Cleveland-Cliffs Inc. (NYSE: CLF) today reported
first-quarter results for the period ended March 31, 2023.
Selected financial results for the first quarter of 2023
include:
- Revenues of $5.3 billion
- Steel shipments of 4.1 million net tons
- GAAP net loss of $42 million, or $0.11 per diluted share
attributable to Cliffs shareholders
- Adjusted EBITDA1 of $243 million
- 36% of Steelmaking revenues from direct automotive sales
First-quarter 2023 revenues were $5.3 billion, compared to $5.0
billion in the fourth quarter of 2022.
For the first quarter of 2023, the Company recorded a GAAP net
loss of $42 million, corresponding to a GAAP net loss per diluted
share attributable to Cliffs shareholders of $0.11. In the fourth
quarter of 2022, the Company recorded a GAAP net loss of $204
million, corresponding to a GAAP net loss of $0.41 per diluted
share.
First-quarter 2023 Adjusted EBITDA1 was $243 million, compared
to $123 million in the fourth quarter of 2022.
Cliffs' Chairman, President, and CEO Lourenco Goncalves said:
“In the first quarter, direct sales to automotive clients in our
mix increased to 36%, confirming our view that our most important
market is strong, and getting stronger. We expect that, throughout
2023, Cleveland-Cliffs should benefit from higher sales volumes to
the automotive sector, and also from the increased prices we were
able to achieve in our yearly renegotiations with each one of the
car manufacturers that have Cleveland-Cliffs as their largest
supplier of automotive steel. With the final batch of yearly
fixed-price contracts -- the ones dated April 1st -- successfully
renewed, our outlook for a significant EBITDA expansion in Q2
remains intact.”
Mr. Goncalves added: “As we expect to continue to happen going
forward, in Q1 we accomplished our goal of increasing steel
shipments to above 4 million tons. Improved demand from our
automotive clients has allowed us to be more selective when selling
flat-rolled steel to the general marketplace, allowing us in Q1 to
implement several price increases to non-contract clients. With
further results from the cost side, we expect 2023 to be another
year of great cash flow generation.”
Steelmaking Segment Results
Three Months Ended
March 31,
Three Months Ended
2023
2022
Dec. 31, 2022
External Sales
Volumes
Steel Products (net tons)
4,085
3,637
3,838
Selling Price -
Per Net Ton
Average net selling price per net ton of
steel products
$
1,128
$
1,446
$
1,156
Operating Results
- In Millions
Revenues
$
5,126
$
5,794
$
4,902
Cost of goods sold
(5,032
)
(4,572
)
(4,966
)
Gross margin
$
94
$
1,222
$
(64
)
First-quarter 2023 steel product sales volumes of 4.1 million
net tons consisted of 36% hot-rolled, 29% coated, 15% cold-rolled,
5% plate, 4% stainless and electrical, and 11% other, including
slabs and rail.
Steelmaking revenues of $5.1 billion included $1.9 billion, or
36%, of direct sales to the automotive market; $1.3 billion, or
25%, of sales to the infrastructure and manufacturing market; $1.3
billion, or 25%, of sales to the distributors and converters
market; and $701 million, or 14%, of sales to steel producers.
Liquidity and Cash Flow
As of April 21, 2023, the Company had total liquidity of
approximately $3.1 billion, which reflected the use of net proceeds
of the $750 million of Senior Unsecured Notes offering completed on
April 14, 2023. These proceeds were used to reduce the borrowings
under the Company's existing asset-based lending facility.
Capital Expenditures Outlook
Cliffs has lowered its full-year 2023 capital expenditures
expectation to $675 to $725 million, from its previous expectation
of $700 to $750 million.
Conference Call Information
Cleveland-Cliffs Inc. will host a conference call on April 25,
2023, at 10 a.m. ET. The call will be broadcast live and archived
on Cliffs' website: www.clevelandcliffs.com.
About Cleveland-Cliffs Inc.
Cleveland-Cliffs is the largest flat-rolled steel producer in
North America. Founded in 1847 as a mine operator, Cliffs also is
the largest manufacturer of iron ore pellets in North America. The
Company is vertically integrated from mined raw materials, direct
reduced iron, and ferrous scrap to primary steelmaking and
downstream finishing, stamping, tooling, and tubing.
Cleveland-Cliffs is the largest supplier of steel to the automotive
industry in North America and serves a diverse range of other
markets due to its comprehensive offering of flat-rolled steel
products. Headquartered in Cleveland, Ohio, Cleveland-Cliffs
employs approximately 27,000 people across its operations in the
United States and Canada.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. All statements other than historical facts,
including, without limitation, statements regarding our current
expectations, estimates and projections about our industry or our
businesses, are forward-looking statements. We caution investors
that any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to
differ materially from those matters expressed in or implied by
such forward-looking statements. Investors are cautioned not to
place undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause actual results to differ from
those described in forward-looking statements are the following:
continued volatility of steel, iron ore and scrap metal market
prices, which directly and indirectly impact the prices of the
products that we sell to our customers; uncertainties associated
with the highly competitive and cyclical steel industry and our
reliance on the demand for steel from the automotive industry,
which has been experiencing supply chain disruptions, such as the
semiconductor shortage, and higher consumer interest rates, which
could result in lower steel volumes being demanded; potential
weaknesses and uncertainties in global economic conditions, excess
global steelmaking capacity, oversupply of iron ore, prevalence of
steel imports and reduced market demand, including as a result of
inflationary pressures, the COVID-19 pandemic, conflicts or
otherwise; severe financial hardship, bankruptcy, temporary or
permanent shutdowns or operational challenges of one or more of our
major customers, including customers in the automotive market, key
suppliers or contractors, which, among other adverse effects, could
disrupt our operations or lead to reduced demand for our products,
increased difficulty collecting receivables, and customers and/or
suppliers asserting force majeure or other reasons for not
performing their contractual obligations to us; disruptions to our
operations relating to an infectious disease outbreak or the
COVID-19 pandemic, including workforce challenges and the risk that
novel variants will prove resistant to existing vaccines or that
new or continuing lockdowns in China will impact our ability to
source certain critical supplies in a timely and predictable
manner; risks related to U.S. government actions with respect to
Section 232 of the Trade Expansion Act of 1962 (as amended by the
Trade Act of 1974), the United States-Mexico-Canada Agreement
and/or other trade agreements, tariffs, treaties or policies, as
well as the uncertainty of obtaining and maintaining effective
antidumping and countervailing duty orders to counteract the
harmful effects of unfairly traded imports; impacts of existing and
increasing governmental regulation, including potential
environmental regulations relating to climate change and carbon
emissions, and related costs and liabilities, including failure to
receive or maintain required operating and environmental permits,
approvals, modifications or other authorizations of, or from, any
governmental or regulatory authority and costs related to
implementing improvements to ensure compliance with regulatory
changes, including potential financial assurance requirements, and
reclamation and remediation obligations; potential impacts to the
environment or exposure to hazardous substances resulting from our
operations; our ability to maintain adequate liquidity, our level
of indebtedness and the availability of capital could limit our
financial flexibility and cash flow necessary to fund working
capital, planned capital expenditures, acquisitions, and other
general corporate purposes or ongoing needs of our business; our
ability to reduce our indebtedness or return capital to
shareholders within the currently expected timeframes or at all;
adverse changes in credit ratings, interest rates, foreign currency
rates and tax laws, including adverse impacts as a result of the
Inflation Reduction Act of 2022; the outcome of, and costs incurred
in connection with, lawsuits, claims, arbitrations or governmental
proceedings relating to commercial and business disputes, antitrust
claims, environmental matters, government investigations,
occupational or personal injury claims, property damage, labor and
employment matters, or suits involving legacy operations and other
matters; uncertain availability or cost, due to inflation or
otherwise, of critical manufacturing equipment and spare parts;
supply chain disruptions or changes in the cost, quality or
availability of energy sources, including electricity, natural gas
and diesel fuel, or critical raw materials and supplies, including
iron ore, industrial gases, graphite electrodes, scrap metal,
chrome, zinc, coke and metallurgical coal; problems or disruptions
associated with transporting products to our customers, moving
manufacturing inputs or products internally among our facilities,
or suppliers transporting raw materials to us; the risk that the
cost or time to implement a strategic or sustaining capital project
may prove to be greater than originally anticipated; uncertainties
associated with natural or human-caused disasters, adverse weather
conditions, unanticipated geological conditions, critical equipment
failures, infectious disease outbreaks, tailings dam failures and
other unexpected events; cybersecurity incidents relating to,
disruptions in, or failures of, information technology systems that
are managed by us or third parties that host or have access to our
data or systems, including the loss, theft or corruption of
sensitive or essential business or personal information and the
inability to access or control systems; liabilities and costs
arising in connection with any business decisions to temporarily or
indefinitely idle or permanently close an operating facility or
mine, which could adversely impact the carrying value of associated
assets and give rise to impairment charges or closure and
reclamation obligations, as well as uncertainties associated with
restarting any previously idled operating facility or mine; our
level of self-insurance and our ability to obtain sufficient
third-party insurance to adequately cover potential adverse events
and business risks; uncertainties associated with our ability to
meet customers' and suppliers' decarbonization goals and reduce our
greenhouse gas emissions in alignment with our own announced
targets; challenges to maintaining our social license to operate
with our stakeholders, including the impacts of our operations on
local communities, reputational impacts of operating in a
carbon-intensive industry that produces greenhouse gas emissions,
and our ability to foster a consistent operational and safety track
record; our actual economic mineral reserves or reductions in
current mineral reserve estimates, and any title defect or loss of
any lease, license, easement or other possessory interest for any
mining property; our ability to maintain satisfactory labor
relations with unions and employees; unanticipated or higher costs
associated with pension and other post-employment benefit
obligations resulting from changes in the value of plan assets or
contribution increases required for unfunded obligations; uncertain
availability or cost of skilled workers to fill critical
operational positions and potential labor shortages caused by
experienced employee attrition or otherwise, as well as our ability
to attract, hire, develop and retain key personnel; the amount and
timing of any repurchases of our common shares; and potential
significant deficiencies or material weaknesses 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, 2022, and other filings with the
U.S. Securities and Exchange Commission.
FINANCIAL TABLES FOLLOW
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED OPERATIONS
Three Months Ended
March 31,
Three Months Ended
(In millions, except per share
amounts)
2023
2022
Dec. 31, 2022
Revenues
$
5,295
$
5,955
$
5,044
Operating costs:
Cost of goods sold
(5,196
)
(4,706
)
(5,104
)
Selling, general and administrative
expenses
(127
)
(122
)
(116
)
Miscellaneous – net
(3
)
(33
)
(6
)
Total operating costs
(5,326
)
(4,861
)
(5,226
)
Operating income (loss)
(31
)
1,094
(182
)
Other income (expense):
Interest expense, net
(77
)
(77
)
(71
)
Gain (loss) on extinguishment of debt
—
(14
)
1
Net periodic benefit credits other than
service cost component
50
49
64
Other non-operating income (expense)
2
(2
)
2
Total other expense
(25
)
(44
)
(4
)
Income (loss) from continuing
operations before income taxes
(56
)
1,050
(186
)
Income tax benefit (expense)
13
(237
)
(19
)
Income (loss) from continuing
operations
(43
)
813
(205
)
Income from discontinued operations, net
of tax
1
1
1
Net income (loss)
(42
)
814
(204
)
Income attributable to noncontrolling
interest
(15
)
(13
)
(10
)
Net income (loss) attributable to
Cliffs shareholders
$
(57
)
$
801
$
(214
)
Earnings (loss) per common share
attributable to Cliffs shareholders - basic
Continuing operations
$
(0.11
)
$
1.54
$
(0.41
)
Discontinued operations
—
—
—
$
(0.11
)
$
1.54
$
(0.41
)
Earnings (loss) per common share
attributable to Cliffs shareholders - diluted
Continuing operations
$
(0.11
)
$
1.50
$
(0.41
)
Discontinued operations
—
—
—
$
(0.11
)
$
1.50
$
(0.41
)
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL POSITION
(In millions)
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
59
$
26
Accounts receivable, net
2,216
1,960
Inventories
4,923
5,130
Other current assets
246
306
Total current assets
7,444
7,422
Non-current assets:
Property, plant and equipment, net
8,950
9,070
Goodwill
1,130
1,130
Pension and OPEB, asset
370
356
Other non-current assets
758
777
TOTAL ASSETS
$
18,652
$
18,755
LIABILITIES
Current liabilities:
Accounts payable
$
2,173
$
2,186
Accrued employment costs
388
429
Accrued expenses
271
383
Other current liabilities
628
551
Total current liabilities
3,460
3,549
Non-current liabilities:
Long-term debt
4,559
4,249
Pension liability, non-current
465
473
OPEB liability, non-current
572
585
Deferred income taxes
527
590
Other non-current liabilities
1,276
1,267
TOTAL LIABILITIES
10,859
10,713
TOTAL EQUITY
7,793
8,042
TOTAL LIABILITIES AND EQUITY
$
18,652
$
18,755
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED CASH FLOWS
Three Months Ended
March 31,
(In millions)
2023
2022
OPERATING ACTIVITIES
Net income (loss)
$
(42
)
$
814
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Depreciation, depletion and
amortization
242
301
Impairment of long-lived assets
—
29
Deferred income taxes
(4
)
57
Pension and OPEB credits
(40
)
(27
)
Loss on extinguishment of debt
—
14
Other
39
25
Changes in operating assets and
liabilities:
Accounts receivable, net
(257
)
(512
)
Inventories
207
(372
)
Income taxes
15
180
Pension and OPEB payments and
contributions
(30
)
(60
)
Payables, accrued employment and accrued
expenses
(90
)
109
Other, net
(79
)
(25
)
Net cash provided (used) by operating
activities
(39
)
533
INVESTING ACTIVITIES
Purchase of property, plant and
equipment
(188
)
(236
)
Other investing activities
3
1
Net cash used by investing activities
(185
)
(235
)
FINANCING ACTIVITIES
Repurchase of common shares
—
(19
)
Repayments of debt
—
(360
)
Borrowings under credit facilities
1,646
1,715
Repayments under credit facilities
(1,339
)
(1,609
)
Other financing activities
(50
)
(38
)
Net cash provided (used) by financing
activities
257
(311
)
Net increase (decrease) in cash and cash
equivalents
33
(13
)
Cash and cash equivalents at beginning of
period
26
48
Cash and cash equivalents at end of
period
$
59
$
35
1 CLEVELAND-CLIFFS 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 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.
Three Months Ended
March 31,
Three Months Ended
(In millions)
2023
2022
Dec. 31, 2022
Net income (loss)
$
(42
)
$
814
$
(204
)
Less:
Interest expense, net
(77
)
(77
)
(71
)
Income tax benefit (expense)
13
(237
)
(19
)
Depreciation, depletion and
amortization
(242
)
(301
)
(246
)
Total EBITDA
$
264
$
1,429
$
132
Less:
EBITDA of noncontrolling interests
$
23
$
22
$
17
Gain (loss) on extinguishment of debt
—
(14
)
1
Asset impairment
—
(29
)
—
Other, net
(2
)
(2
)
(9
)
Total Adjusted EBITDA
$
243
$
1,452
$
123
EBITDA of noncontrolling interests
includes the following:
Net income attributable to noncontrolling
interests
$
15
$
13
$
10
Depreciation, depletion and
amortization
8
9
7
EBITDA of noncontrolling interests
$
23
$
22
$
17
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005788/en/
MEDIA CONTACT: Patricia Persico Senior Director,
Corporate Communications (216) 694-5316
INVESTOR CONTACT: James Kerr Manager, Investor Relations
(216) 694-7719
Cleveland Cliffs (NYSE:CLF)
Historical Stock Chart
From May 2024 to Jun 2024
Cleveland Cliffs (NYSE:CLF)
Historical Stock Chart
From Jun 2023 to Jun 2024