Cleveland-Cliffs Inc. (NYSE: CLF) today reported
first-quarter results for the period ended March 31, 2024.
First Quarter 2024 Highlights
- Repurchased 30.4 million shares, or 6% of total
outstanding
- Revenues of $5.2 billion
- Steel shipments of 3.9 million net tons
- GAAP net loss of $53 million and adjusted net income1 of $87
million
- Adjusted EPS1 of $0.18 per diluted share
- Adjusted EBITDA2 of $414 million
- 70% Adjusted EBITDA2 improvement year-over-year and 48%
increase quarter-over-quarter
- Liquidity of $4.0 billion as of March 31, 2024
- Retired all remaining secured notes
First-quarter 2024 revenues were $5.2 billion, compared to $5.1
billion in the fourth quarter of 2023.
For the first quarter of 2024, the Company recorded a net loss
of $53 million, or $0.14 per diluted share, with adjusted net
income1 of $87 million, or $0.18 per diluted share. Included in the
results were charges and losses totaling $202 million primarily
related to the indefinite idle of the Weirton tinplate facility and
loss on extinguishment of debt. This compares to a fourth quarter
2023 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.
First-quarter 2024 Adjusted EBITDA2 was $414 million, compared
to $279 million in the fourth quarter of 2023 and $243 million in
the first quarter of 2023.
During the first quarter of 2024, the Company repurchased 30.4
million CLF common shares, fully utilizing the remaining balance of
$608 million under the previously authorized $1 billion share
repurchase program. The average stock purchase price for the entire
program was $18.79 per share. Following the completion of the
program, the Cliffs Board of Directors has authorized a new share
repurchase program for the Company to buy back up to $1.5 billion
of its outstanding common shares. The Company will have ample
flexibility to buy CLF 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 new program is effective today and
does not have a specific expiration date.
Cliffs’ Chairman, President and CEO Lourenco Goncalves said:
“Our first quarter results were highlighted by the resiliency of
automotive production in the United States, which helped to offset
a temporary buyers strike from service centers in January and
February. With more automotive and less service center business,
first quarter mix was richer than originally anticipated, driving
both our average selling prices and production costs higher than
expected.”
Mr. Goncalves added: “In the first quarter, we returned capital
to our shareholders at an aggressive rate. Our stock was cheap
throughout the quarter and remains so, driving the exhaustion of
our previous $1 billion share repurchase authorization and the
commencement of another larger one. Buying our own stock is clearly
a better use of capital than any M&A opportunities at current
valuations -- so that's our primary focus."
Mr. Goncalves continued: “This quarter, our efforts towards
green steel production were recognized in an unprecedented way. As
a result of our strong track record with emissions reductions and
labor relations, we became the largest intended recipient of
federal grants toward decarbonization in the history of the United
States. These investments will go toward two game-changing
projects, not only with immense carbon reduction prospects, but
also robust returns and manageable capital commitments.”
Mr. Goncalves concluded: “Looking forward, we expect to benefit
in Q2 from the lower costs under our guidance, which we have
maintained. Our largest end market, the automotive sector, is
expected to remain strong. Orders from our service center customers
have started to increase, with spot pricing also on the upswing. We
are fortunate to have such a remarkable partnership with our
workforce, and we will navigate this world of abundant
opportunities together with our union partners.”
Steelmaking Segment Results
Three Months Ended
March 31,
Three Months Ended
2024
2023
Dec. 31, 2023
External Sales
Volumes - In Thousands
Steel Products (net tons)
3,940
4,085
4,039
Selling Price -
Per Net Ton
Average net selling price per net ton of
steel products
$
1,175
$
1,128
$
1,093
Operating Results
- In Millions
Revenues
$
5,027
$
5,126
$
4,954
Cost of goods sold
(4,757
)
(5,032
)
(4,798
)
Gross margin
$
270
$
94
$
156
First-quarter 2024 steel product sales volumes of 3.9 million
net tons consisted of 32% hot-rolled, 31% coated, 17% cold-rolled,
5% plate, 4% stainless and electrical, and 11% other, including
slabs and rail.
Steelmaking revenues of $5.0 billion included $1.6 billion, or
32%, of direct sales to the automotive market; $1.4 billion, or
28%, of sales to the infrastructure and manufacturing market; $1.4
billion, or 28%, of sales to the distributors and converters
market; and $606 million, or 12%, of sales to steel producers.
Liquidity and Cash Flow
Going forward, the Company has a stated target to maintain net
debt at less than two and a half times the Company's trailing
twelve months Adjusted EBITDA. The same leverage target would apply
in the event of potential future M&A. As of March 31, 2024, the
Company's net debt3 was $3.6 billion, well below the target level.
The Company ended the first quarter of 2024 with total liquidity of
$4.0 billion.
Outlook
The Company maintained all of its previously guided expectations
for the full-year 2024, including:
- Steel shipment volumes of 16.5 million net tons;
- Year-over-year 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.
Cleveland-Cliffs Inc. will host a conference call on April 23,
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 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; 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, other
alloys, 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 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, 2023, and other filings with the
U.S. Securities and Exchange Commission.
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)
2024
2023
Dec. 31, 2023
Revenues
$
5,199
$
5,295
$
5,112
Operating costs:
Cost of goods sold
(4,914
)
(5,196
)
(4,944
)
Selling, general and administrative
expenses
(132
)
(127
)
(169
)
Restructuring and other charges
(104
)
—
—
Asset impairments
(64
)
—
—
Goodwill impairment
—
—
(125
)
Miscellaneous – net
(23
)
(3
)
26
Total operating costs
(5,237
)
(5,326
)
(5,212
)
Operating loss
(38
)
(31
)
(100
)
Other income (expense):
Interest expense, net
(64
)
(77
)
(63
)
Loss on extinguishment of debt
(21
)
—
—
Net periodic benefit credits other than
service cost component
60
50
54
Other non-operating income
2
2
1
Total other expense
(23
)
(25
)
(8
)
Loss from continuing operations before
income taxes
(61
)
(56
)
(108
)
Income tax benefit (expense)
8
13
(30
)
Loss from continuing operations
(53
)
(43
)
(138
)
Income (loss) from discontinued
operations, net of tax
—
1
(1
)
Net loss
(53
)
(42
)
(139
)
Income attributable to noncontrolling
interests
(14
)
(15
)
(16
)
Net loss attributable to Cliffs
shareholders
$
(67
)
$
(57
)
$
(155
)
Loss per common share attributable to
Cliffs shareholders - basic
Continuing operations
$
(0.14
)
$
(0.11
)
$
(0.31
)
Discontinued operations
—
—
—
$
(0.14
)
$
(0.11
)
$
(0.31
)
Loss per common share attributable to
Cliffs shareholders - diluted
Continuing operations
$
(0.14
)
$
(0.11
)
$
(0.31
)
Discontinued operations
—
—
—
$
(0.14
)
$
(0.11
)
$
(0.31
)
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL POSITION
(In millions)
March 31, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
30
$
198
Accounts receivable, net
1,868
1,840
Inventories
4,449
4,460
Other current assets
122
138
Total current assets
6,469
6,636
Non-current assets:
Property, plant and equipment, net
8,771
8,895
Goodwill
1,005
1,005
Pension and OPEB assets
344
329
Other non-current assets
647
672
TOTAL ASSETS
$
17,236
$
17,537
LIABILITIES
Current liabilities:
Accounts payable
$
2,051
$
2,099
Accrued employment costs
449
511
Accrued expenses
318
380
Other current liabilities
578
518
Total current liabilities
3,396
3,508
Non-current liabilities:
Long-term debt
3,664
3,137
Pension and OPEB liabilities
791
821
Deferred income taxes
628
639
Other non-current liabilities
1,315
1,310
TOTAL LIABILITIES
9,794
9,415
TOTAL EQUITY
7,442
8,122
TOTAL LIABILITIES AND EQUITY
$
17,236
$
17,537
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED CASH FLOWS
Three Months Ended
March 31,
(In millions)
2024
2023
OPERATING ACTIVITIES
Net loss
$
(53
)
$
(42
)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation, depletion and
amortization
230
242
Restructuring and other charges
104
—
Asset impairments
64
—
Pension and OPEB credits
(51
)
(40
)
Loss on extinguishment of debt
21
—
Other
44
35
Changes in operating assets and
liabilities:
Accounts receivable, net
(27
)
(257
)
Inventories
(8
)
207
Income taxes
(1
)
15
Pension and OPEB payments and
contributions
(32
)
(30
)
Payables, accrued employment and accrued
expenses
(170
)
(90
)
Other, net
21
(79
)
Net cash provided (used) by operating
activities
142
(39
)
INVESTING ACTIVITIES
Purchase of property, plant and
equipment
(182
)
(188
)
Other investing activities
3
3
Net cash used by investing activities
(179
)
(185
)
FINANCING ACTIVITIES
Repurchase of common shares
(608
)
—
Proceeds from issuance of senior notes
825
—
Repayments of senior notes
(652
)
—
Borrowings under credit facilities,
net
342
307
Debt issuance costs
(13
)
—
Other financing activities
(25
)
(50
)
Net cash provided (used) by financing
activities
(131
)
257
Net increase (decrease) in cash and cash
equivalents
(168
)
33
Cash and cash equivalents at beginning of
period
198
26
Cash and cash equivalents at end of
period
$
30
$
59
1 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
March 31,
Three Months Ended
(In millions)
2024
2023
Dec. 31, 2023
Net loss attributable to Cliffs
shareholders
$
(67
)
$
(57
)
$
(155
)
Adjustments:
Weirton indefinite idleA
(177
)
—
—
Loss on extinguishment of debt
(21
)
—
—
Goodwill impairmentB
—
—
(125
)
Tax valuation allowance
—
—
(14
)
Non-cash gain on sale of business
—
—
28
Other, net
(4
)
(2
)
(16
)
Income tax effectB
48
—
(3
)
Adjusted net income (loss) attributable to
Cliffs shareholders
$
87
$
(55
)
$
(25
)
Loss per common share attributable to
Cliffs shareholders - diluted
$
(0.14
)
$
(0.11
)
$
(0.31
)
Adjusted earnings (loss) per common share
attributable to Cliffs shareholders - diluted
$
0.18
$
(0.11
)
$
(0.05
)
APrimarily includes asset impairments,
asset retirement obligation charges and employee-related costs.
BGoodwill impairment is non-deductible for
income tax purposes.
2 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
March 31,
Three Months Ended
(In millions)
2024
2023
Dec. 31, 2023
Net loss
$
(53
)
$
(42
)
$
(139
)
Less:
Interest expense, net
(64
)
(77
)
(63
)
Income tax benefit (expense)
8
13
(30
)
Depreciation, depletion and
amortization
(230
)
(242
)
(235
)
Total EBITDA
$
233
$
264
$
189
Less:
EBITDA of noncontrolling interests
$
21
$
23
$
23
Weirton indefinite idle
(177
)
—
—
Loss on extinguishment of debt
(21
)
—
—
Goodwill impairment
—
—
(125
)
Non-cash gain on sale of business
—
—
28
Other, net
(4
)
(2
)
(16
)
Total Adjusted EBITDA
$
414
$
243
$
279
EBITDA of noncontrolling interests
includes the following:
Net income attributable to noncontrolling
interests
$
14
$
15
$
16
Depreciation, depletion and
amortization
7
8
7
EBITDA of noncontrolling interests
$
21
$
23
$
23
3 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:
Three Months Ended
March 31,
Three Months Ended
(In millions)
2024
2023
Dec. 31, 2023
Long-term debt
$
3,664
$
4,559
$
3,137
Less: Cash and cash equivalents
30
59
198
Net debt
$
3,634
$
4,500
$
2,939
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240422558584/en/
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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