
|
Sales
margin
|
|
$
|
66.5
|
|
|
$
|
48.7
|
|
|
$
|
149.7
|
|
|
$
|
177.7
|
|
Sales Margin - Per
Long Ton
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
73.50
|
|
|
$
|
76.52
|
|
|
$
|
76.82
|
|
|
$
|
80.85
|
|
Cash production
cost2
|
|
55.69
|
|
|
48.99
|
|
|
50.02
|
|
|
57.25
|
|
Non-production cash
cost2
|
|
1.68
|
|
|
13.85
|
|
|
7.87
|
|
|
4.11
|
|
Cash
cost2
|
|
57.37
|
|
|
62.84
|
|
|
57.89
|
|
|
61.36
|
|
Depreciation,
depletion and amortization
|
|
3.56
|
|
|
4.98
|
|
|
5.74
|
|
|
5.60
|
|
Cost of goods sold
and operating expenses*
|
|
60.93
|
|
|
67.82
|
|
|
63.63
|
|
|
66.96
|
|
Sales
margin
|
|
$
|
12.57
|
|
|
$
|
8.70
|
|
|
$
|
13.19
|
|
|
$
|
13.89
|
|
|
|
|
|
|
|
|
|
|
* Excludes revenues
and expenses related to domestic freight, which are offsetting and
have no impact on sales margin. Revenues per ton also exclude
venture partner cost reimbursements.
|
U.S. Iron Ore pellet sales volume in the third quarter of 2016
was 5.3 million long tons, a 6 percent decrease when compared to
the third quarter of 2015. The decrease was driven principally by
the termination of a customer contract in the fourth quarter of the
prior year that was reinstated in June
2016 for fewer nominated tons. In addition, there was a
negative impact as a result of a customer's inventory capacity
limitations in which the customer could not mix varying iron ore
grades coming from different mine sites. This decrease was
partially offset by additional sales in the third quarter of 2016
that resulted from a short-term contract with a customer that had
no sales in 2015.
As Cliffs' management previously guided, third-quarter revenues
per ton of $73.50 were lower than the
full-year average as a result of customer mix. This result was
expected and was included within the full-year Revenues-Per-Ton
Table in the "Outlook" Section of the previous quarter's earnings
release.
Cash production cost per long ton2 in U.S. Iron Ore
was $55.69, up 14 percent from
$48.99 in the prior year's third
quarter. The increase was driven by the additional costs associated
with the restart of the United Taconite mine and timing of
maintenance activity at the Tilden
mine.
Non-production cash cost per long ton2 of
$1.68 primarily consisted of
$12 million of idle costs.
Asia Pacific Iron Ore
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Volumes - In
Thousands of Metric Tons
|
|
|
|
|
|
|
|
|
Total sales
volume
|
|
2,799
|
|
|
2,926
|
|
|
8,705
|
|
|
8,710
|
|
Total production
volume
|
|
2,968
|
|
|
2,928
|
|
|
8,575
|
|
|
8,655
|
|
Sales Margin - In
Millions
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
125.0
|
|
|
$
|
122.2
|
|
|
$
|
379.5
|
|
|
$
|
384.8
|
|
Cost of goods sold
and operating expenses
|
|
106.1
|
|
|
115.8
|
|
|
321.4
|
|
|
369.3
|
|
Sales
margin
|
|
$
|
18.9
|
|
|
$
|
6.4
|
|
|
$
|
58.1
|
|
|
$
|
15.5
|
|
Sales Margin - Per
Metric Ton
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
42.87
|
|
|
$
|
39.00
|
|
|
$
|
41.99
|
|
|
$
|
42.01
|
|
Cash production
cost2
|
|
26.10
|
|
|
26.87
|
|
|
27.16
|
|
|
32.62
|
|
Non-production cash
cost2
|
|
7.77
|
|
|
7.85
|
|
|
5.95
|
|
|
5.42
|
|
Cash
cost2
|
|
33.87
|
|
|
34.72
|
|
|
33.11
|
|
|
38.04
|
|
Depreciation,
depletion and amortization
|
|
2.25
|
|
|
2.08
|
|
|
2.21
|
|
|
2.19
|
|
Cost of goods sold
and operating expenses*
|
|
36.12
|
|
|
36.80
|
|
|
35.32
|
|
|
40.23
|
|
Sales
margin
|
|
$
|
6.75
|
|
|
$
|
2.20
|
|
|
$
|
6.67
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
*Excludes revenues
and expenses related to freight, which are offsetting and have no
impact on sales margin.
|
Third-quarter 2016 Asia Pacific Iron Ore sales volume decreased
4 percent to 2.8 million metric tons, from 2.9 million metric tons
in the third quarter of 2015. The volume decrease was driven by the
timing of shipments related to adverse weather conditions at the
port at the end of September.
Cash production cost per metric ton2 in Asia Pacific
Iron Ore was $26.10, down 3 percent
from $26.87 in the prior year's third
quarter. The decrease was driven by reduced logistics costs and
decreased site administrative expenses, partially offset by an
unfavorable exchange rate variance of $1 per ton.
Cash Flow
Capital expenditures during the quarter were $26 million, compared to $24 million in the third quarter of 2015. This
was driven primarily by spending related to the Mustang Project at
the United Taconite mine.
Cliffs also reported depreciation, depletion and amortization of
$27 million in the third quarter of
2016.
Outlook
Cliffs provides full-year expected revenues-per-ton ranges based
on different assumptions of seaborne iron ore prices. Cliffs
indicated that each different pricing assumption holds all other
assumptions constant, including customer mix, as well as industrial
commodity prices, freight rates, energy prices, production input
costs and/or hot-rolled coil prices (all factors contained in
certain of Cliffs' supply agreements).
The U.S. Iron Ore table further assumes full-year hot-rolled
coil pricing of approximately $470
per short ton. The Company notes that this estimate is based on its
customers' realized prices and not an index or spot market price,
valid through the end of 2016. This represents a $10 decrease from the previous full-year price
estimate of $480 per short ton. For
every $50 per short ton change in the
customers' full-year hot-rolled coil prices, Cliffs U.S. Iron Ore
revenue realizations per long ton in 2016 would be expected to
increase or decrease $2.00 if steel
prices increase or decrease, respectively.
The table below provides certain Platts IODEX averages for the
remaining three months of 2016 and the corresponding full-year
realization for the U.S. Iron Ore and Asia Pacific Iron Ore
segments. The estimates consider actual Platts IODEX rates and
Cliffs' actual revenue realizations for the first nine months of
2016.
2016 Full-Year
Realized Revenues-Per-Ton Range Summary
|
Oct. - Dec.
Platts IODEX (1)
|
|
U.S. Iron Ore
(2)
|
|
Asia Pacific Iron
Ore (3)
|
$40
|
|
$75 - $77
|
|
$38 - $40
|
$45
|
|
$75 - $77
|
|
$39 - $41
|
$50
|
|
$75 - $77
|
|
$40 - $42
|
$55
|
|
$75 - $77
|
|
$41 - $43
|
$60
|
|
$75 - $77
|
|
$42 - $44
|
$65
|
|
$75 - $77
|
|
$43 - $45
|
$70
|
|
$75 - $77
|
|
$45 - $47
|
(1)
|
The Platts IODEX is
the benchmark assessment based on a standard specification of iron
ore fines with 62% iron content (C.F.R. China).
|
(2)
|
U.S. Iron Ore tons
are reported in long tons of pellets. This table assumes full-year
hot-rolled coil pricing of approximately $470 per short ton, which
is based on customer realizations and not a public
index.
|
(3)
|
Asia Pacific Iron Ore
tons are reported in metric tons of lumps and fines, F.O.B. the
port.
|
|
|
|
|
|
|
U.S. Iron Ore Outlook (Long Tons)
Cliffs is maintaining its full-year sales volume expectation of
18 million long tons. The Company's 2016 production volume guidance
of 16.5 million long tons is also maintained.
Cliffs is maintaining its cash production cost per long
ton2 expectation of $50 -
$55 and the cash cost of goods sold per long ton2
expectation of $55 - $60.
Cliffs anticipates depreciation, depletion and amortization to
be approximately $5 per long ton for
full-year 2016.
Asia Pacific Iron Ore Outlook (Metric Tons, F.O.B. the
port)
The Company is maintaining its full-year 2016 Asia Pacific Iron
Ore sales and production volume forecast of approximately 11.5
million metric tons. The product mix is expected to contain 50
percent lump and 50 percent fines.
Based on a full-year average exchange rate of $0.75 U.S. Dollar to Australian Dollar, the
Company is maintaining its full-year 2016 Asia Pacific Iron Ore
cash production cost per metric ton2 expectation of
$25 - $30. Cliffs' cash cost of goods
sold per metric ton2 is also unchanged at $30 - $35. Cliffs indicated that for every
$0.01 change in this exchange rate
for the remainder of the year, the Company's full-year cash cost of
goods sold is impacted by approximately $2
million.
Cliffs anticipates depreciation, depletion and amortization to
be approximately $2 per metric ton
for full-year 2016.
The following table provides a summary of Cliffs' 2016 guidance
for its two business segments:
|
|
2016 Outlook
Summary
|
|
|
U.S. Iron Ore
(A)
|
Asia
Pacific
Iron Ore
(B)
|
Sales volume
(million tons)
|
18
|
|
11.5
|
|
Production volume
(million tons)
|
16.5
|
|
11.5
|
|
Cash production
cost per ton2
|
$50 -
$55
|
|
$25 -
$30
|
|
Cash cost of goods
sold per ton2
|
$55 -
$60
|
|
$30 -
$35
|
|
DD&A per
ton
|
$5
|
|
$2
|
|
|
|
|
|
|
|
(A)
U.S. Iron Ore tons are reported in long
tons of pellets.
|
(B)
Asia Pacific Iron Ore tons are reported
in metric tons of lumps and fines.
|
SG&A Expenses and Other Expectations
Cliffs' full-year 2016 SG&A expenses expectation is
$104 million, a $4 million increase from the previous
expectation, primarily driven by the un-forecasted $4 million USW labor contract signing bonus.
The Company's full-year 2016 interest expense is expected to be
approximately $200 million. Of the
$200 million expectation,
approximately $170 million is
considered cash and $30 million is
considered non-cash.
Consolidated full-year 2016 depreciation, depletion and
amortization is expected to be approximately $120 million.
Capital Budget Update
Cliffs is maintaining its full-year 2016 capital expenditures
expectation of $75 million.
Conference Call Information
Cliffs Natural Resources Inc. will host a conference call this
morning, October 27, 2016, at
10 a.m. ET. The call will be
broadcast live and archived on Cliffs' website:
www.cliffsnaturalresources.com.
About Cliffs Natural Resources Inc.
Cliffs Natural Resources Inc. is a leading mining and natural
resources company in the United
States. The Company is a major supplier of iron ore pellets
to the North American steel industry from its mines and pellet
plants located in Michigan and
Minnesota. Cliffs also operates an
iron ore mining complex in Western
Australia. Driven by the core values of safety, social,
environmental and capital stewardship, Cliffs' employees endeavor
to provide all stakeholders operating and financial
transparency.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. As a general matter, forward-looking
statements relate to anticipated trends and expectations rather
than historical matters. Forward-looking statements are
subject to uncertainties and factors relating to Cliffs' operations
and business environment that are difficult to predict and may be
beyond our control. Such uncertainties and factors may cause
actual results to differ materially from those expressed or implied
by the forward-looking statements. These statements speak
only as of the date of this release, and we undertake no ongoing
obligation, other than that imposed by law, to update these
statements. Uncertainties and risk factors that could affect
Cliffs' future performance and cause results to differ from the
forward-looking statements in this release include, but are not
limited to: trends affecting our financial condition, results of
operations or future prospects, particularly the continued
volatility of iron ore prices; availability of capital and our
ability to maintain adequate liquidity; our level of indebtedness
could limit cash flow available to fund working capital, capital
expenditures, acquisitions and other general corporate purposes or
ongoing needs of our business, which could prevent us from
fulfilling our debt obligations; continued weaknesses in global
economic conditions, including downward pressure on prices caused
by oversupply or imported products, including the impact of any
reduced barriers to trade, recently filed and forthcoming trade
cases, reduced market demand and any change to the economic growth
rate in China; our ability to
reach agreement with our iron ore customers regarding any
modifications to sales contract provisions, renewals or new
arrangements; uncertainty relating to restructurings in the steel
industry and/or affecting the steel industry; our ability to
maintain appropriate relations with unions and employees; the
impact of our customers reducing their steel production or using
other methods to produce steel; our ability to successfully
execute an exit option for our Canadian Entities that minimizes the
cash outflows and associated liabilities of such entities,
including the CCAA process; our ability to successfully identify
and consummate any strategic investments and complete planned
divestitures; our ability to successfully diversify our product mix
and add new customers beyond our traditional blast furnace
clientele; the outcome of any contractual disputes with our
customers, joint venture partners or significant energy, material
or service providers or any other litigation or arbitration; the
ability of our customers and joint venture partners to meet their
obligations to us on a timely basis or at all; the impact of
price-adjustment factors on our sales contracts; changes in sales
volume or mix; our actual levels of capital spending; our actual
economic iron ore reserves or reductions in current mineral
estimates, including whether any mineralized material qualifies as
a reserve; events or circumstances that could impair or adversely
impact the viability of a mine and the carrying value of associated
assets, as well as any resulting impairment charges; the results of
prefeasibility and feasibility studies in relation to projects;
impacts of existing and increasing governmental regulation and
related costs and liabilities, including failure to receive or
maintain required operating and environmental permits, approvals,
modifications or other authorization of, or from, any governmental
or regulatory entity and costs related to implementing improvements
to ensure compliance with regulatory changes; our ability to
cost-effectively achieve planned production rates or levels;
uncertainties associated with natural disasters, weather
conditions, unanticipated geological conditions, supply or price of
energy, equipment failures and other unexpected events; adverse
changes in currency values, currency exchange rates, interest rates
and tax laws; risks related to international operations;
availability of capital equipment and component parts; the
potential existence of significant deficiencies or material
weakness in our internal control over financial reporting; and
problems or uncertainties with productivity, tons mined,
transportation, mine-closure obligations, environmental
liabilities, employee-benefit costs and other risks of the mining
industry. For additional factors affecting the business of Cliffs,
refer to Part I – Item 1A. Risk Factors of our Annual Report
on Form 10-K for the year ended December 31,
2015. You are urged to carefully consider these risk
factors.
FINANCIAL TABLES FOLLOW
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
|
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED OPERATIONS
|
|
|
|
|
|
(In Millions,
Except Per Share Amounts)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
REVENUES FROM PRODUCT
SALES AND SERVICES
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
508.6
|
|
|
$
|
542.5
|
|
|
$
|
1,237.0
|
|
|
$
|
1,399.9
|
|
Freight and venture
partners' cost reimbursements
|
|
44.7
|
|
|
50.7
|
|
|
118.0
|
|
|
137.4
|
|
|
|
553.3
|
|
|
593.2
|
|
|
1,355.0
|
|
|
1,537.3
|
|
COST OF GOODS SOLD
AND OPERATING EXPENSES
|
|
(467.9)
|
|
|
(538.1)
|
|
|
(1,147.2)
|
|
|
(1,344.1)
|
|
SALES
MARGIN
|
|
85.4
|
|
|
55.1
|
|
|
207.8
|
|
|
193.2
|
|
OTHER OPERATING
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(31.1)
|
|
|
(22.4)
|
|
|
(81.8)
|
|
|
(82.2)
|
|
Miscellaneous -
net
|
|
(19.6)
|
|
|
(3.5)
|
|
|
(16.9)
|
|
|
15.8
|
|
|
|
(50.7)
|
|
|
(25.9)
|
|
|
(98.7)
|
|
|
(66.4)
|
|
OPERATING
INCOME
|
|
34.7
|
|
|
29.2
|
|
|
109.1
|
|
|
126.8
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(48.7)
|
|
|
(61.7)
|
|
|
(156.2)
|
|
|
(168.2)
|
|
Gain (loss) on
extinguishment/restructuring of debt
|
|
(18.3)
|
|
|
79.2
|
|
|
164.1
|
|
|
392.9
|
|
Other non-operating
income (expense)
|
|
0.1
|
|
|
(0.1)
|
|
|
0.4
|
|
|
(3.0)
|
|
|
|
(66.9)
|
|
|
17.4
|
|
|
8.3
|
|
|
221.7
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
(32.2)
|
|
|
46.6
|
|
|
117.4
|
|
|
348.5
|
|
INCOME TAX BENEFIT
(EXPENSE)
|
|
7.1
|
|
|
3.4
|
|
|
1.7
|
|
|
(169.9)
|
|
EQUITY LOSS FROM
VENTURES, NET OF TAX
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS
|
|
(25.1)
|
|
|
49.9
|
|
|
119.1
|
|
|
178.5
|
|
LOSS FROM
DISCONTINUED OPERATIONS, NET OF TAX
|
|
(2.7)
|
|
|
(43.9)
|
|
|
(0.6)
|
|
|
(869.0)
|
|
NET INCOME
(LOSS)
|
|
(27.8)
|
|
|
6.0
|
|
|
118.5
|
|
|
(690.5)
|
|
LOSS (INCOME)
ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
2.0
|
|
|
4.6
|
|
|
(23.5)
|
|
|
1.5
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
|
$
|
(25.8)
|
|
|
$
|
10.6
|
|
|
$
|
95.0
|
|
|
$
|
(689.0)
|
|
PREFERRED STOCK
DIVIDENDS
|
|
—
|
|
|
(25.6)
|
|
|
—
|
|
|
(38.4)
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS COMMON SHAREHOLDERS
|
|
$
|
(25.8)
|
|
|
$
|
(15.0)
|
|
|
$
|
95.0
|
|
|
$
|
(727.4)
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.11)
|
|
|
$
|
0.19
|
|
|
$
|
0.51
|
|
|
$
|
0.87
|
|
Discontinued
operations
|
|
(0.01)
|
|
|
(0.29)
|
|
|
—
|
|
|
(5.62)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
|
|
$
|
(0.12)
|
|
|
$
|
(0.10)
|
|
|
$
|
0.51
|
|
|
$
|
(4.75)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS -
DILUTED
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.11)
|
|
|
$
|
0.19
|
|
|
$
|
0.51
|
|
|
$
|
0.87
|
|
Discontinued
operations
|
|
(0.01)
|
|
|
(0.29)
|
|
|
—
|
|
|
(5.62)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS -
DILUTED
|
|
$
|
(0.12)
|
|
|
$
|
(0.10)
|
|
|
$
|
0.51
|
|
|
$
|
(4.75)
|
|
AVERAGE NUMBER OF
SHARES (IN THOUSANDS)
|
|
|
|
|
|
|
|
|
Basic
|
|
206,279
|
|
|
153,237
|
|
|
186,454
|
|
|
153,213
|
|
Diluted
|
|
206,279
|
|
|
153,237
|
|
|
188,471
|
|
|
153,213
|
|
CASH DIVIDENDS
DECLARED PER DEPOSITARY SHARE
|
|
$
|
—
|
|
|
$
|
0.88
|
|
|
$
|
—
|
|
|
$
|
1.32
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
|
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL POSITION
|
|
|
|
|
|
(In
Millions)
|
|
|
September 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
132.2
|
|
|
$
|
285.2
|
|
Accounts receivable,
net
|
|
49.2
|
|
|
40.2
|
|
Inventories
|
|
317.3
|
|
|
329.6
|
|
Supplies and other
inventories
|
|
84.0
|
|
|
110.4
|
|
Short-term assets of
discontinued operations
|
|
—
|
|
|
14.9
|
|
Loans to and accounts
receivable from the Canadian Entities
|
|
69.3
|
|
|
72.9
|
|
Insurance coverage
receivable
|
|
—
|
|
|
93.5
|
|
Other current
assets
|
|
47.6
|
|
|
36.0
|
|
TOTAL CURRENT
ASSETS
|
|
699.6
|
|
|
982.7
|
|
PROPERTY, PLANT AND
EQUIPMENT, NET
|
|
990.1
|
|
|
1,059.0
|
|
OTHER
ASSETS
|
|
|
|
|
Other non-current
assets
|
|
83.2
|
|
|
93.8
|
|
TOTAL OTHER
ASSETS
|
|
83.2
|
|
|
93.8
|
|
TOTAL
ASSETS
|
|
$
|
1,772.9
|
|
|
$
|
2,135.5
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable
|
|
$
|
81.3
|
|
|
$
|
106.3
|
|
Accrued
expenses
|
|
134.2
|
|
|
156.0
|
|
Short-term
liabilities of discontinued operations
|
|
5.5
|
|
|
6.9
|
|
Guarantees
|
|
0.2
|
|
|
96.5
|
|
Insured
loss
|
|
—
|
|
|
93.5
|
|
Other current
liabilities
|
|
102.3
|
|
|
122.5
|
|
TOTAL CURRENT
LIABILITIES
|
|
323.5
|
|
|
581.7
|
|
PENSION AND
POSTEMPLOYMENT BENEFIT LIABILITIES
|
|
198.5
|
|
|
221.0
|
|
ENVIRONMENTAL AND
MINE CLOSURE OBLIGATIONS
|
|
220.2
|
|
|
231.2
|
|
LONG-TERM
DEBT
|
|
2,195.9
|
|
|
2,699.4
|
|
OTHER
LIABILITIES
|
|
235.3
|
|
|
213.8
|
|
TOTAL
LIABILITIES
|
|
3,173.4
|
|
|
3,947.1
|
|
EQUITY
|
|
|
|
|
CLIFFS SHAREHOLDERS'
DEFICIT
|
|
(1,544.3)
|
|
|
(1,981.4)
|
|
NONCONTROLLING
INTEREST
|
|
143.8
|
|
|
169.8
|
|
TOTAL
DEFICIT
|
|
(1,400.5)
|
|
|
(1,811.6)
|
|
TOTAL LIABILITIES AND
DEFICIT
|
|
$
|
1,772.9
|
|
|
$
|
2,135.5
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
|
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED CASH FLOWS
|
|
|
|
|
|
(In
Millions)
|
|
|
Nine Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
(loss)
|
|
$
|
118.5
|
|
|
$
|
(690.5)
|
|
Adjustments to
reconcile net income (loss) to net cash provided (used) by
operating activities:
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
88.9
|
|
|
99.1
|
|
Impairment of other
long-lived assets
|
|
—
|
|
|
76.6
|
|
Deferred income
taxes
|
|
—
|
|
|
160.0
|
|
Gain on
extinguishment/restructuring of debt
|
|
(164.1)
|
|
|
(392.9)
|
|
(Gain) loss on
deconsolidation, net of cash deconsolidated
|
|
(3.2)
|
|
|
654.8
|
|
Other
|
|
9.0
|
|
|
52.7
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Receivables and other
assets
|
|
137.5
|
|
|
293.1
|
|
Inventories
|
|
21.6
|
|
|
(76.2)
|
|
Payables, accrued
expenses and other liabilities
|
|
(136.1)
|
|
|
(236.2)
|
|
Net cash provided
(used) by operating activities
|
|
72.1
|
|
|
(59.5)
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(45.8)
|
|
|
(57.9)
|
|
Other investing
activities
|
|
6.3
|
|
|
0.7
|
|
Net cash used by
investing activities
|
|
(39.5)
|
|
|
(57.2)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Repayment of
equipment loans
|
|
(95.6)
|
|
|
(36.9)
|
|
Distributions of
partnership equity
|
|
(52.5)
|
|
|
(31.7)
|
|
Debt issuance
costs
|
|
(5.2)
|
|
|
(33.6)
|
|
Net proceeds from
issuance of common shares
|
|
287.6
|
|
|
—
|
|
Proceeds from first
lien notes offering
|
|
—
|
|
|
503.5
|
|
Repurchase of
debt
|
|
(301.0)
|
|
|
(225.9)
|
|
Borrowings under
credit facilities
|
|
105.0
|
|
|
309.8
|
|
Repayment under
credit facilities
|
|
(105.0)
|
|
|
(309.8)
|
|
Preferred stock
dividends
|
|
—
|
|
|
(38.4)
|
|
Other financing
activities
|
|
(19.3)
|
|
|
(38.8)
|
|
Net cash provided
(used) by financing activities
|
|
(186.0)
|
|
|
98.2
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
0.4
|
|
|
(2.2)
|
|
DECREASE IN CASH AND
CASH EQUIVALENTS
|
|
(153.0)
|
|
|
(20.7)
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
|
285.2
|
|
|
290.9
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
|
$
|
132.2
|
|
|
$
|
270.2
|
|
1 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION - EBITDA
AND ADJUSTED EBITDA
In addition to the consolidated financial statements presented
in accordance with U.S. GAAP, the Company has presented EBITDA and
adjusted EBITDA on both a consolidated basis and on a segment
basis, which are non-GAAP financial measures that management uses
in evaluating operating performance. The presentation of these
measures is not intended to be considered in isolation from, as a
substitute for, or as superior to, the financial information
prepared and presented in accordance with U.S. GAAP. The
presentation of these measures may be different from non-GAAP
financial measures used by other companies. A reconciliation of
these measures on a segment basis is provided in the results
section of this news release. A reconciliation of these
consolidated measures to their most directly comparable GAAP
measures is provided in the table below.
|
|
(In
Millions)
|
|
(In
Millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Income
(Loss)
|
|
$
|
(27.8)
|
|
|
$
|
6.0
|
|
|
$
|
118.5
|
|
|
$
|
(690.5)
|
|
Less:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(48.7)
|
|
|
(62.3)
|
|
|
(156.2)
|
|
|
(170.7)
|
|
Income tax benefit
(expense)
|
|
7.1
|
|
|
4.8
|
|
|
1.7
|
|
|
(167.3)
|
|
Depreciation,
depletion and amortization
|
|
(26.8)
|
|
|
(35.6)
|
|
|
(88.9)
|
|
|
(99.1)
|
|
EBITDA
|
|
$
|
40.6
|
|
|
$
|
99.1
|
|
|
$
|
361.9
|
|
|
$
|
(253.4)
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
Impairment of other
long-lived assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3.3)
|
|
Impact of
discontinued operations
|
|
(2.7)
|
|
|
(44.8)
|
|
|
(0.6)
|
|
|
(865.9)
|
|
Gain (loss) on
extinguishment/restructuring of debt
|
|
(18.3)
|
|
|
79.2
|
|
|
164.1
|
|
|
392.9
|
|
Foreign exchange
remeasurement
|
|
(0.3)
|
|
|
2.4
|
|
|
(1.2)
|
|
|
15.2
|
|
Severance and
contractor termination
costs
|
|
—
|
|
|
2.2
|
|
|
(0.1)
|
|
|
(9.3)
|
|
Adjusted
EBITDA*
|
|
$
|
61.9
|
|
|
$
|
60.1
|
|
|
$
|
199.7
|
|
|
$
|
217.0
|
|
|
*For the third
quarter of 2016, this includes $20 million in expenses related to
idled mines, a $12 million non-cash accrual as a reserve for
potential but unlikely retroactive electric power surcharges, and a
one-time $4 million charge associated with the new labor contract
signing bonus. Excluding these expenses of $36 million, Cliffs'
adjusted EBITDA1 would have been $98 million.
|
2 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
EXPLANATIONS
Cash production cost, non-production cash cost, and cash cost
per long/metric ton are non-GAAP financial measures that management
uses in evaluating operating performance. The presentation of these
measures is not intended to be considered in isolation from, as a
substitute for, or as superior to, the financial information
prepared and presented in accordance with U.S. GAAP.
Reconciliations of these measures to their most directly comparable
GAAP measures are provided in the U.S. Iron Ore and Asia Pacific
Iron Ore results tables in this release. The presentation of these
measures may be different from non-GAAP financial measures used by
other companies.
- Cash production cost per long/metric ton is defined as cost of
goods sold and operating expenses per ton less depreciation,
depletion and amortization; as well as period costs, costs of
services and inventory effects per long/metric ton.
- Non-production cash cost per long/metric ton is defined as the
sum of idle costs, period costs (including royalties), costs of
services, and inventory effects per long/metric ton.
- Cash cost per long/metric ton is defined as cost of goods sold
and operating expenses per ton less depreciation, depletion and
amortization per long/metric ton.
3 NET DEBT
RECONCILIATION
Net debt is a non-GAAP financial measure that management uses in
evaluating financial position. The presentation of this measure is
not intended to be considered in isolation from, as a substitute
for, or as superior to, the financial information prepared and
presented in accordance with U.S. GAAP. The presentation of this
measure may be different from non-GAAP financial measures used by
other companies. Net debt is defined as long-term debt plus the
current portion of short term debt, less cash and cash equivalents
and undiscounted interest. A reconciliation of this measure to its
most directly comparable GAAP measure is provided in the table
below.
|
|
(In
Millions)
|
|
|
September
30,
2016
|
|
September
30,
2015
|
Long-term
debt
|
|
$
|
2,195.9
|
|
|
$
|
2,721.6
|
|
Short-term debt and
current portion of long-term debt
|
|
17.5
|
|
|
—
|
|
Total Debt
|
|
$
|
2,213.4
|
|
|
$
|
2,721.6
|
|
Less:
|
|
|
|
|
Cash and cash
equivalents
|
|
132.2
|
|
|
270.2
|
|
Undiscounted
interest
|
|
70.0
|
|
|
—
|
|
Net Debt
|
|
$
|
2,011.2
|
|
|
$
|
2,451.4
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cliffs-natural-resources-inc-reports-third-quarter-2016-results-300352311.html
SOURCE Cliffs Natural Resources Inc.