Cleveland-Cliffs
Inc. (NYSE: CLF) today reported third-quarter results for the period ended
September 30, 2019.
The
Company reported consolidated revenues of $556 million, compared to the
prior year's third-quarter consolidated revenues of $742 million. Cost of
goods sold was $401 million compared to $480 million reported in the third
quarter of 2018.
The
Company recorded net income of $91 million, or $0.33 per diluted share.
This compares to net income of $438 million, or $1.41 per diluted share
recorded in the prior-year quarter, which included a one-time gain of $228
million related to historical changes in foreign currency translation. For
the nine months ended September 30, 2019, net income was $230 million,
compared to $519 million during the same period in 2018.
For
the third quarter of 2019, the Company reported adjusted EBITDA1 of $144
million.
“This
past quarter was a story of continued execution at both the operational
level and at our HBI site under construction in Toledo. While irrational
behavior by one major supplier in the pellet marketplace has dampened the
Atlantic Basin pellet premium, our business remains on solid footing with
a very strong balance sheet supporting our world-class operations in
Minnesota and in Michigan." Mr. Goncalves concluded, "We believe
the currently weak steel prices in the United States are temporary, and
the cyclicality associated with our business should be largely mitigated
as we start-up HBI next year. With that, Cliffs is well-positioned to
become an even stronger free-cash-flow generating enterprise, with limited
cash needs and the ability to return even more capital to our
shareholders."
Mining
and Pelletizing pellet sales volume in the third quarter of 2019 was 5.8
million long tons, an 11 percent decrease from the prior-year quarter on
reduced customer nominations, partially offset by intercompany sales to
the Toledo HBI plant.
Realized
revenues were $96 per long ton in the third quarter of 2019. The quarter's
results were negatively impacted by an unfavorable true-up of previously
sold volumes due to lower pellet premiums and HRC prices.
Mining
and Pelletizing Outlook (Long Tons)
Based
on the assumption that relevant pricing indices will average for the
remainder of 2019 their respective year-to-date averages, Cliffs would
expect to realize Mining and Pelletizing revenue rates in the range of
$101 to $106 per long ton.
Assuming
spot prices as of October 22, 2019, including an iron ore price of $86 per
metric ton, a hot-rolled coil steel price of $479 per short ton, and a
pellet premium of $36 per metric ton, will average these levels for the
remainder of 2019, Cliffs would expect to realize Mining and Pelletizing
revenue rates in the range of $97 to $102 per long ton for the full-year
2019.
The
2019 sales volume expectation was revised to 19.5 million long tons,
driven by seaborne export economics and timing. Cliffs' full-year 2019
Mining and Pelletizing cash cost of goods sold rate2 expectation is
maintained at $62 to $67 per long ton.
Other
Outlook
Cliffs'
full-year 2019 SG&A expense expectation of $120 million is being
maintained. Cliffs also notes that of the $120 million expectation,
approximately $20 million is considered non-cash. The Company's full-year
2019 net interest expense expectation is maintained at $100 million.
Full-year 2019 depreciation, depletion and amortization is expected to be
approximately $85 million.
The
Company has lowered its effective tax rate expectation for 2019 to
approximately 10 percent, from its previous expectation of 12-14 percent.
Due to the Company's NOL position, its cash tax payments are expected to
be zero.
Cliffs'
2019 total capital expenditures expectation was reduced to approximately
$625-$675 million, from its previous expectation of $650-$700 million.
Related Link: Official
document
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