- Record annual revenue of $20.4 billion
- Record annual net income of $3.0 billion
- Record annual Adjusted EBITDA1 of $5.3 billion
- Record annual operating cash flow of $2.8 billion
Cleveland-Cliffs Inc. (NYSE: CLF) today reported
full-year and fourth-quarter results for the period ended December
31, 2021.
Full-Year Consolidated Results
Full-year 2021 consolidated revenues were $20.4 billion,
compared to the prior year's consolidated revenues of $5.3
billion.
For the full year 2021, the Company generated net income of $3.0
billion, or $5.36 per diluted share. This compares to a 2020 net
loss of $81 million, or $0.32 per diluted share.
For the full year 2021, Adjusted EBITDA1 was $5.3 billion,
compared to $353 million in 2020.
Fourth-Quarter Consolidated Results
Fourth-quarter 2021 consolidated revenues were $5.3 billion,
compared to prior-year fourth-quarter consolidated revenues of $2.3
billion.
For the fourth quarter of 2021, the Company generated net income
of $899 million, or $1.69 per diluted share. This included $47
million of charges, or $0.09 per diluted share, from amortization
of inventory step-up and acquisition-related expenses. This
compares to net income of $74 million, or $0.14 per diluted share,
recorded in the fourth-quarter of 2020, which included $44 million
of charges, or $0.10 per diluted share, of acquisition-related
costs and amortization of inventory step-up.
Fourth-quarter 2021 Adjusted EBITDA1 was $1.5 billion, compared
to $286 million in the fourth quarter of 2020.
From the cash generated during the fourth quarter of 2021, the
Company used $761 million toward the acquisition of Ferrous
Processing and Trading Company ("FPT"). The Company used the
remainder of the cash generated during the quarter to pay down
approximately $150 million in principal debt.
Also during the fourth quarter of 2021, pension and OPEB
liabilities, net of assets, were reduced by approximately $1
billion, from $3.9 billion to $2.9 billion, primarily as a result
of actuarial gains and strong returns on assets. The full-year 2021
liability reduction, net of assets, was approximately $1.3 billion,
which also included Company contributions.
(In Millions)
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
Adjusted EBITDA1:
Steelmaking
$
1,521
$
316
$
5,422
$
433
Other Businesses
(16
)
25
9
47
Corporate and eliminations
(49
)
(55
)
(169
)
(127
)
Total Adjusted EBITDA1
$
1,456
$
286
$
5,262
$
353
The Cliffs Board of Directors has authorized a new share
repurchase program for the Company to buy back its outstanding
common shares. Under the share repurchase program, the Company will
have ample flexibility to buy up to a maximum of $1 billion worth
of shares, via acquisitions in the open market or privately
negotiated transactions. The Company is not obligated to make any
purchases and the program may be suspended or discontinued at any
time. The program is effective today and does not have a specific
expiration date.
Lourenco Goncalves, Cliffs' Chairman, President and CEO said:
“During the last two years, we completed the construction and
started operating our flagship state-of-the-art Direct Reduction
plant, and also acquired and paid for the acquisition of two big
steel companies and a major scrap company. The results we achieved
in 2021 are a clear demonstration of how powerful Cleveland-Cliffs
has become, as our revenues grew more than ten times, from $2
billion in 2019 to over $20 billion in 2021. All this growth was
profitable growth, generating $5.3 billion of Adjusted EBITDA and
$3 billion of net income this past year. Our strong cash flow
generation allowed us to not only reduce our diluted share count by
10%, but also to bring our leverage down to a very healthy level of
just 1x Adjusted EBITDA.”
Mr. Goncalves continued: “Our fourth-quarter 2021 results
demonstrate the disciplined approach to supply that is fundamental
to us. During Q3 of last year we realized that our automotive
clients would not be able to resolve their supply chain issues in
Q4, and therefore demand pull from the sector would be weak. That
would come on top of the widely expected lighter demand from
service centers in Q4. As such, we elected not to chase weak
demand, and instead accelerated maintenance forward to Q4 at
several of our steel production and finishing facilities. These
actions had a short-term impact on our unit costs in Q4, but should
benefit our 2022 results."
Mr. Goncalves added: “Cleveland-Cliffs is, by a very large
margin, the largest steel supplier of the automotive sector in the
United States. Through our massive utilization of both HBI in our
blast furnaces and prime scrap in our BOF’s, we are now able to
stretch hot metal, reduce coke rate, and reduce CO2 emissions to a
new international benchmark level for steel companies with product
mix similar to ours. That’s particularly relevant when our clients
in the automotive sector compare our emissions performance against
their other major steel suppliers in countries like Japan, South
Korea, France, Austria, Germany, Belgium and a few others. Said
another way, through operational changes we have already
implemented and that do not depend on breakthrough technologies or
massive investment, Cleveland-Cliffs is setting a new world
benchmark in CO2 emissions for steel suppliers of higher quality
steels to the automotive sector.”
Mr. Goncalves concluded: "With demand on the rebound,
particularly in automotive, 2022 is set to be another phenomenal
year for profitability at Cleveland-Cliffs. Based on our recently
renewed contracts, we are now selling the vast majority of our
fixed-price contractual volumes at substantially higher selling
prices. Even at the steel futures curve as of today, we would
expect to see higher average selling prices for our steel in 2022
than in 2021. As we look forward to delivering another stellar year
in 2022 and with our limited needs for capex, we are now
comfortable to implement shareholder-focused actions ahead of our
original expectations.”
Steelmaking
On November 18, 2021, Cleveland-Cliffs completed the acquisition
of FPT. The operations of FPT are categorized under the Company's
Steelmaking segment. The Steelmaking results set forth only include
the operating results of FPT for the period from November 18, 2021
through December 31, 2021.
Three Months Ended December
31,
Year Ended
December 31,
2021
2020
2021
2020
External Sales
Volumes
Steel Products (net tons)
3,384
1,858
15,886
3,783
Operating Results
- In Millions
Revenues
$
5,191
$
2,099
$
19,901
$
4,965
Cost of goods sold
$
(3,907
)
$
(1,867
)
$
(15,379
)
$
(4,749
)
Selling Price -
Per Net Ton
Average net selling price per net ton of
steel products
$
1,423
$
880
$
1,187
$
947
Full-year 2021 steel product volume of 15.9 million net tons
consisted of 32% coated, 31% hot-rolled, 18% cold-rolled, 6% plate,
4% stainless and electrical, and 9% other, including slabs and
rail. Fourth-quarter 2021 steel product volume of 3.4 million net
tons consisted of 34% coated, 29% hot-rolled, 17% cold-rolled, 7%
plate, 5% stainless and electrical, and 8% other, including slabs
and rail.
Full-year 2021 Steelmaking revenues of $19.9 billion included
approximately $7.7 billion, or 38% of sales, to the distributors
and converters market; $5.4 billion, or 27% of sales, to the
infrastructure and manufacturing market; $4.7 billion, or 24% of
sales, to the automotive market; and $2.1 billion, or 11% of sales,
to steel producers. Fourth-quarter 2021 Steelmaking revenues of
$5.2 billion included approximately $2.0 billion, or 38% of sales,
to the distributors and converters market; $1.5 billion, or 29% of
sales, to the infrastructure and manufacturing market; $1.1
billion, or 22% of sales, to the automotive market; and $552
million, or 11% of sales to steel producers.
Full-year 2021 Steelmaking cost of goods sold of $15.4 billion
included depreciation, depletion, and amortization of $855 million
and amortization of inventory step-up charges of $161 million.
Full-year Steelmaking segment Adjusted EBITDA of $5.4 billion
included $232 million of SG&A expense. Fourth-quarter 2021
Steelmaking cost of goods sold of $3.9 billion included
depreciation, depletion, and amortization of $222 million and
amortization of inventory step-up charges of $32 million.
Fourth-quarter 2021 Steelmaking segment Adjusted EBITDA of $1.5
billion included $52 million of SG&A expense.
Other Businesses
Fourth-quarter 2021 results in Other Businesses, specifically
Tooling & Stamping, were negatively affected by inventory
valuation adjustments, as well as the December 2021 tornado that
impacted the Bowling Green, Kentucky facility.
Liquidity
As of February 8, 2022, the Company had total liquidity of
approximately $2.6 billion, consisting of approximately $100
million in cash and approximately $2.5 billion of availability
under its ABL credit facility.
Outlook
Due to the successful renewal of relevant fixed price sales
contracts, and based on the current 2022 futures curve which
implies an average hot-rolled coil steel index price of $925 per
net ton for the remainder of the year, the Company would expect its
2022 average selling price to be approximately $1,225 per net
ton.
In comparison, in 2021, when the hot-rolled coil steel index
price averaged approximately $1,600 per net ton, the Company’s
average selling price was $1,187 per net ton.
Conference Call Information
Cleveland-Cliffs Inc. will host a conference call this morning,
February 11, 2022, 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. We are the
largest supplier of steel to the automotive industry in North
America and serve a diverse range of other markets due to our
comprehensive offering of flat-rolled steel products. Headquartered
in Cleveland, Ohio, Cleveland-Cliffs employs approximately 26,000
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:
disruptions to our operations relating to the ongoing COVID-19
pandemic, including the heightened risk that a significant portion
of our workforce or on-site contractors may suffer illness or
otherwise be unable to perform their ordinary work functions;
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 a trend toward light weighting and
supply chain disruptions, such as the semiconductor shortage, that
could result in lower steel volumes being consumed; 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
the prolonged COVID-19 pandemic; severe financial hardship,
bankruptcy, temporary or permanent shutdowns or operational
challenges, due to the ongoing COVID-19 pandemic or otherwise, of
one or more of our major customers, including customers in the
automotive market, key suppliers or contractors, which, among other
adverse effects, could 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; 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; 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; the outcome of, and costs incurred in
connection with, lawsuits, claims, arbitrations or governmental
proceedings relating to commercial and business disputes,
environmental matters, government investigations, occupational or
personal injury claims, property damage, labor and employment
matters, or suits involving legacy operations and other matters;
supply chain disruptions or changes in the cost or quality 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; 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; disruptions in, or failures of, our information
technology systems, including those related to cybersecurity;
liabilities and costs arising in connection with any business
decisions to temporarily 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 ability to realize the anticipated synergies and benefits of
our recent acquisition transactions and to successfully integrate
the acquired businesses into our existing businesses, including
uncertainties associated with maintaining relationships with
customers, vendors and employees and known and unknown liabilities
we assumed in connection with the acquisitions; our level of
self-insurance and our ability to obtain sufficient third-party
insurance to adequately cover potential adverse events and business
risks; 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 ability to successfully identify and consummate any
strategic capital investments or development projects,
cost-effectively achieve planned production rates or levels, and
diversify our product mix and add new customers; 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;
availability of workers to fill critical operational positions and
potential labor shortages caused by the ongoing COVID-19 pandemic,
as well as our ability to attract, hire, develop and retain key
personnel; our ability to maintain satisfactory labor relations
with unions and employees; unanticipated or higher costs associated
with pension and OPEB obligations resulting from changes in the
value of plan assets or contribution increases required for
unfunded obligations; 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, 2020, our Quarterly Reports on Form
10-Q for the quarterly periods ended March 31, 2021, June 30, 2021
and September 30, 2021, and other filings with the SEC.
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED OPERATIONS
(In Millions, Except Per Share
Amounts)
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
Revenues
$
5,346
$
2,256
$
20,444
$
5,354
Operating costs:
Cost of goods sold
(4,072
)
(2,013
)
(15,910
)
(5,102
)
Selling, general and administrative
expenses
(111
)
(95
)
(422
)
(244
)
Acquisition-related costs
(2
)
(22
)
(20
)
(90
)
Miscellaneous – net
(42
)
(19
)
(80
)
(60
)
Total operating costs
(4,227
)
(2,149
)
(16,432
)
(5,496
)
Operating income (loss)
1,119
107
4,012
(142
)
Other income (expense):
Interest expense, net
(79
)
(70
)
(337
)
(238
)
Gain (loss) on extinguishment of debt
—
(3
)
(88
)
130
Net periodic benefit credits other than
service cost component
71
24
210
54
Other non-operating income
1
2
6
3
Total other expense
(7
)
(47
)
(209
)
(51
)
Income (loss) from continuing
operations before income taxes
1,112
60
3,803
(193
)
Income tax benefit (expense)
(214
)
13
(773
)
111
Income (loss) from continuing
operations
898
73
3,030
(82
)
Income from discontinued operations, net
of tax
1
1
3
1
Net income (loss)
899
74
3,033
(81
)
Income attributable to noncontrolling
interest
(6
)
(10
)
(45
)
(41
)
Net income (loss) attributable to
Cliffs shareholders
$
893
$
64
$
2,988
$
(122
)
Earnings (loss) per common share
attributable to Cliffs
shareholders - basic
Continuing operations
$
1.78
$
0.15
$
5.62
$
(0.32
)
Discontinued operations
—
—
0.01
—
$
1.78
$
0.15
$
5.63
$
(0.32
)
Earnings (loss) per common share
attributable to Cliffs
shareholders - diluted
Continuing operations
$
1.69
$
0.14
$
5.35
$
(0.32
)
Discontinued operations
—
—
0.01
—
$
1.69
$
0.14
$
5.36
$
(0.32
)
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL POSITION
(In Millions)
December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
48
$
112
Accounts receivable, net
2,154
1,169
Inventories
5,188
3,828
Other current assets
263
189
Total current assets
7,653
5,298
Non-current assets:
Property, plant and equipment, net
9,186
8,743
Goodwill
1,116
1,406
Other non-current assets
1,020
1,324
TOTAL ASSETS
$
18,975
$
16,771
LIABILITIES
Current liabilities:
Accounts payable
$
2,073
$
1,575
Accrued employment costs
585
460
State and local taxes
138
147
Other current liabilities
765
747
Total current liabilities
3,561
2,929
Non-current liabilities:
Long-term debt
5,238
5,390
Pension liability, non-current
578
1,224
OPEB liability, non-current
2,383
2,889
Other non-current liabilities
1,441
1,260
TOTAL LIABILITIES
13,201
13,692
SERIES B PARTICIPATING REDEEMABLE
PREFERRED STOCK
—
738
TOTAL EQUITY
5,774
2,341
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND EQUITY
$
18,975
$
16,771
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED CASH FLOWS
(In Millions)
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
OPERATING ACTIVITIES
Net income (loss)
$
899
$
74
$
3,033
$
(81
)
Adjustments to reconcile net income (loss)
to net cash
provided (used) by operating
activities:
Depreciation, depletion and
amortization
233
124
897
308
Amortization of inventory step-up
32
22
161
96
Deferred income taxes
210
(11
)
767
(101
)
Pension and OPEB credits
(44
)
(12
)
(103
)
(23
)
Loss (gain) on extinguishment of debt
—
3
88
(130
)
Other
59
(52
)
139
(70
)
Changes in operating assets and
liabilities, net of
business combination:
Receivables and other assets
317
(302
)
(858
)
(42
)
Inventories
(577
)
(142
)
(1,370
)
(146
)
Pension and OPEB payments and
contributions
(64
)
(44
)
(343
)
(75
)
Payables, accrued expenses and other
liabilities
72
133
374
6
Net cash provided (used) by operating
activities
1,137
(207
)
2,785
(258
)
INVESTING ACTIVITIES
Purchase of property, plant and
equipment
(232
)
(146
)
(705
)
(525
)
Acquisition of FPT, net of cash
acquired
(761
)
—
(761
)
—
Acquisition of ArcelorMittal USA, net of
cash acquired
—
(658
)
54
(658
)
Acquisition of AK Steel, net of cash
acquired
—
—
—
(869
)
Other investing activities
28
2
33
10
Net cash used by investing activities
(965
)
(802
)
(1,379
)
(2,042
)
FINANCING ACTIVITIES
Series B Redeemable Preferred Stock
redemption
—
—
(1,343
)
—
Proceeds from issuance of common
shares
—
—
322
—
Proceeds from issuance of debt
—
—
1,000
1,763
Debt issuance costs
(3
)
(18
)
(20
)
(76
)
Repayments of debt
(26
)
(23
)
(1,372
)
(1,023
)
Borrowings under credit facilities
1,609
1,278
5,962
2,060
Repayments under credit facilities
(1,729
)
(150
)
(5,889
)
(550
)
Other financing activities
(17
)
(22
)
(130
)
(115
)
Net cash provided (used) by financing
activities
(166
)
1,065
(1,470
)
2,059
Net increase (decrease) in cash and cash
equivalents
6
56
(64
)
(241
)
Cash and cash equivalents at beginning of
period
42
56
112
353
Cash and cash equivalents at end of
period
$
48
$
112
$
48
$
112
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.
(In Millions)
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
Net income (loss)
$
899
$
74
$
3,033
$
(81
)
Less:
Interest expense, net
(79
)
(70
)
(337
)
(238
)
Income tax benefit (expense)
(214
)
13
(773
)
111
Depreciation, depletion and
amortization
(233
)
(124
)
(897
)
(308
)
Total EBITDA
$
1,425
$
255
$
5,040
$
354
Less:
EBITDA from noncontrolling interests
$
15
$
15
$
75
$
56
Gain (loss) on extinguishment of debt
—
(3
)
(88
)
130
Severance costs
—
—
(15
)
(38
)
Acquisition-related costs excluding
severance costs
(2
)
(22
)
(5
)
(52
)
Acquisition-related loss on equity method
investment
(13
)
—
(31
)
—
Amortization of inventory step-up
(32
)
(22
)
(161
)
(96
)
Impact of discontinued operations
1
1
3
1
Total Adjusted EBITDA1
$
1,456
$
286
$
5,262
$
353
EBITDA of noncontrolling interests
includes the following:
Net income attributable to noncontrolling
interests
$
6
$
10
$
45
$
41
Depreciation, depletion and
amortization
9
5
30
15
EBITDA of noncontrolling interests
$
15
$
15
$
75
$
56
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220211005093/en/
MEDIA CONTACT: Patricia Persico Senior Director,
Corporate Communications (216) 694-5316
INVESTOR CONTACT: James Kerr Manager, Investor Relations
(216) 694-7719
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