Cleveland-Cliffs Inc. (NYSE: CLF) today reported full-year and fourth-quarter results for the period ended December 31, 2023.

Full-Year Highlights

  • Revenues of $22.0 billion
  • Record steel shipments of 16.4 million net tons, including record automotive shipments
  • Cash flow from operations of $2.3 billion
  • Free cash flow of $1.6 billion3, including approximately $500 million in the fourth quarter of 2023
  • Year-end net debt of $2.9 billion4
  • Net pension and OPEB liabilities reduced to $586 million, a $3.6 billion reduction since 2020

Full-Year Consolidated Results

Full-year 2023 consolidated revenues were $22.0 billion, compared to the prior year's consolidated revenues of $23.0 billion.

As previously foreshadowed in Cliffs' 2022 10-K, full-year results included a goodwill impairment charge totaling $125 million, related to the Tooling & Stamping business within the Other Businesses segment, primarily driven by revised investment plans and higher discount rates. For the full year 2023, the Company generated GAAP net income of $450 million, or $0.78 per diluted share, with adjusted net income2 of $545 million and adjusted EPS2 of $1.07 per diluted share. This compares to 2022 net income of $1.4 billion, or $2.55 per diluted share, with adjusted net income2 of $1.4 billion or $2.74 per diluted share. For the full year 2023, Adjusted EBITDA1 was $1.9 billion, compared to $3.2 billion in 2022. The reduction was primarily driven by lower steel index pricing in 2023 compared to 2022, partially offset by higher sales volumes and lower operating costs.

In 2023, the Company recorded cash flows from operations of $2.3 billion and had capital expenditures of $646 million, equating to free cash flow of $1.6 billion3. During 2023, the Company reduced its net debt3 by $1.3 billion, using the majority of its free cash flow for this purpose.

Fourth-Quarter Consolidated Results

Fourth-quarter 2023 consolidated revenues were $5.1 billion, compared to prior-year fourth-quarter consolidated revenues of $5.0 billion.

For the fourth quarter of 2023, the Company recorded a GAAP net loss of $139 million, or $0.31 per diluted share, with an adjusted net loss2 of $25 million or $0.05 per diluted share. In the prior-year fourth quarter, the Company recorded a net loss of $204 million, or $0.41, with an adjusted net loss2 of $208 million or $0.40 per diluted share.

In the fourth quarter of 2023, the Company recorded cash flows from operations of $652 million and had capital expenditures of $165 million, equating to free cash flow of $487 million3. Net debt4 was reduced by approximately $500 million during the quarter.

Fourth-quarter 2023 Adjusted EBITDA1 was $279 million, compared to $123 million in the fourth quarter of 2022.

Lourenco Goncalves, Cliffs’ Chairman, President and CEO said: “2023 was another great year for Cleveland-Cliffs, in which we accomplished several goals in commercial, operations, finance and human resources. Steel demand remained healthy throughout the entire year, with our most important market – the automotive sector – performing well. Even with the UAW labor strike late in Q3 and into Q4, automotive steel demand remained consistently strong, as we anticipated. After it was clear that the strike was not creating any real issues in the marketplace, non-automotive clients de-stocking their inventories betting on lower steel prices were compelled to buy steel at higher prices.”

Mr. Goncalves added: “Our 2023 total steel shipments of 16.4 million tons set a record since we became a steel company in 2020. We now have four consecutive quarters with steel shipments above 4 million tons. We generated robust free cash flow of more than $1.6 billion and primarily used it to continue to pay down debt, while also repurchasing more than 10 million shares at an average price of $14.68 per share. Our net debt of $2.9 billion at the end of 2023 is below our publicly stated target of $3.0 billion, and our liquidity is now at an all-time high of $4.5 billion. We ended 2023 with a zero balance on our ABL, as planned. Going forward, and assuming a fair scrap marketplace -- free from artificial, provoked and hard-to-explain moves -- with scrap demand growing and scrap supply shrinking, there is no good reason for scrap prices to go down. If true supply and demand for scrap in the U.S. prevails, there is no good reason for HRC prices to go below $1,000 per net ton."

Mr. Goncalves continued: “Another very important highlight of 2023 at Cleveland-Cliffs was our success in significantly reducing our unit costs. We expect steel unit costs to further decrease $30 per ton in 2024. Together with expected strong shipments in 2024, we should continue to generate healthy free cash flow throughout the year. With our net debt target achieved and our shares still undervalued, we can now put a stronger focus on aggressive share buybacks.”

Mr. Goncalves concluded: “Our position as an American leader in the steel industry has never been stronger, and that is particularly relevant in turbulent periods for the world, like the one we are living through right now. We remain committed to all stakeholders of Cleveland-Cliffs, and that includes our union represented and non-union workforce, investors, customers, suppliers, communities and the United States of America. Our relationship with each and every one of these stakeholders is incorporated into every decision we make as a company. Cleveland-Cliffs is proud of being American owned, American operated, and a reliable foundation of American values.”

Steelmaking Segment Results

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

Three Months

Ended

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

Sept. 30,

2023

External Sales Volumes

 

 

 

 

 

 

 

 

 

Steel Products (net tons)

 

4,039

 

 

 

3,838

 

 

 

16,432

 

 

 

14,751

 

 

 

4,106

 

Selling Price - Per Net Ton

 

 

 

 

 

 

 

 

 

Average net selling price per net ton of steel products

$

1,093

 

 

$

1,156

 

 

$

1,171

 

 

$

1,360

 

 

$

1,203

 

Operating Results - In Millions

 

 

 

 

 

 

 

 

 

Revenues

$

4,954

 

 

$

4,902

 

 

$

21,331

 

 

$

22,383

 

 

$

5,443

 

Cost of goods sold

 

(4,798

)

 

 

(4,966

)

 

 

(19,979

)

 

 

(19,914

)

 

 

(4,970

)

Gross margin

$

156

 

 

$

(64

)

 

$

1,352

 

 

$

2,469

 

 

$

473

 

Full-year 2023 steel product volume of 16.4 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. Fourth-quarter 2023 steel product volume of 4.0 million net tons consisted of 36% hot-rolled, 28% coated, 15% cold-rolled, 5% plate, 4% stainless and electrical, and 12% other, including slabs and rail.

Full-year 2023 Steelmaking revenues of $21.3 billion included approximately $7.4 billion, or 35%, of sales to direct automotive customers; $5.6 billion, or 26%, of sales to the infrastructure and manufacturing market; $5.3 billion, or 25%, of sales to the distributors and converters market; and $2.9 billion, or 14%, of sales to steel producers. Fourth-quarter 2023 Steelmaking revenues of $5.0 billion included approximately $1.6 billion, or 33%, of sales to direct automotive customers; $1.3 billion, or 26%, of sales to the distributors and converters market; $1.3 billion, or 26%, of sales to the infrastructure and manufacturing market; and $715 million, or 14%, of sales to steel producers.

Liquidity and Cash Flow

During the fourth quarter of 2023, the outstanding balance of the Company's ABL Facility was eliminated, a reduction of $325 million during the quarter. The ABL was fully undrawn as of December 31, 2023. As of December 31, 2023, the Company's net debt4 was $2.9 billion, down from $3.4 billion in the third quarter of 2023.

The Company ended 2023 with record liquidity of $4.5 billion.

Outlook

The Company put forth the following expectations for the full-year 2024:

  • Steel shipment volumes of 16.5 million net tons, compared to 16.4 million net tons in 2023;
  • Steel unit cost reductions of approximately $30 per net ton, corresponding to an approximate $500 million Adjusted EBITDA benefit compared to 2023; and
  • Capital expenditures of $675 to $725 million.

The Company expects its Adjusted EBITDA performance in the first quarter of 2024 to meaningfully exceed its Adjusted EBITDA performance in the fourth quarter of 2023.

Conference Call Information

Cleveland-Cliffs Inc. will host a conference call on January 30, 2024, at 8:30 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 28,000 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; potential weaknesses and uncertainties in global economic conditions, excess global steelmaking capacity, oversupply of iron ore, prevalence of steel imports and reduced market demand; severe financial hardship, bankruptcy, temporary or permanent shutdowns or operational challenges of one or more of our major customers, 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; 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, or to repurchase our common shares; 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; 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-related matters, labor and employment matters, or suits involving legacy operations and other matters; supply chain disruptions or changes in the cost, quality or availability of energy sources, including electricity, natural gas and diesel fuel, critical raw materials and supplies, including iron ore, industrial gases, graphite electrodes, scrap metal, chrome, zinc, coke and metallurgical coal, and critical manufacturing equipment and spare parts; 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; our ability to consummate any public or private acquisition transactions and to realize any or all of the anticipated benefits or estimated future synergies, as well as to successfully integrate any acquired businesses into our existing businesses; 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 OPEB 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 SEC.

CLEVELAND-CLIFFS INC. AND SUBSIDIARIES

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED OPERATIONS

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

Three Months

Ended

(In Millions, Except Per Share Amounts)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

Sept. 30,

2023

Revenues

$

5,112

 

 

$

5,044

 

 

$

21,996

 

 

$

22,989

 

 

$

5,605

 

Operating costs:

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

(4,944

)

 

 

(5,104

)

 

 

(20,605

)

 

 

(20,471

)

 

 

(5,125

)

Selling, general and administrative expenses

 

(162

)

 

 

(116

)

 

 

(577

)

 

 

(465

)

 

 

(139

)

Acquisition-related costs

 

(7

)

 

 

 

 

 

(12

)

 

 

(4

)

 

 

(5

)

Goodwill impairment

 

(125

)

 

 

 

 

 

(125

)

 

 

 

 

 

 

Miscellaneous – net

 

26

 

 

 

(6

)

 

 

 

 

 

(110

)

 

 

(11

)

Total operating costs

 

(5,212

)

 

 

(5,226

)

 

 

(21,319

)

 

 

(21,050

)

 

 

(5,280

)

Operating income (loss)

 

(100

)

 

 

(182

)

 

 

677

 

 

 

1,939

 

 

 

325

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(63

)

 

 

(71

)

 

 

(289

)

 

 

(276

)

 

 

(70

)

Gain (loss) on extinguishment of debt

 

 

 

 

1

 

 

 

 

 

 

(75

)

 

 

 

Net periodic benefit credits other than service cost component

 

54

 

 

 

64

 

 

 

204

 

 

 

212

 

 

 

50

 

Other non-operating income (loss)

 

1

 

 

 

2

 

 

 

5

 

 

 

(4

)

 

 

(2

)

Total other expense

 

(8

)

 

 

(4

)

 

 

(80

)

 

 

(143

)

 

 

(22

)

Income (loss) from continuing operations before income taxes

 

(108

)

 

 

(186

)

 

 

597

 

 

 

1,796

 

 

 

303

 

Income tax expense

 

(30

)

 

 

(19

)

 

 

(148

)

 

 

(423

)

 

 

(29

)

Income (loss) from continuing operations

 

(138

)

 

 

(205

)

 

 

449

 

 

 

1,373

 

 

 

274

 

Income (loss) from discontinued operations, net of tax

 

(1

)

 

 

1

 

 

 

1

 

 

 

3

 

 

 

1

 

Net income (loss)

 

(139

)

 

 

(204

)

 

 

450

 

 

 

1,376

 

 

 

275

 

Net income attributable to noncontrolling interests

 

(16

)

 

 

(10

)

 

 

(51

)

 

 

(41

)

 

 

(11

)

Net income (loss) attributable to Cliffs shareholders

$

(155

)

 

$

(214

)

 

$

399

 

 

$

1,335

 

 

$

264

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share attributable to Cliffs shareholders - basic

 

 

 

 

 

 

 

 

 

Continuing operations

$

(0.31

)

 

$

(0.41

)

 

$

0.78

 

 

$

2.57

 

 

$

0.52

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.31

)

 

$

(0.41

)

 

$

0.78

 

 

$

2.57

 

 

$

0.52

 

Earnings (loss) per common share attributable to Cliffs shareholders - diluted

 

 

 

 

 

 

 

 

 

Continuing operations

$

(0.31

)

 

$

(0.41

)

 

$

0.78

 

 

$

2.55

 

 

$

0.52

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.31

)

 

$

(0.41

)

 

$

0.78

 

 

$

2.55

 

 

$

0.52

 

CLEVELAND-CLIFFS INC. AND SUBSIDIARIES

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL POSITION

 

December 31,

(In millions)

 

2023

 

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

198

 

$

26

Accounts receivable, net

 

1,840

 

 

1,960

Inventories

 

4,460

 

 

5,130

Other current assets

 

138

 

 

306

Total current assets

 

6,636

 

 

7,422

Non-current assets:

 

 

 

Property, plant and equipment, net

 

8,895

 

 

9,070

Goodwill

 

1,005

 

 

1,130

Pension and OPEB assets

 

329

 

 

356

Other non-current assets

 

672

 

 

777

TOTAL ASSETS

$

17,537

 

$

18,755

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

2,099

 

$

2,186

Accrued employment costs

 

511

 

 

429

Accrued expenses

 

380

 

 

383

Other current liabilities

 

518

 

 

551

Total current liabilities

 

3,508

 

 

3,549

Non-current liabilities:

 

 

 

Long-term debt

 

3,137

 

 

4,249

Pension and OPEB liabilities

 

821

 

 

1,058

Deferred income taxes

 

639

 

 

590

Other non-current liabilities

 

1,310

 

 

1,267

TOTAL LIABILITIES

 

9,415

 

 

10,713

TOTAL EQUITY

 

8,122

 

 

8,042

TOTAL LIABILITIES AND EQUITY

$

17,537

 

$

18,755

CLEVELAND-CLIFFS INC. AND SUBSIDIARIES

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED CASH FLOWS

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

(In millions)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income (loss)

$

(139

)

 

$

(204

)

 

$

450

 

 

$

1,376

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

235

 

 

 

246

 

 

 

973

 

 

 

1,034

 

Deferred income taxes

 

(18

)

 

 

(120

)

 

 

114

 

 

 

90

 

Pension and OPEB credits

 

(44

)

 

 

(51

)

 

 

(163

)

 

 

(132

)

Goodwill impairment

 

125

 

 

 

 

 

 

125

 

 

 

 

Loss (gain) on extinguishment of debt

 

 

 

 

(1

)

 

 

 

 

 

75

 

Other

 

(45

)

 

 

47

 

 

 

76

 

 

 

151

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

284

 

 

 

342

 

 

 

120

 

 

 

197

 

Inventories

 

132

 

 

 

412

 

 

 

670

 

 

 

64

 

Income taxes

 

106

 

 

 

87

 

 

 

122

 

 

 

(22

)

Pension and OPEB payments and contributions

 

(10

)

 

 

(30

)

 

 

(94

)

 

 

(204

)

Payables, accrued employment and accrued expenses

 

99

 

 

 

(136

)

 

 

4

 

 

 

(70

)

Other, net

 

(73

)

 

 

(103

)

 

 

(130

)

 

 

(136

)

Net cash provided by operating activities

 

652

 

 

 

489

 

 

 

2,267

 

 

 

2,423

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(165

)

 

 

(227

)

 

 

(646

)

 

 

(943

)

Acquisition of FPT, net of cash acquired

 

 

 

 

 

 

 

 

 

 

(31

)

Other investing activities

 

44

 

 

 

18

 

 

 

55

 

 

 

38

 

Net cash used by investing activities

 

(121

)

 

 

(209

)

 

 

(591

)

 

 

(936

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

Repurchase of common shares

 

 

 

 

(30

)

 

 

(152

)

 

 

(240

)

Proceeds from issuance of debt

 

 

 

 

 

 

 

750

 

 

 

 

Repayments of senior notes

 

 

 

 

(3

)

 

 

 

 

 

(1,358

)

Borrowings under credit facilities

 

 

 

 

1,099

 

 

 

3,004

 

 

 

5,749

 

Repayments under credit facilities

 

(325

)

 

 

(1,325

)

 

 

(4,868

)

 

 

(5,494

)

Debt issuance costs

 

 

 

 

 

 

 

(34

)

 

 

 

Other financing activities

 

(39

)

 

 

(51

)

 

 

(204

)

 

 

(166

)

Net cash used by financing activities

 

(364

)

 

 

(310

)

 

 

(1,504

)

 

 

(1,509

)

Net increase (decrease) in cash and cash equivalents

 

167

 

 

 

(30

)

 

 

172

 

 

 

(22

)

Cash and cash equivalents at beginning of period

 

31

 

 

 

56

 

 

 

26

 

 

 

48

 

Cash and cash equivalents at end of period

$

198

 

 

$

26

 

 

$

198

 

 

$

26

 

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. These measures are used by management, investors, lenders and other external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the steel industry, showing results exclusive of non-cash and/or non-recurring items. 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

December 31,

 

Year Ended

December 31,

 

Three Months

Ended

(In millions)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

Sept. 30,

2023

Net income (loss)

$

(139

)

 

$

(204

)

 

$

450

 

 

$

1,376

 

 

$

275

 

Less:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(63

)

 

 

(71

)

 

 

(289

)

 

 

(276

)

 

 

(70

)

Income tax expense

 

(30

)

 

 

(19

)

 

 

(148

)

 

 

(423

)

 

 

(29

)

Depreciation, depletion and amortization

 

(235

)

 

 

(246

)

 

 

(973

)

 

 

(1,034

)

 

 

(249

)

Total EBITDA

$

189

 

 

$

132

 

 

$

1,860

 

 

$

3,109

 

 

$

623

 

Less:

 

 

 

 

 

 

 

 

 

EBITDA from noncontrolling interests

$

23

 

 

$

17

 

 

$

83

 

 

$

74

 

 

$

20

 

Gain (loss) on extinguishment of debt

 

 

 

 

1

 

 

 

 

 

 

(75

)

 

 

 

Acquisition-related expenses and adjustments

 

(7

)

 

 

 

 

 

(12

)

 

 

(1

)

 

 

(3

)

Goodwill impairment

 

(125

)

 

 

 

 

 

(125

)

 

 

 

 

 

 

Asset impairment

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

 

Non-cash gain on sale of business

 

28

 

 

 

 

 

 

28

 

 

 

 

 

 

 

Other, net

 

(9

)

 

 

(9

)

 

 

(25

)

 

 

(29

)

 

 

(8

)

Total Adjusted EBITDA1

$

279

 

 

$

123

 

 

$

1,911

 

 

$

3,169

 

 

$

614

 

 

 

 

 

 

 

 

 

 

 

EBITDA of noncontrolling interests includes the following:

 

 

Net income attributable to noncontrolling interests

$

16

 

 

$

10

 

 

$

51

 

 

$

41

 

 

$

11

 

Depreciation, depletion and amortization

 

7

 

 

 

7

 

 

 

32

 

 

 

33

 

 

 

9

 

EBITDA of noncontrolling interests

$

23

 

 

$

17

 

 

$

83

 

 

$

74

 

 

$

20

 

2 CLEVELAND-CLIFFS INC. AND SUBSIDIARIES

ADJUSTED EARNINGS PER SHARE RECONCILIATION

In addition to the consolidated financial statements presented in accordance with U.S. GAAP, the Company has presented Adjusted net income (loss) attributable to Cliffs shareholders and Adjusted earnings (loss) per common share attributable to Cliffs shareholders - diluted. These measures are used by management, investors, lenders and other external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the steel industry, showing results exclusive of non-cash and/or non-recurring items. 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

December 31,

 

Year Ended

December 31,

 

Three Months

Ended

(In millions)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

Sept. 30,

2023

Net income (loss) attributable to Cliffs shareholders

$

(155

)

 

$

(214

)

 

$

399

 

 

$

1,335

 

 

$

264

 

Adjustments:

 

 

 

 

 

 

 

 

 

Gain (loss) on extinguishment of debt

 

 

 

 

1

 

 

 

 

 

 

(75

)

 

 

 

Acquisition-related expenses and adjustments

 

(7

)

 

 

 

 

 

(12

)

 

 

(1

)

 

 

(3

)

Goodwill impairment1

 

(125

)

 

 

 

 

 

(125

)

 

 

 

 

 

 

Tax valuation allowance

 

(14

)

 

 

 

 

 

(14

)

 

 

 

 

 

 

Asset impairment

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

 

Non-cash gain on sale of business

 

28

 

 

 

 

 

 

28

 

 

 

 

 

 

 

Other, net

 

(9

)

 

 

(9

)

 

 

(25

)

 

 

(29

)

 

 

(8

)

Income tax effect1

 

(3

)

 

 

2

 

 

 

2

 

 

 

32

 

 

 

3

 

Adjusted net income (loss) attributable to Cliffs shareholders

$

(25

)

 

$

(208

)

 

$

545

 

 

$

1,437

 

 

$

272

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share attributable to Cliffs shareholders - diluted

$

(0.31

)

 

$

(0.41

)

 

$

0.78

 

 

$

2.55

 

 

$

0.52

 

Adjusted earnings (loss) per common share attributable to Cliffs shareholders - diluted

$

(0.05

)

 

$

(0.40

)

 

$

1.07

 

 

$

2.74

 

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

1Goodwill impairment is non-deductible for income tax purposes.

3 CLEVELAND-CLIFFS INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATION - FREE CASH FLOW

Free cash flow is a non-GAAP measure defined as net cash provided by operating activities less purchase of property, plant and equipment. Management believes it is an important measure to assess the cash generation available to service debt, strategic initiatives or other financing activities. The following table provides a reconciliation of operating cash flows to free cash flows:

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

(In millions)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net cash provided by operating activities

$

652

 

 

$

489

 

 

$

2,267

 

 

$

2,423

 

Purchase of property, plant and equipment

 

(165

)

 

 

(227

)

 

 

(646

)

 

 

(943

)

Free cash flow

$

487

 

 

$

262

 

 

$

1,621

 

 

$

1,480

 

4 CLEVELAND-CLIFFS INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATION - NET DEBT

Net debt is a non-GAAP financial measure that management uses in evaluating financial position. Net debt is defined as long-term debt less cash and cash equivalents. Management believes net debt is an important measure of the Company’s financial position due to the amount of cash and cash equivalents on hand. 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. A reconciliation of this measure to its most directly comparable GAAP measure is provided in the table below:

 

(In millions)

December 31,

2023

 

September 30,

2023

 

December 31,

2022

Long-term debt

$

3,137

 

$

3,458

 

$

4,249

Less: Cash and cash equivalents

 

198

 

 

31

 

 

26

Net debt

$

2,939

 

$

3,427

 

$

4,223

 

MEDIA CONTACT: Patricia Persico Senior Director, Corporate Communications (216) 694-5316

INVESTOR CONTACT: James Kerr Director, Investor Relations (216) 694-7719

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