Ohio | 1-8944 | 34-1464672 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
200 Public Square, Suite 3300 Cleveland, Ohio | 44114-2315 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (216) 694-5700 |
Not Applicable |
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter). |
Emerging growth company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description | |
Cleveland-Cliffs Inc. published a news release on October 19, 2018 captioned, “Cleveland-Cliffs Inc. Reports Third-Quarter 2018 Results and Initiates Quarterly Cash Dividend” |
CLEVELAND-CLIFFS INC. | |||
Date: | October 19, 2018 | By: | /s/ James D. Graham |
Name: | James D. Graham | ||
Title: | Executive Vice President, Chief Legal Officer & Secretary |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Adjusted EBITDA1 | |||||||||||||||
U.S. Iron Ore | $ | 279.5 | $ | 174.2 | $ | 657.9 | $ | 399.8 | |||||||
Corporate/Other | (29.2 | ) | (23.4 | ) | (79.6 | ) | (73.9 | ) | |||||||
Total Adjusted EBITDA1 | $ | 250.3 | $ | 150.8 | $ | 578.3 | $ | 325.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Volumes - In Thousands of Long Tons | ||||||||||||||||
Sales volume | 6,481 | 5,863 | 14,060 | 13,291 | ||||||||||||
Production volume | 4,719 | 4,265 | 14,731 | 13,233 | ||||||||||||
Sales Margin - In Millions | ||||||||||||||||
Revenues from product sales and services | $ | 741.8 | $ | 596.7 | $ | 1,636.1 | $ | 1,354.2 | ||||||||
Cost of goods sold and operating expenses | 480.2 | 438.9 | 1,028.5 | 1,002.7 | ||||||||||||
Sales margin | $ | 261.6 | $ | 157.8 | $ | 607.6 | $ | 351.5 | ||||||||
Sales Margin - Per Long Ton | ||||||||||||||||
Revenues from product sales and services* | $ | 105.65 | $ | 90.52 | $ | 108.53 | $ | 89.91 | ||||||||
Cash cost of goods sold and operating expense rate2 | 62.54 | 60.79 | 61.81 | 59.73 | ||||||||||||
Depreciation, depletion and amortization | 2.75 | 2.81 | 3.50 | 3.73 | ||||||||||||
Cost of goods sold and operating expenses* | 65.29 | 63.60 | 65.31 | 63.46 | ||||||||||||
Sales margin | $ | 40.36 | $ | 26.92 | $ | 43.22 | $ | 26.45 | ||||||||
*Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin. Revenues and expenses also exclude venture partner cost reimbursements, where applicable. |
2018 Outlook Summary | ||
Per Long Ton Information | U.S. Iron Ore | |
Revenues from product sales and services (A) | $105 - $110 | |
Cost of goods sold and operating expense rate | $69 - $74 | |
Less: | ||
Freight expense rate (B) | $8 | |
Depreciation, depletion & amortization rate | $3 | |
Cash cost of goods sold and operating expense rate2 | $58 - $63 | |
Sales volume (million long tons) | 21.0 | |
Production volume (million long tons) | 20.0 | |
(A) This expectation is based on the assumption that iron ore prices, steel prices, and pellet premiums will average for the remainder of 2018 their respective year-to-date averages. | ||
(B) Freight has an offsetting amount in revenue and has no impact on sales margin. |
• | the Toledo HBI Project spend expectation was reduced by $25 million to $175 million due to further development and refined timing of the project spending plan; |
• | the sustaining capital expectation of $75 million was maintained; and |
• | the Northshore Mine upgrade spend expectation of $50 million was maintained. |
MEDIA CONTACT: | INVESTOR CONTACT: | |
Patricia Persico Director, Corporate Communications (216) 694-5316 | Paul Finan Director, Investor Relations (216) 694-6544 |
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
REVENUES FROM PRODUCT SALES AND SERVICES | |||||||||||||||
Product | $ | 684.7 | $ | 530.7 | $ | 1,525.9 | $ | 1,195.0 | |||||||
Freight and venture partners' cost reimbursements | 57.1 | 66.0 | 110.2 | 159.2 | |||||||||||
741.8 | 596.7 | 1,636.1 | 1,354.2 | ||||||||||||
COST OF GOODS SOLD AND OPERATING EXPENSES | (480.2 | ) | (438.9 | ) | (1,028.5 | ) | (1,002.7 | ) | |||||||
SALES MARGIN | 261.6 | 157.8 | 607.6 | 351.5 | |||||||||||
OTHER OPERATING INCOME (EXPENSE) | |||||||||||||||
Selling, general and administrative expenses | (30.1 | ) | (23.8 | ) | (81.4 | ) | (75.5 | ) | |||||||
Miscellaneous – net | (6.0 | ) | (5.3 | ) | (16.2 | ) | 1.3 | ||||||||
(36.1 | ) | (29.1 | ) | (97.6 | ) | (74.2 | ) | ||||||||
OPERATING INCOME | 225.5 | 128.7 | 510.0 | 277.3 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest expense, net | (29.5 | ) | (27.6 | ) | (93.1 | ) | (99.1 | ) | |||||||
Gain (loss) on extinguishment of debt | — | (88.6 | ) | 0.2 | (165.4 | ) | |||||||||
Other non-operating income | 4.3 | 2.6 | 13.1 | 7.6 | |||||||||||
(25.2 | ) | (113.6 | ) | (79.8 | ) | (256.9 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 200.3 | 15.1 | 430.2 | 20.4 | |||||||||||
INCOME TAX BENEFIT (EXPENSE) | (0.5 | ) | 7.2 | (14.4 | ) | 7.2 | |||||||||
INCOME FROM CONTINUING OPERATIONS | 199.8 | 22.3 | 415.8 | 27.6 | |||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | 238.0 | 30.6 | 102.8 | 25.6 | |||||||||||
NET INCOME | 437.8 | 52.9 | 518.6 | 53.2 | |||||||||||
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | — | 0.5 | — | 3.9 | |||||||||||
NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS | $ | 437.8 | $ | 53.4 | $ | 518.6 | $ | 57.1 | |||||||
INCOME PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS – BASIC | |||||||||||||||
Continuing operations | $ | 0.67 | $ | 0.08 | $ | 1.40 | $ | 0.11 | |||||||
Discontinued operations | 0.80 | 0.10 | 0.35 | 0.09 | |||||||||||
$ | 1.47 | $ | 0.18 | $ | 1.75 | $ | 0.20 | ||||||||
INCOME PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS – DILUTED | |||||||||||||||
Continuing operations | $ | 0.64 | $ | 0.08 | $ | 1.37 | $ | 0.11 | |||||||
Discontinued operations | 0.77 | 0.10 | 0.34 | 0.08 | |||||||||||
$ | 1.41 | $ | 0.18 | $ | 1.71 | $ | 0.19 | ||||||||
AVERAGE NUMBER OF SHARES (IN THOUSANDS) | |||||||||||||||
Basic | 297,878 | 296,079 | 297,587 | 285,771 | |||||||||||
Diluted | 310,203 | 301,075 | 303,518 | 290,512 |
(In Millions) | ||||||||
September 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 897.1 | $ | 978.3 | ||||
Accounts receivable, net | 141.4 | 106.7 | ||||||
Inventories | 187.9 | 138.4 | ||||||
Supplies and other inventories | 88.2 | 88.8 | ||||||
Derivative assets | 190.8 | 37.9 | ||||||
Income tax receivable | 110.3 | 13.3 | ||||||
Current assets of discontinued operations | 16.1 | 118.5 | ||||||
Loans to and accounts receivable from the Canadian Entities | — | 51.6 | ||||||
Other current assets | 18.8 | 11.1 | ||||||
TOTAL CURRENT ASSETS | 1,650.6 | 1,544.6 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 1,144.8 | 1,033.8 | ||||||
OTHER ASSETS | ||||||||
Deposits for property, plant and equipment | 94.6 | 17.8 | ||||||
Income tax receivable | 113.6 | 235.3 | ||||||
Non-current assets of discontinued operations | — | 20.3 | ||||||
Other non-current assets | 121.4 | 101.6 | ||||||
TOTAL OTHER ASSETS | 329.6 | 375.0 | ||||||
TOTAL ASSETS | $ | 3,125.0 | $ | 2,953.4 | ||||
LIABILITIES | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 140.8 | $ | 99.5 | ||||
Accrued expenses | 95.1 | 79.1 | ||||||
Accrued interest | 26.2 | 31.4 | ||||||
Contingent claims | — | 55.6 | ||||||
Partnership distribution payable | 43.1 | 44.2 | ||||||
Current liabilities of discontinued operations | 14.2 | 75.0 | ||||||
Other current liabilities | 61.3 | 67.4 | ||||||
TOTAL CURRENT LIABILITIES | 380.7 | 452.2 | ||||||
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES | $ | 225.0 | $ | 257.7 | ||||
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS | 174.4 | 167.7 | ||||||
LONG-TERM DEBT | 2,300.0 | 2,304.2 | ||||||
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS | 9.3 | 52.2 | ||||||
OTHER LIABILITIES | 121.8 | 163.5 | ||||||
TOTAL LIABILITIES | 3,211.2 | 3,397.5 | ||||||
EQUITY | ||||||||
CLIFFS SHAREHOLDERS' DEFICIT | (86.2 | ) | (444.3 | ) | ||||
NONCONTROLLING INTEREST | — | 0.2 | ||||||
TOTAL DEFICIT | (86.2 | ) | (444.1 | ) | ||||
TOTAL LIABILITIES AND DEFICIT | $ | 3,125.0 | $ | 2,953.4 |
(In Millions) | ||||||||
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 518.6 | $ | 53.2 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 68.6 | 66.3 | ||||||
Loss (gain) on extinguishment of debt | (0.2 | ) | 165.4 | |||||
Loss on deconsolidation | — | 16.3 | ||||||
Gain on derivatives | (136.4 | ) | (47.5 | ) | ||||
Gain on foreign currency translation | (228.1 | ) | — | |||||
Other | 5.7 | 19.0 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables and other assets | 96.2 | 68.9 | ||||||
Inventories | (57.1 | ) | (26.1 | ) | ||||
Payables, accrued expenses and other liabilities | (78.6 | ) | (108.8 | ) | ||||
Net cash provided by operating activities | 188.7 | 206.7 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchase of property, plant and equipment | (111.4 | ) | (62.7 | ) | ||||
Deposits for property, plant and equipment | (83.3 | ) | (16.2 | ) | ||||
Proceeds on sales of assets | 18.5 | 2.2 | ||||||
Other investing activities | 2.5 | (7.7 | ) | |||||
Net cash used by investing activities | (173.7 | ) | (84.4 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Net proceeds from issuance of common shares | — | 661.3 | ||||||
Proceeds from issuance of debt | — | 1,057.8 | ||||||
Debt issuance costs | (1.5 | ) | (12.0 | ) | ||||
Repurchase of debt | (16.3 | ) | (1,720.7 | ) | ||||
Acquisition of noncontrolling interest | — | (105.0 | ) | |||||
Distributions of partnership equity | (44.2 | ) | (53.0 | ) | ||||
Other financing activities | (45.7 | ) | (17.0 | ) | ||||
Net cash used by financing activities | (107.7 | ) | (188.6 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (2.3 | ) | 3.7 | |||||
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS | (95.0 | ) | (62.6 | ) | ||||
LESS: INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CLASSIFIED WITHIN CURRENT ASSETS OF DISCONTINUED OPERATIONS | (13.8 | ) | 23.1 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (81.2 | ) | (85.7 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 978.3 | 312.8 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 897.1 | $ | 227.1 |
(In Millions) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net Income | $ | 437.8 | $ | 52.9 | $ | 518.6 | $ | 53.2 | |||||||
Less: | |||||||||||||||
Interest expense, net | (29.7 | ) | (28.9 | ) | (95.5 | ) | (103.1 | ) | |||||||
Income tax benefit (expense) | (0.5 | ) | 7.6 | (14.4 | ) | 6.8 | |||||||||
Depreciation, depletion and amortization | (19.2 | ) | (21.5 | ) | (68.6 | ) | (66.3 | ) | |||||||
EBITDA | $ | 487.2 | $ | 95.7 | $ | 697.1 | $ | 215.8 | |||||||
Less: | |||||||||||||||
Impact of discontinued operations | $ | 238.2 | $ | 34.8 | $ | 120.4 | $ | 41.3 | |||||||
Foreign exchange remeasurement | (0.2 | ) | (1.3 | ) | (0.7 | ) | 14.0 | ||||||||
Gain (loss) on extinguishment of debt | — | (88.6 | ) | 0.2 | (165.4 | ) | |||||||||
Impairment of long-lived assets | (1.1 | ) | — | (1.1 | ) | — | |||||||||
Adjusted EBITDA | $ | 250.3 | $ | 150.8 | $ | 578.3 | $ | 325.9 |
(In Millions) | ||||||||||||||||
U.S. Iron Ore | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Cost of goods sold and operating expenses | $ | 480.2 | $ | 438.9 | $ | 1,028.5 | $ | 1,002.7 | ||||||||
Less: | ||||||||||||||||
Freight and reimbursements | 57.1 | 66.0 | 110.2 | 159.2 | ||||||||||||
Depreciation, depletion & amortization | 17.8 | 16.5 | 49.2 | 49.6 | ||||||||||||
Cash cost of goods sold and operating expenses | $ | 405.3 | $ | 356.4 | $ | 869.1 | $ | 793.9 |
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