CLEVELAND, April 27, 2017 /PRNewswire/ -- Cliffs
Natural Resources Inc. (NYSE: CLF) today reported
first-quarter results for the period ended March 31, 2017. The Company reported consolidated
revenues of $462 million, an increase
of 51 percent compared to the prior year's first-quarter revenues
of $306 million, as a result of
increased sales volumes and seaborne iron ore prices. Cost of goods
sold increased by 33 percent to $366
million compared to $275
million reported in the first quarter of 2016, as a result
of increased sales volumes in both business segments.
The Company recorded a net loss of $30
million in the first quarter, including a $72 million, or $0.27 per share, loss on
extinguishment/restructuring of debt attributable to the liability
management activities that reduced total debt by $550 million during the quarter. This compares to
net income of $117 million recorded
in the prior-year quarter. The net income recorded in the
prior-year quarter included a $179
million gain on extinguishment/restructuring of debt.
Total debt at the end of the first quarter of 2017 was
$1.6 billion, approximately
$900 million lower than $2.5
billion total debt at the end of the prior-year quarter.
Cliffs had net debt3 of $1.3
billion at the end of the first quarter of 2017, compared to
$2.4 billion of net debt3
at the end of the first quarter of 2016. The Company had no
borrowings on its asset-based lending facility at the end of the
first quarter of 2017 or 2016.
For the first quarter of 2017, adjusted EBITDA1 was
$92 million, a 156 percent increase
compared to $36 million reported in
the first quarter of 2016.
|
|
|
Adjusted
EBITDA1 by Segment (in millions)
|
|
|
U.S.
Iron Ore
|
|
Asia Pacific
Iron Ore
|
|
Corporate/
Other
|
|
Total
|
Q1 2017 Adjusted
EBITDA1
|
|
$
|
64.1
|
|
|
$
|
53.8
|
|
|
$
|
(25.7)
|
|
|
$
|
92.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lourenco Goncalves, Cliffs'
Chairman, President and Chief Executive Officer, said, "During the
first quarter, we put our finishing touches on what has been a
remarkable operational, commercial and financial transformation of
this company. Over the last two and half years, Cliffs has
transformed itself into a lean and focused company, with a strong
balance sheet and a lot less to pay in interest expense. This is
particularly evident in our strong first quarter results, which
exceeded our expectations in revenues, EBITDA and earnings per
share." Mr. Goncalves concluded: "We expect 2017 to be a phenomenal
year of EBITDA and free cash flow generation."
U.S. Iron
Ore
|
|
|
Three Months
Ended
March 31,
|
|
|
2017
|
|
2016
|
Volumes - In
Thousands of Long Tons
|
|
|
|
|
Sales
volume
|
|
3,118
|
|
|
1,910
|
|
Production
volume
|
|
4,277
|
|
|
3,047
|
|
Sales Margin - In
Millions
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
286.2
|
|
|
$
|
185.5
|
|
Cost of goods sold
and operating expenses
|
|
237.8
|
|
|
172.3
|
|
Sales
margin
|
|
$
|
48.4
|
|
|
$
|
13.2
|
|
Sales Margin - Per
Long Ton
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
79.35
|
|
|
$
|
83.87
|
|
|
|
|
|
|
Cash cost of goods
sold and operating expense rate2
|
|
58.57
|
|
|
62.88
|
|
Depreciation,
depletion and amortization
|
|
5.26
|
|
|
14.08
|
|
Cost of goods sold
and operating expenses*
|
|
63.83
|
|
|
76.96
|
|
Sales
margin
|
|
$
|
15.52
|
|
|
$
|
6.91
|
|
|
|
|
|
|
*Excludes revenues
and expenses related to domestic freight, which are offsetting and
have no impact on sales margin. Revenues and expenses also exclude
venture partner cost reimbursements.
|
U.S. Iron Ore pellet sales volume in the first quarter of 2017
was 3.1 million long tons, a 63 percent increase when compared to
the first quarter of 2016 as a result of increased customer
demand.
As Cliffs' management previously guided, first-quarter revenues
per ton of $79.35 decreased by 5
percent compared to the prior-year quarter. The decrease is a
result of carryover pricing impacts from both 2015 and 2016, and
changes in customer mix. The majority of tons sold in the
first quarter are from products shipped under the prior-year
contract pricing. Contracts that have been priced based on
2017 pricing have been favorable to prior year due to higher
benchmark iron ore and hot-rolled coil steel pricing.
Cash cost of goods sold and operating expense rate2
in U.S. Iron Ore was $58.57 per long
ton, a 7 percent decrease from $62.88
per long ton in the prior year's first quarter. The decrease was
primarily due to having no idled active mines during the first
quarter of 2017, compared to having two idled mines during the
prior-year quarter.
Asia Pacific Iron
Ore
|
|
|
Three Months
Ended
March 31,
|
|
|
2017
|
|
2016
|
Volumes - In
Thousands of Metric Tons
|
|
|
|
|
Sales
volume
|
|
3,043
|
|
|
2,804
|
|
Production
volume
|
|
2,671
|
|
|
2,808
|
|
Sales Margin - In
Millions
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
175.4
|
|
|
$
|
120.0
|
|
Cost of goods sold
and operating expenses
|
|
128.1
|
|
|
102.3
|
|
Sales
margin
|
|
$
|
47.3
|
|
|
$
|
17.7
|
|
Sales Margin - Per
Metric Ton
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
54.35
|
|
|
$
|
41.16
|
|
|
|
|
|
|
Cash cost of goods
sold and operating expense rate2
|
|
37.27
|
|
|
32.42
|
|
Depreciation,
depletion and amortization
|
|
1.54
|
|
|
2.43
|
|
Cost of goods sold
and operating expenses*
|
|
38.81
|
|
|
34.85
|
|
Sales
margin
|
|
$
|
15.54
|
|
|
$
|
6.31
|
|
|
|
|
|
|
*Excludes revenues
and expenses related to freight, which are offsetting and have no
impact on sales margin.
|
First-quarter 2017 Asia Pacific Iron Ore sales volume increased
9 percent to 3.0 million metric tons, from 2.8 million metric tons
in the first quarter of 2016. The volume increase was primarily
related to the timing of shipments.
Revenues per ton of $54.35
increased by 32 percent compared to the prior-year quarter, driven
by improved seaborne market prices. This was partially offset by
larger price adjustments to meet market competition, timing of
contract settlements and increased freight rates.
Cash cost of goods sold and operating expense rate2
in Asia Pacific Iron Ore was $37.27
per metric ton in the first quarter of 2017, a 15 percent increase
from $32.42 in the prior-year
quarter. The increase was attributable to higher royalties,
increased mining costs driven by a higher strip ratio, and an
unfavorable exchange rate compared to the prior-year quarter.
Other Income Statement Items
Cliffs' first-quarter
2017 SG&A expenses were $26
million. This represents a 7 percent decrease when compared
to the first-quarter 2016 expenses of $28
million. The decrease was driven primarily by reduced
charges related to corporate office space.
Cliffs' net interest expense during the first quarter was
$43 million, a 25 percent decrease
when compared to the first-quarter 2016 expense of $57 million as a result of the nearly
$900 million in total debt reduction.
The Company noted that of the $43
million expense, $36 million
was a cash expense and the remainder was non-cash.
Miscellaneous-net income of $12
million included, among other items, favorable foreign
exchange remeasurements of $14
million, partially offset by $7
million in charges related to the indefinite idle at Empire
mine.
Cash Flow
Capital expenditures during the quarter were
$28 million compared to $10 million in the prior-year quarter. The
increase was driven primarily by spending related to the Mustang
Project at the United Taconite mine.
Outlook
Based on the assumption that iron ore and
steel prices will average for the remainder of 2017 their
respective April month-to-date averages, Cliffs expects to
generate approximately $380
million of net income and $700
million of adjusted EBITDA1 for the
full-year 2017. This new outlook incorporates revised assumptions
around Asia Pacific Iron Ore revenue realizations, which are
impacted by the lower IODEX price, larger iron ore content
discounts, and lower lump premiums.
Segment
Outlook
|
|
|
2017 Outlook
Summary
|
Per Sales Ton
Information
|
U.S. Iron Ore
(A)
|
Asia Pacific
Iron
Ore (B)
|
Cost of goods sold
and operating expense rate
|
$70 - $75
|
|
$37 - $42
|
|
Less:
|
|
|
|
|
Freight and venture partners' cost reimbursements expense rate
(C)
|
$11
|
|
$2
|
|
Depreciation, depletion & amortization rate
|
$4
|
|
$1
|
|
Cash cost of goods
sold and operating expense rate2
|
$55 - $60
|
|
$34 - $39
|
|
|
|
|
|
|
Sales volume (million
tons)
|
19.0
|
|
11.5
|
|
Production volume
(million tons)
|
19.0
|
|
11.5
|
|
(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 lump and fines.
|
(C) The freight and
venture partners' cost reimbursements have offsetting amounts in
revenue and have no impact on sales margin.
|
U.S. Iron Ore Outlook (Long Tons)
Cliffs full-year sales and production volumes expectation is
unchanged at approximately 19 million long tons.
Cliffs' full-year 2017 U.S. Iron Ore cash cost of goods sold and
operating expense2 expectation is unchanged at
$55 - $60 per long ton.
Asia Pacific Iron Ore Outlook (Metric Tons, F.O.B. the
port)
Cliffs' full-year 2017 Asia Pacific Iron Ore expected sales and
production volume is unchanged at approximately 11.5 million tons.
The product mix is expected to contain 50 percent lump ore and 50
percent fines.
Based on a full-year average exchange rate of $0.75 U.S. Dollar to Australian Dollar, Cliffs'
full-year 2017 cash cost of goods sold and operating
expense2 expectation is unchanged at $34 - $39 per metric ton.
SG&A Expenses and Other Expectations
The
full-year 2017 SG&A expenses expectation of approximately
$100 million is unchanged. Cliffs
also notes that of the $100 million
expectation, approximately $25
million is considered non-cash.
The Company's full-year 2017 interest expense is expected to be
approximately $135 million, a
$40 million dollar reduction compared
to its previous expectation of $175
million. Of this $135 million,
approximately $20 million is expected
to be non-cash.
Capital Budget Update
Cliffs full-year 2017 capital
expenditures budget is unchanged at $105
million.
Conference Call Information
Cliffs Natural Resources
Inc. will host a conference call this morning, April 27, 2017, 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.
Founded in 1847, Cliffs Natural Resources Inc. is recognized as the
largest and oldest independent iron ore mining 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 report 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 report, 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 report include, but are
not limited to: uncertainty and weaknesses in global economic
conditions, including downward pressure on prices caused by
oversupply or imported products, the impact of any reduced barriers
to trade, the outcomes of recently filed and forthcoming trade
cases, reduced market demand and any change to the economic growth
rate in China; continued
volatility of iron ore and steel prices and other trends, including
the supply approach of the major iron ore producers, affecting our
financial condition, results of operations or future prospects,
specifically the impact of price-adjustment factors on our sales
contracts; 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; availability of capital and our ability to
maintain adequate liquidity; our ability to successfully conclude
the CCAA process in a manner that minimizes cash outflows and
associated liabilities; the impact of our customers reducing their
steel production due to increased market share of steel produced
using other methods or lighter-weight steel alternatives;
uncertainty relating to restructurings in the steel industry and/or
affecting the steel industry; 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; problems or uncertainties with productivity, tons mined,
transportation, mine-closure obligations, environmental
liabilities, employee-benefit costs and other risks of the mining
industry; our ability to reach agreement with our customers
regarding any modifications to sales contract provisions, renewals
or new arrangements; our actual levels of capital spending; our
ability to successfully diversify our product mix and add new
customers beyond our traditional blast furnace clientele; our
actual economic iron ore reserves or reductions in current mineral
estimates, including whether any mineralized material qualifies as
a reserve; our ability to cost-effectively achieve planned
production rates or levels; our ability to successfully identify
and consummate any strategic investments or development projects;
changes in sales volume or mix; 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; our ability to maintain appropriate relations with
unions and employees; 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; 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; and the potential existence of significant deficiencies
or material weakness in our internal control over financial
reporting.
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,
2016. 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
March 31,
|
|
|
2017
|
|
2016
|
REVENUES FROM PRODUCT
SALES AND SERVICES
|
|
|
|
|
Product
|
|
$
|
412.8
|
|
|
$
|
275.6
|
|
Freight and venture
partners' cost reimbursements
|
|
48.8
|
|
|
29.9
|
|
|
|
461.6
|
|
|
305.5
|
|
COST OF GOODS SOLD
AND OPERATING EXPENSES
|
|
(365.9)
|
|
|
(274.6)
|
|
SALES
MARGIN
|
|
95.7
|
|
|
30.9
|
|
OTHER OPERATING
INCOME (EXPENSE)
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(25.7)
|
|
|
(28.2)
|
|
Miscellaneous -
net
|
|
11.9
|
|
|
(3.0)
|
|
|
|
(13.8)
|
|
|
(31.2)
|
|
OPERATING INCOME
(EXPENSE)
|
|
81.9
|
|
|
(0.3)
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
Interest expense,
net
|
|
(42.8)
|
|
|
(56.8)
|
|
Gain (loss) on
extinguishment/restructuring of debt
|
|
(71.9)
|
|
|
178.8
|
|
Other non-operating
income (expense)
|
|
0.7
|
|
|
0.1
|
|
|
|
(114.0)
|
|
|
122.1
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE
INCOME TAXES
|
|
(32.1)
|
|
|
121.8
|
|
INCOME TAX BENEFIT
(EXPENSE)
|
|
1.8
|
|
|
(7.5)
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS
|
|
(30.3)
|
|
|
114.3
|
|
INCOME FROM
DISCONTINUED OPERATIONS, NET OF TAX
|
|
0.5
|
|
|
2.5
|
|
NET INCOME
(LOSS)
|
|
(29.8)
|
|
|
116.8
|
|
LOSS (INCOME)
ATTRIBUTABLE TO NONCONTROLLING
INTEREST
|
|
1.7
|
|
|
(8.8)
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS
SHAREHOLDERS
|
|
$
|
(28.1)
|
|
|
$
|
108.0
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO
CLIFFS SHAREHOLDERS - BASIC
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.11)
|
|
|
$
|
0.61
|
|
Discontinued
operations
|
|
—
|
|
|
0.01
|
|
|
|
$
|
(0.11)
|
|
|
$
|
0.62
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO
CLIFFS SHAREHOLDERS - DILUTED
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.11)
|
|
|
$
|
0.61
|
|
Discontinued
operations
|
|
—
|
|
|
0.01
|
|
|
|
$
|
(0.11)
|
|
|
$
|
0.62
|
|
AVERAGE NUMBER OF
SHARES (IN THOUSANDS)
|
|
|
|
|
Basic
|
|
265,164
|
|
|
171,677
|
|
Diluted
|
|
265,164
|
|
|
171,962
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
|
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL POSITION
|
|
|
(In
Millions)
|
|
|
March 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
295.3
|
|
|
$
|
323.4
|
|
Accounts receivable,
net
|
|
61.1
|
|
|
128.7
|
|
Inventories
|
|
250.8
|
|
|
178.4
|
|
Supplies and other
inventories
|
|
80.4
|
|
|
91.4
|
|
Loans to and accounts
receivable from the Canadian Entities
|
|
49.0
|
|
|
48.6
|
|
Other current
assets
|
|
76.6
|
|
|
54.1
|
|
TOTAL CURRENT
ASSETS
|
|
813.2
|
|
|
824.6
|
|
PROPERTY, PLANT AND
EQUIPMENT, NET
|
|
995.0
|
|
|
984.4
|
|
OTHER NON-CURRENT
ASSETS
|
|
117.5
|
|
|
114.9
|
|
TOTAL
ASSETS
|
|
$
|
1,925.7
|
|
|
$
|
1,923.9
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable
|
|
$
|
91.1
|
|
|
$
|
107.6
|
|
Accrued
expenses
|
|
102.9
|
|
|
123.3
|
|
Accrued
interest
|
|
|
19.7
|
|
|
|
40.2
|
|
Other current
liabilities
|
|
95.6
|
|
|
120.0
|
|
TOTAL CURRENT
LIABILITIES
|
|
309.3
|
|
|
391.1
|
|
PENSION AND
POSTEMPLOYMENT BENEFIT LIABILITIES
|
|
279.1
|
|
|
280.5
|
|
ENVIRONMENTAL AND
MINE CLOSURE OBLIGATIONS
|
|
198.2
|
|
|
193.9
|
|
LONG-TERM
DEBT
|
|
1,642.9
|
|
|
2,175.1
|
|
OTHER
LIABILITIES
|
|
199.2
|
|
|
213.8
|
|
TOTAL
LIABILITIES
|
|
2,628.7
|
|
|
3,254.4
|
|
EQUITY
|
|
|
|
|
CLIFFS SHAREHOLDERS'
DEFICIT
|
|
(830.1)
|
|
|
(1,464.3)
|
|
NONCONTROLLING
INTEREST
|
|
127.1
|
|
|
133.8
|
|
TOTAL
DEFICIT
|
|
(703.0)
|
|
|
(1,330.5)
|
|
TOTAL LIABILITIES AND
DEFICIT
|
|
$
|
1,925.7
|
|
|
$
|
1,923.9
|
|
|
|
|
|
|
|
|
|
|
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
|
STATEMENTS OF
UNAUDITED CONDENSED CONSOLIDATED CASH FLOWS
|
|
|
|
(In
Millions)
|
|
|
Three Months
Ended
March 31,
|
|
|
2017
|
|
2016
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
(loss)
|
|
$
|
(29.8)
|
|
|
$
|
116.8
|
|
Adjustments to
reconcile net income (loss) to net cash used by operating
activities:
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
23.2
|
|
|
35.2
|
|
(Gain) loss on
extinguishment/restructuring of debt
|
|
71.9
|
|
|
(178.8)
|
|
Other
|
|
(16.9)
|
|
|
14.7
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Receivables and other
assets
|
|
86.5
|
|
|
38.5
|
|
Inventories
|
|
(70.0)
|
|
|
(66.1)
|
|
Payables, accrued
expenses and other liabilities
|
|
(90.0)
|
|
|
(86.8)
|
|
Net cash used by
operating activities
|
|
(25.1)
|
|
|
(126.5)
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(27.9)
|
|
|
(10.4)
|
|
Other investing
activities
|
|
0.5
|
|
|
5.5
|
|
Net cash used by
investing activities
|
|
(27.4)
|
|
|
(4.9)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Proceeds from
issuance of senior notes
|
|
500.0
|
|
|
—
|
|
Debt issuance
costs
|
|
(8.5)
|
|
|
(5.2)
|
|
Net proceeds from
issuance of common shares
|
|
661.3
|
|
|
—
|
|
Repurchase of
debt
|
|
(1,115.5)
|
|
|
—
|
|
Distributions of
partnership equity
|
|
(8.7)
|
|
|
(11.1)
|
|
Repayment of
equipment loans
|
|
—
|
|
|
(72.9)
|
|
Other financing
activities
|
|
(5.6)
|
|
|
(4.2)
|
|
Net cash provided
(used) by financing activities
|
|
23.0
|
|
|
(93.4)
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
1.4
|
|
|
(0.5)
|
|
DECREASE IN CASH AND
CASH EQUIVALENTS
|
|
(28.1)
|
|
|
(225.3)
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
|
323.4
|
|
|
285.2
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
|
$
|
295.3
|
|
|
$
|
59.9
|
|
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 adjusted
EBITDA on a segment basis, and both EBITDA and adjusted EBITDA on a
consolidated basis. EBITDA and Adjusted EBITDA 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 consolidated measures to their
most directly comparable GAAP measures is provided in the table
below.
|
|
(In
Millions)
|
|
|
Three Months
Ended
March 31,
|
|
|
2017
|
|
2016
|
Net Income
(Loss)
|
|
$
|
(29.8)
|
|
|
$
|
116.8
|
|
Less:
|
|
|
|
|
Interest expense,
net
|
|
(42.8)
|
|
|
(56.8)
|
|
Income tax benefit
(expense)
|
|
1.8
|
|
|
(7.6)
|
|
Depreciation,
depletion and amortization
|
|
(23.2)
|
|
|
(35.2)
|
|
EBITDA
|
|
$
|
34.4
|
|
|
$
|
216.4
|
|
|
|
|
|
|
Less:
|
|
|
|
|
Gain (loss) on
extinguishment/restructuring of debt
|
|
$
|
(71.9)
|
|
|
$
|
178.8
|
|
Foreign exchange
remeasurement
|
|
13.6
|
|
|
(1.2)
|
|
Impact of
discontinued operations
|
|
0.5
|
|
|
2.6
|
|
Severance and
contractor termination costs
|
|
—
|
|
|
(0.1)
|
|
Adjusted
EBITDA
|
|
$
|
92.2
|
|
|
$
|
36.3
|
|
|
NON-GAAP
RECONCILIATION - EBITDA AND ADJUSTED EBITDA OUTLOOK
|
|
|
|
(In
Millions)
|
|
|
Year Ending
December 31,
|
|
|
2017
|
Net Income
(Loss)
|
|
$
|
380.0
|
|
Less:
|
|
|
Interest expense,
net
|
|
(135.0)
|
|
Income tax benefit
(expense)
|
|
(27.2)
|
|
Depreciation,
depletion and amortization
|
|
(100.0)
|
|
EBITDA
|
|
$
|
642.2
|
|
|
|
|
Less*:
|
|
|
Gain (loss) on
extinguishment/restructuring of debt
|
|
$
|
(71.9)
|
|
Foreign exchange
remeasurement
|
|
13.6
|
|
Impact of
discontinued operations
|
|
0.5
|
|
Adjusted
EBITDA
|
|
$
|
700.0
|
|
|
*Adjustments to
EBITDA are unpredictable by nature and thus cannot be forecasted
beyond March
31, 2017.
|
2 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
EXPLANATIONS
The Company presents cash cost of goods sold and operating
expense rate per long/metric ton, which is a non-GAAP financial
measure that management uses in evaluating operating
performance. Cliffs believes the presentation of non-GAAP
cash cost of goods sold and operating expenses is useful to
investors because it excludes depreciation, depletion and
amortization, which are non-cash, and freight and venture partners'
cost reimbursements, which have no impact on sales margin, thus
providing a more accurate view of the cash outflows related to the
sale of iron ore. 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.
|
|
(In
Millions)
|
|
|
Three Months Ended
March 31,
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
U.S. Iron
Ore
|
|
Asia Pacific
Iron Ore
|
|
Total
|
|
U.S. Iron
Ore
|
|
Asia Pacific
Iron Ore
|
|
Total
|
Cost of goods sold
and operating
expenses
|
|
$
|
(237.8)
|
|
|
$
|
(128.1)
|
|
|
$
|
(365.9)
|
|
|
$
|
(172.3)
|
|
|
$
|
(102.3)
|
|
|
$
|
(274.6)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight and
reimbursements
|
|
(38.8)
|
|
|
(10.0)
|
|
|
(48.8)
|
|
|
(25.3)
|
|
|
(4.6)
|
|
|
(29.9)
|
|
Depreciation,
depletion &
amortization
|
|
(16.4)
|
|
|
(4.7)
|
|
|
(21.1)
|
|
|
(26.9)
|
|
|
(6.8)
|
|
|
(33.7)
|
|
Cash cost of goods
sold
and operating expenses
|
|
$
|
(182.6)
|
|
|
$
|
(113.4)
|
|
|
$
|
(296.0)
|
|
|
$
|
(120.1)
|
|
|
$
|
(90.9)
|
|
|
$
|
(211.0)
|
|
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)
|
|
|
March
31,
2017
|
|
March
31,
2016
|
Long-term
debt
|
|
$
|
1,642.9
|
|
|
$
|
2,499.1
|
|
Short-term debt and
current portion of long-term debt
|
|
—
|
|
|
17.5
|
|
Total Debt
|
|
$
|
1,642.9
|
|
|
$
|
2,516.6
|
|
Less:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
295.3
|
|
|
$
|
59.9
|
|
Undiscounted
interest
|
|
—
|
|
|
78.8
|
|
Net Debt
|
|
$
|
1,347.6
|
|
|
$
|
2,377.9
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cliffs-natural-resources-inc-reports-first-quarter-2017-results-300446855.html
SOURCE Cliffs Natural Resources Inc.