Cleveland-Cliffs Inc. (NYSE: CLF) today reported
third-quarter results for the period ended September 30, 2024.
Third-Quarter 2024 Highlights
- Revenues of $4.6 billion
- Steel shipments of 3.8 million net tons
- GAAP net loss of $230 million and adjusted net loss1 of $156
million
- Adjusted EBITDA2 of $124 million
- Does not include Stelco's third-quarter adjusted EBITDA3 of
US$64 million and adjusted EBITDA3 margin of 13%
- Liquidity of $3.8 billion as of September 30, 2024
Third-quarter 2024 revenues were $4.6 billion, compared to $5.1
billion in the second quarter of 2024. For the third quarter of
2024, the Company recorded a GAAP net loss of $0.52 per diluted
share to Cliffs shareholders and adjusted net loss1 of $0.33 per
diluted share. Included in the GAAP results were discrete charges
and losses totaling $145 million, primarily related to an
arbitration decision and acquisition-related expenses.
Cliffs’ Chairman, President and CEO Lourenco Goncalves said: “In
Q3, weaker demand and pricing drove tighter margins, and ultimately
led us to temporarily idle our Cleveland #6 blast furnace. We
achieved our lowest unit cost since 2021, exceeding our already
aggressive cost reduction targets, but that was not enough to
offset the negative impact of two of our top four automotive
clients who continue to underperform their own expectations. Due to
our high exposure to the automotive sector, Cliffs was more
affected than our competitors."
Mr. Goncalves continued: “We are thrilled to have closed on the
acquisition of Stelco last week. Stelco’s portfolio of business is
very different from ours, with virtually no exposure to the
automotive sector. Stelco’s low-cost, efficient assets will make us
more resilient in times of underperformance from the automotive
clients. Stelco’s industry-best third-quarter adjusted EBITDA
margin is direct proof of the cost advantages and strong business
model Cliffs will benefit from. Unlike our previous acquisitions,
which were underperforming companies needing significant capital
investment, Stelco’s assets are well capitalized and are a major
contributor to us on day 1."
Mr. Goncalves concluded: "For 2025, we’ve set a much lower
capital budget, even after including the strategic projects that
are expected to boost annual EBITDA by over $600 million once
completed. Additionally, lower coal costs will bring a $70 million
benefit next year compared to 2024. We expect steel demand to
rebound in early 2025, supported by a number of economic and
political factors. With Stelco’s assets and our cost reductions,
we’re well-positioned to capitalize on this upswing and will be
able to reduce acquisition debt quickly with healthy free cash
flow."
Steelmaking Segment Results
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
2024
2023
2024
2023
June 30, 2024
External Sales Volumes - In
Thousands
Steel Products (net tons)
3,840
4,106
11,769
12,393
3,989
Selling Price - Per Net Ton
Average net selling price per net ton of
steel products
$
1,045
$
1,203
$
1,116
$
1,196
$
1,125
Operating Results - In Millions
Revenues
$
4,419
$
5,443
$
14,361
$
16,377
$
4,915
Cost of goods sold*
(4,533
)
(4,970
)
(14,060
)
(15,181
)
(4,770
)
Gross margin
$
(114
)
$
473
$
301
$
1,196
$
145
*Includes $71 million arbitration
decision.
Third-quarter 2024 steel product sales volumes of 3.8 million
net tons consisted of 36% hot-rolled, 28% coated, 17% cold-rolled,
4% plate, 4% stainless and electrical, and 11% other, including
slabs and rail.
Steelmaking revenues of $4.4 billion included $1.3 billion, or
30%, of direct sales to the automotive market; $1.3 billion, or
30%, of sales to the distributors and converters market; $1.2
billion, or 26%, of sales to the infrastructure and manufacturing
market; and $608 million, or 14%, of sales to steel producers.
Stelco Third-Quarter Highlights3
Cliffs' acquisition of Stelco closed on November 1, 2024. Key
highlights of Stelco's third-quarter 2024 results include:
- Steel shipments of 639,000 net tons, including 66%
hot-rolled
- Revenues of US$480 million
- Steel average selling price of US$725 per net ton
- Adjusted EBITDA of US$64 million
- Capital expenditures of US$32 million
Capital Expenditures Outlook
Cliffs lowered its full-year 2024 expected capital expenditures
range by $50 million to $600 to $650 million, from its previous
range of $650 to $700 million.
Additionally, Cliffs expects standalone (excluding Stelco)
full-year 2025 capital expenditures to be approximately $600
million, inclusive of strategic growth projects at Middletown,
Butler and Weirton.
Sustaining capital spend from Stelco is expected to be
approximately US$100 million annually.
Cleveland-Cliffs Inc. will host a conference call on November 5,
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 a leading North America-based steel producer
with focus on value-added sheet products, particularly for the
automotive industry. The Company is vertically integrated from the
mining of iron ore, production of pellets and direct reduced iron,
and processing of ferrous scrap through primary steelmaking and
downstream finishing, stamping, tooling, and tubing. Headquartered
in Cleveland, Ohio, Cleveland-Cliffs employs approximately 30,000
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; 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; potential significant deficiencies or material
weaknesses in our internal control over financial reporting; the
risk that the Stelco acquisition may be less accretive than
expected, or may be dilutive, to Cliffs’ earnings per share, which
may negatively affect the market price of Cliffs’ common shares;
the risk that adverse reactions or changes to business or
regulatory relationships may result from the Stelco acquisition;
the risk that the financing transactions undertaken in connection
with the Stelco acquisition may have a negative impact on the
combined company’s credit profile, financial condition or financial
flexibility; the possibility that the anticipated benefits of the
Stelco acquisition are not realized to the same extent as projected
and that the integration of the acquired business into our existing
business, including uncertainties associated with maintaining
relationships with customers, vendors and employees, is not as
successful as expected; the risk that future synergies from the
Stelco acquisition may not be realized or may take longer than
expected to achieve; the possibility that the business and
management strategies currently in place or implemented in the
future for the maintenance, expansion and growth of the combined
company’s operations may not be as successful as anticipated; the
risk associated with the retention and hiring of key personnel,
including those of Stelco; the risk that the Stelco acquisition
could have adverse effects on the market price of Cliffs' common
shares; and the risk of any unforeseen liabilities and future
capital expenditures related to the Stelco acquisition.
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, our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2024, and other
filings with the U.S. Securities and Exchange Commission.
FINANCIAL TABLES FOLLOW
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED OPERATIONS
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
(In millions, except per share
amounts)
2024
2023
2024
2023
June 30, 2024
Revenues
$
4,569
$
5,605
$
14,860
$
16,884
$
5,092
Operating costs:
Cost of goods sold
(4,673
)
(5,125
)
(14,517
)
(15,661
)
(4,930
)
Selling, general and administrative
expenses
(112
)
(139
)
(347
)
(415
)
(103
)
Acquisition-related costs
(14
)
(5
)
(14
)
(5
)
—
Restructuring and other charges
(2
)
—
(131
)
—
(25
)
Asset impairments
—
—
(79
)
—
(15
)
Miscellaneous – net
(27
)
(11
)
(63
)
(26
)
(13
)
Total operating costs
(4,828
)
(5,280
)
(15,151
)
(16,107
)
(5,086
)
Operating income (loss)
(259
)
325
(291
)
777
6
Other income (expense):
Interest expense, net
(102
)
(70
)
(235
)
(226
)
(69
)
Loss on extinguishment of debt
—
—
(27
)
—
(6
)
Net periodic benefit credits other than
service cost component
62
50
184
150
62
Changes in fair value of foreign currency
contracts, net
(7
)
—
(7
)
—
—
Other non-operating income (expense)
—
(2
)
3
4
1
Total other expense
(47
)
(22
)
(82
)
(72
)
(12
)
Income (loss) from continuing
operations before income taxes
(306
)
303
(373
)
705
(6
)
Income tax benefit (expense)
76
(29
)
99
(118
)
15
Income (loss) from continuing
operations
(230
)
274
(274
)
587
9
Income from discontinued operations, net
of tax
—
1
—
2
—
Net income (loss)
(230
)
275
(274
)
589
9
Income attributable to noncontrolling
interests
(12
)
(11
)
(33
)
(35
)
(7
)
Net income (loss) attributable to
Cliffs shareholders
$
(242
)
$
264
$
(307
)
$
554
$
2
Earnings (loss) per common share
attributable to Cliffs shareholders - basic
Continuing operations
$
(0.52
)
$
0.52
$
(0.64
)
$
1.08
$
0.00
Discontinued operations
0.00
0.00
0.00
0.00
0.00
$
(0.52
)
$
0.52
$
(0.64
)
$
1.08
$
0.00
Earnings (loss) per common share
attributable to Cliffs shareholders - diluted
Continuing operations
$
(0.52
)
$
0.52
$
(0.64
)
$
1.08
$
0.00
Discontinued operations
0.00
0.00
0.00
0.00
0.00
$
(0.52
)
$
0.52
$
(0.64
)
$
1.08
$
0.00
The sum of quarterly EPS may not equal EPS
for the year-to-date period based on changes in share count due to
discrete quarterly calculations.
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL POSITION
(In millions)
September 30,
2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
39
$
198
Accounts receivable, net
1,583
1,840
Inventories
4,236
4,460
Other current assets
169
138
Total current assets
6,027
6,636
Non-current assets:
Property, plant and equipment, net
8,687
8,895
Goodwill
1,005
1,005
Pension and OPEB assets
378
329
Other non-current assets
699
672
TOTAL ASSETS
$
16,796
$
17,537
LIABILITIES
Current liabilities:
Accounts payable
$
1,983
$
2,099
Accrued employment costs
413
511
Accrued expenses
379
380
Other current liabilities
480
518
Total current liabilities
3,255
3,508
Non-current liabilities:
Long-term debt
3,774
3,137
Pension and OPEB liabilities
666
821
Deferred income taxes
567
639
Other non-current liabilities
1,439
1,310
TOTAL LIABILITIES
9,701
9,415
TOTAL EQUITY
7,095
8,122
TOTAL LIABILITIES AND EQUITY
$
16,796
$
17,537
CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
STATEMENTS OF UNAUDITED
CONDENSED CONSOLIDATED CASH FLOWS
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)
2024
2023
2024
2023
OPERATING ACTIVITIES
Net income (loss)
$
(230
)
$
275
$
(274
)
$
589
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Depreciation, depletion and
amortization
235
249
693
738
Restructuring and other charges
2
—
131
—
Asset impairments
—
—
79
—
Pension and OPEB credits
(53
)
(40
)
(157
)
(119
)
Loss on extinguishment of debt
—
—
27
—
Other
19
163
66
253
Changes in operating assets and
liabilities:
Accounts receivable, net
191
169
258
(164
)
Inventories
(37
)
135
190
538
Income taxes
(34
)
(153
)
(46
)
16
Pension and OPEB payments and
contributions
(100
)
(26
)
(162
)
(84
)
Payables, accrued employment and accrued
expenses
(41
)
(17
)
(217
)
(95
)
Other, net
(36
)
12
(11
)
(57
)
Net cash provided (used) by operating
activities
(84
)
767
577
1,615
INVESTING ACTIVITIES
Purchase of property, plant and
equipment
(151
)
(162
)
(490
)
(481
)
Other investing activities
5
2
13
11
Net cash used by investing activities
(146
)
(160
)
(477
)
(470
)
FINANCING ACTIVITIES
Repurchase of common shares
—
(58
)
(733
)
(152
)
Proceeds from issuance of senior notes
596
—
1,421
750
Repayments of senior notes
—
—
(845
)
—
Borrowings (repayments) under credit
facilities, net
(323
)
(508
)
47
(1,539
)
Debt issuance costs
(60
)
—
(73
)
(34
)
Other financing activities
(54
)
(44
)
(76
)
(165
)
Net cash provided (used) by financing
activities
159
(610
)
(259
)
(1,140
)
Net increase (decrease) in cash and cash
equivalents
(71
)
(3
)
(159
)
5
Cash and cash equivalents at beginning of
period
110
34
198
26
Cash and cash equivalents at end of
period
$
39
$
31
$
39
$
31
1 CLEVELAND-CLIFFS INC. AND
SUBSIDIARIES
ADJUSTED NET INCOME AND 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 certain non-recurring and/or non-cash
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
September 30,
Nine Months Ended
September 30,
Three Months Ended
(In millions)
2024
2023
2024
2023
June 30, 2024
Net income (loss) attributable to Cliffs
shareholders
$
(242
)
$
264
$
(307
)
$
554
$
2
Adjustments:
Weirton indefinite idleA
(2
)
—
(219
)
—
(40
)
Loss on extinguishment of debt
—
—
(27
)
—
(6
)
Acquisition-related costs
(14
)
(3
)
(14
)
(5
)
—
Acquisition-related interest expense
(32
)
—
(32
)
—
—
Changes in fair value of foreign currency
contracts, net
(7
)
—
(7
)
—
—
Arbitration decision
(71
)
—
(71
)
—
—
Other, net
(19
)
(8
)
(24
)
(16
)
(1
)
Income tax effect
59
—
106
2
(1
)
Adjusted net income (loss) attributable to
Cliffs shareholders
$
(156
)
$
275
$
(19
)
$
573
$
50
Earnings (loss) per common share
attributable to Cliffs shareholders - diluted
$
(0.52
)
$
0.52
$
(0.64
)
$
1.08
$
0.00
Adjusted earnings (loss) per common share
attributable to Cliffs shareholders - diluted
$
(0.33
)
$
0.54
$
(0.04
)
$
1.12
$
0.11
A Primarily includes asset impairments,
asset retirement obligation charges and employee-related costs.
The sum of quarterly EPS may not equal EPS
for the year-to-date period based on changes in share count due to
discrete quarterly calculations.
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 certain non-recurring and/or
non-cash 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
September 30,
Nine Months Ended
September 30,
Three Months Ended
(In millions)
2024
2023
2024
2023
June 30, 2024
Net income (loss)
$
(230
)
$
275
$
(274
)
$
589
$
9
Less:
Interest expense, net
(102
)
(70
)
(235
)
(226
)
(69
)
Income tax benefit (expense)
76
(29
)
99
(118
)
15
Depreciation, depletion and
amortization
(235
)
(249
)
(693
)
(738
)
(228
)
Total EBITDA
$
31
$
623
$
555
$
1,671
$
291
Less:
EBITDA of noncontrolling interests
$
20
$
20
$
56
$
60
$
15
Weirton indefinite idle
(2
)
—
(219
)
—
(40
)
Loss on extinguishment of debt
—
—
(27
)
—
(6
)
Acquisition-related costs
(14
)
(3
)
(14
)
(5
)
—
Changes in fair value of foreign currency
contracts, net
(7
)
—
(7
)
—
—
Arbitration decision
(71
)
—
(71
)
—
—
Other, net
(19
)
(8
)
(24
)
(16
)
(1
)
Total Adjusted EBITDA
$
124
$
614
$
861
$
1,632
$
323
EBITDA of noncontrolling interests
includes the following:
Net income attributable to noncontrolling
interests
$
12
$
11
$
33
$
35
$
7
Depreciation, depletion and
amortization
8
9
23
25
8
EBITDA of noncontrolling interests
$
20
$
20
$
56
$
60
$
15
3 STELCO FINANCIAL RESULTS
Stelco financial information represents the historical
consolidated financial information prepared by Stelco management in
accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board
which differ in certain respects from U.S. GAAP. This financial
information does not include any adjustments for differences
between IFRS and US GAAP and also does not reflect any purchase
accounting or pro forma adjustments as required by ASC Topic 805,
Business Combinations. Due to the limited time since the closing of
acquisition, the reconciliation of IFRS to US GAAP, valuation
efforts and related acquisition accounting is incomplete at the
time of the filing of Cliffs’ unaudited condensed consolidated
financial statements. As a result, the Company is unable to provide
these adjustments. This Stelco financial information should be read
in conjunction with Stelco Holdings Inc.’s historical audited
consolidated financial statements and notes thereto contained for
the year ended December 31, 2023 and the Stelco historical
unaudited interim condensed consolidated financial statements and
notes thereto for prior interim periods that can be accessed
through the SEDAR+ website.
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version on businesswire.com: https://www.businesswire.com/news/home/20241104825023/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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