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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cleveland Cliffs Inc | NYSE:CLF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.39 | -2.22% | 17.21 | 17.95 | 17.13 | 17.79 | 8,772,190 | 22:42:39 |
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
Ohio
|
|
34-1464672
|
|
||
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
||
|
|
|
|
|
||
|
200 Public Square,
|
Cleveland,
|
Ohio
|
|
44114-2315
|
|
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common shares, par value $0.125 per share
|
|
CLF
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
Abbreviation or acronym
|
|
Term
|
A&R 2015 Equity Plan
|
|
Cliffs Natural Resources Inc. Amended and Restated 2015 Equity and Incentive Compensation Plan
|
ABL Facility
|
|
Amended and Restated Syndicated Facility Agreement by and among Bank of America, N.A., as Administrative Agent and Australian Security Trustee, the Lenders that are parties hereto, as the Lenders, Cleveland-Cliffs Inc., as Parent and a Borrower, and the Subsidiaries of Parent party hereto, as Borrowers dated as of March 30, 2015, and Amended and Restated as of February 28, 2018
|
Adjusted EBITDA
|
|
EBITDA excluding certain items such as extinguishment/restructuring of debt, impacts of discontinued operations, foreign currency exchange remeasurement, impairment of other long-lived assets, severance and intersegment corporate allocations of SG&A costs
|
ArcelorMittal
|
|
ArcelorMittal (as the parent company of ArcelorMittal Mines Canada, ArcelorMittal USA and ArcelorMittal Dofasco, as well as many other subsidiaries)
|
AMT
|
|
Alternative Minimum Tax
|
ASC
|
|
Accounting Standards Codification
|
ASU
|
|
Accounting Standards Update
|
CECL
|
|
Current Expected Credit Losses model
|
Compensation Committee
|
|
Compensation and Organization Committee of the Board of Directors
|
Dodd-Frank Act
|
|
Dodd-Frank Wall Street Reform and Consumer Protection Act
|
DR-grade
|
|
Direct Reduction-grade
|
EBITDA
|
|
Earnings before interest, taxes, depreciation and amortization
|
Empire
|
|
Empire Iron Mining Partnership
|
Exchange Act
|
|
Securities Exchange Act of 1934, as amended
|
FASB
|
|
Financial Accounting Standards Board
|
Fe
|
|
Iron
|
FMSH Act
|
|
U.S. Federal Mine Safety and Health Act 1977, as amended
|
GAAP
|
|
Accounting principles generally accepted in the United States
|
HBI
|
|
Hot briquetted iron
|
Hibbing
|
|
Hibbing Taconite Company, an unincorporated joint venture
|
Hot-rolled coil steel price
|
|
Estimated average annual daily market price for hot-rolled coil steel
|
Long ton
|
|
2,240 pounds
|
Metric ton
|
|
2,205 pounds
|
MMBtu
|
|
Million British Thermal Units
|
MSHA
|
|
U.S. Mine Safety and Health Administration
|
Net ton
|
|
2,000 pounds
|
Northshore
|
|
Northshore Mining Company
|
OPEB
|
|
Other postretirement employment benefits
|
Platts 62% Price
|
|
Platts IODEX 62% Fe Fines CFR North China
|
PPI
|
|
Producer Price Indices
|
SEC
|
|
U.S. Securities and Exchange Commission
|
SG&A
|
|
Selling, general and administrative
|
Tilden
|
|
Tilden Mining Company L.C.
|
Topic 606
|
|
ASC Topic 606, Revenue from Contracts with Customers
|
Topic 815
|
|
ASC Topic 815, Derivatives and Hedging
|
TSR
|
|
Total shareholder return
|
United Taconite
|
|
United Taconite LLC
|
U.S.
|
|
United States of America
|
U.S. Steel
|
|
U.S Steel Corporation and all subsidiaries
|
Item 1.
|
Financial Statements
|
|
(In Millions)
|
||||||
|
June 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
377.2
|
|
|
$
|
823.2
|
|
Accounts receivable, net
|
193.1
|
|
|
226.7
|
|
||
Inventories
|
219.0
|
|
|
87.9
|
|
||
Supplies and other inventories
|
110.8
|
|
|
93.2
|
|
||
Derivative assets
|
118.3
|
|
|
91.5
|
|
||
Income tax receivable, current
|
58.7
|
|
|
117.3
|
|
||
Other current assets
|
42.3
|
|
|
39.8
|
|
||
TOTAL CURRENT ASSETS
|
1,119.4
|
|
|
1,479.6
|
|
||
PROPERTY, PLANT AND EQUIPMENT, NET
|
1,597.3
|
|
|
1,286.0
|
|
||
OTHER ASSETS
|
|
|
|
||||
Deposits for property, plant and equipment
|
52.2
|
|
|
83.0
|
|
||
Income tax receivable, non-current
|
62.7
|
|
|
121.3
|
|
||
Deferred income taxes
|
443.3
|
|
|
464.8
|
|
||
Other non-current assets
|
118.3
|
|
|
94.9
|
|
||
TOTAL OTHER ASSETS
|
676.5
|
|
|
764.0
|
|
||
TOTAL ASSETS
|
$
|
3,393.2
|
|
|
$
|
3,529.6
|
|
|
(In Millions, Except Per Share Amounts)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
REVENUES FROM PRODUCT SALES AND SERVICES
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
697.4
|
|
|
$
|
672.0
|
|
|
$
|
842.8
|
|
|
$
|
841.2
|
|
Freight
|
45.8
|
|
|
42.3
|
|
|
57.4
|
|
|
53.1
|
|
||||
|
743.2
|
|
|
714.3
|
|
|
900.2
|
|
|
894.3
|
|
||||
COST OF GOODS SOLD
|
(480.2
|
)
|
|
(429.8
|
)
|
|
(606.3
|
)
|
|
(548.3
|
)
|
||||
SALES MARGIN
|
263.0
|
|
|
284.5
|
|
|
293.9
|
|
|
346.0
|
|
||||
OTHER OPERATING EXPENSE
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
(30.6
|
)
|
|
(26.2
|
)
|
|
(58.7
|
)
|
|
(51.3
|
)
|
||||
Miscellaneous – net
|
(5.6
|
)
|
|
(4.1
|
)
|
|
(9.2
|
)
|
|
(10.2
|
)
|
||||
|
(36.2
|
)
|
|
(30.3
|
)
|
|
(67.9
|
)
|
|
(61.5
|
)
|
||||
OPERATING INCOME
|
226.8
|
|
|
254.2
|
|
|
226.0
|
|
|
284.5
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(26.1
|
)
|
|
(31.2
|
)
|
|
(51.2
|
)
|
|
(63.6
|
)
|
||||
Gain (loss) on extinguishment of debt
|
(17.9
|
)
|
|
0.2
|
|
|
(18.2
|
)
|
|
0.2
|
|
||||
Other non-operating income
|
0.6
|
|
|
4.4
|
|
|
1.0
|
|
|
8.8
|
|
||||
|
(43.4
|
)
|
|
(26.6
|
)
|
|
(68.4
|
)
|
|
(54.6
|
)
|
||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
183.4
|
|
|
227.6
|
|
|
157.6
|
|
|
229.9
|
|
||||
INCOME TAX BENEFIT (EXPENSE)
|
(22.0
|
)
|
|
1.8
|
|
|
(18.3
|
)
|
|
(13.9
|
)
|
||||
INCOME FROM CONTINUING OPERATIONS
|
161.4
|
|
|
229.4
|
|
|
139.3
|
|
|
216.0
|
|
||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
|
(0.6
|
)
|
|
(64.3
|
)
|
|
(0.6
|
)
|
|
(135.2
|
)
|
||||
NET INCOME
|
$
|
160.8
|
|
|
$
|
165.1
|
|
|
$
|
138.7
|
|
|
$
|
80.8
|
|
|
|
|
|
|
|
|
|
||||||||
EARNINGS (LOSS) PER COMMON SHARE – BASIC
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.59
|
|
|
$
|
0.77
|
|
|
$
|
0.49
|
|
|
$
|
0.73
|
|
Discontinued operations
|
—
|
|
|
(0.22
|
)
|
|
—
|
|
|
(0.46
|
)
|
||||
|
$
|
0.59
|
|
|
$
|
0.55
|
|
|
$
|
0.49
|
|
|
$
|
0.27
|
|
EARNINGS (LOSS) PER COMMON SHARE – DILUTED
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.57
|
|
|
$
|
0.76
|
|
|
$
|
0.47
|
|
|
$
|
0.72
|
|
Discontinued operations
|
—
|
|
|
(0.21
|
)
|
|
—
|
|
|
(0.45
|
)
|
||||
|
$
|
0.57
|
|
|
$
|
0.55
|
|
|
$
|
0.47
|
|
|
$
|
0.27
|
|
AVERAGE NUMBER OF SHARES (IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Basic
|
275,769
|
|
|
297,618
|
|
|
282,647
|
|
|
297,442
|
|
||||
Diluted
|
285,479
|
|
|
301,275
|
|
|
293,580
|
|
|
301,143
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
NET INCOME
|
$
|
160.8
|
|
|
$
|
165.1
|
|
|
$
|
138.7
|
|
|
$
|
80.8
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
||||||||
Changes in pension and other post-retirement benefits, net of tax
|
5.8
|
|
|
6.7
|
|
|
11.5
|
|
|
13.4
|
|
||||
Changes in foreign currency translation
|
—
|
|
|
2.2
|
|
|
—
|
|
|
2.9
|
|
||||
Changes in derivative financial instruments, net of tax
|
(2.1
|
)
|
|
0.2
|
|
|
0.6
|
|
|
0.5
|
|
||||
OTHER COMPREHENSIVE INCOME
|
3.7
|
|
|
9.1
|
|
|
12.1
|
|
|
16.8
|
|
||||
TOTAL COMPREHENSIVE INCOME
|
$
|
164.5
|
|
|
$
|
174.2
|
|
|
$
|
150.8
|
|
|
$
|
97.6
|
|
|
(In Millions)
|
||||||
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
138.7
|
|
|
$
|
80.8
|
|
Adjustments to reconcile net income to net cash provided (used) by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
40.9
|
|
|
49.4
|
|
||
Loss (gain) on extinguishment of debt
|
18.2
|
|
|
(0.2
|
)
|
||
Gain on derivatives
|
(27.2
|
)
|
|
(123.5
|
)
|
||
Other
|
46.6
|
|
|
12.6
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables and other assets
|
127.8
|
|
|
61.8
|
|
||
Inventories
|
(131.1
|
)
|
|
(125.6
|
)
|
||
Payables, accrued expenses and other liabilities
|
(62.8
|
)
|
|
(4.6
|
)
|
||
Net cash provided (used) by operating activities
|
151.1
|
|
|
(49.3
|
)
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchase of property, plant and equipment
|
(294.4
|
)
|
|
(42.1
|
)
|
||
Deposits for property, plant and equipment
|
(6.5
|
)
|
|
(72.3
|
)
|
||
Proceeds on sales of assets
|
—
|
|
|
14.6
|
|
||
Other investing activities
|
8.5
|
|
|
—
|
|
||
Net cash used by investing activities
|
(292.4
|
)
|
|
(99.8
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Repurchase of common shares
|
(252.9
|
)
|
|
—
|
|
||
Dividends paid
|
(28.9
|
)
|
|
—
|
|
||
Proceeds from issuance of debt
|
720.9
|
|
|
—
|
|
||
Debt issuance costs
|
(6.8
|
)
|
|
(1.5
|
)
|
||
Repurchase of debt
|
(729.3
|
)
|
|
(15.3
|
)
|
||
Other financing activities
|
(10.9
|
)
|
|
(8.9
|
)
|
||
Net cash used by financing activities
|
(307.9
|
)
|
|
(25.7
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
(1.0
|
)
|
||
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN OTHER CURRENT ASSETS RELATED TO DISCONTINUED OPERATIONS
|
(449.2
|
)
|
|
(175.8
|
)
|
||
LESS: DECREASE IN CASH AND CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS, CLASSIFIED WITHIN OTHER CURRENT ASSETS
|
(3.2
|
)
|
|
—
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(446.0
|
)
|
|
(175.8
|
)
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
823.2
|
|
|
978.3
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
377.2
|
|
|
$
|
802.5
|
|
|
(In Millions)
|
|||||||||||||||||||||||||
|
Number
of Common Shares Outstanding |
|
Par Value of Common
Shares Issued |
|
Capital in
Excess of Par Value of Shares |
|
Retained
Deficit |
|
Common
Shares in Treasury |
|
Accumulated
Other Comprehensive Loss |
|
Total
|
|||||||||||||
December 31, 2018
|
292.6
|
|
|
$
|
37.7
|
|
|
$
|
3,916.7
|
|
|
$
|
(3,060.2
|
)
|
|
$
|
(186.1
|
)
|
|
$
|
(283.9
|
)
|
|
$
|
424.2
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.1
|
)
|
|
—
|
|
|
—
|
|
|
(22.1
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.4
|
|
|
8.4
|
|
||||||
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(13.7
|
)
|
||||||||||||
Stock and other incentive plans
|
1.7
|
|
|
—
|
|
|
(56.5
|
)
|
|
—
|
|
|
46.5
|
|
|
—
|
|
|
(10.0
|
)
|
||||||
Common share repurchases
|
(11.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124.3
|
)
|
|
—
|
|
|
(124.3
|
)
|
||||||
Common share dividends ($0.05 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.5
|
)
|
|
—
|
|
|
—
|
|
|
(14.5
|
)
|
||||||
March 31, 2019
|
282.8
|
|
|
$
|
37.7
|
|
|
$
|
3,860.2
|
|
|
$
|
(3,096.8
|
)
|
|
$
|
(263.9
|
)
|
|
$
|
(275.5
|
)
|
|
$
|
261.7
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
160.8
|
|
|
—
|
|
|
—
|
|
|
160.8
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
3.7
|
|
||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
164.5
|
|
||||||||||||
Stock and other incentive plans
|
0.1
|
|
|
—
|
|
|
3.4
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
4.6
|
|
||||||
Common share repurchases
|
(12.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(128.6
|
)
|
|
—
|
|
|
(128.6
|
)
|
||||||
Common share dividends ($0.06 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(16.6
|
)
|
|
—
|
|
|
—
|
|
|
(16.6
|
)
|
||||||
June 30, 2019
|
270.0
|
|
|
$
|
37.7
|
|
|
$
|
3,863.6
|
|
|
$
|
(2,952.6
|
)
|
|
$
|
(391.3
|
)
|
|
$
|
(271.8
|
)
|
|
$
|
285.6
|
|
|
(In Millions)
|
|||||||||||||||||||||||||||||
|
Number
of Common Shares Outstanding |
|
Par Value of Common
Shares Issued |
|
Capital in
Excess of Par Value of Shares |
|
Retained
Deficit |
|
Common
Shares in Treasury |
|
Accumulated
Other Comprehensive Loss |
|
Non-Controlling Interest
|
|
Total
|
|||||||||||||||
December 31, 2017
|
297.4
|
|
|
$
|
37.7
|
|
|
$
|
3,933.9
|
|
|
$
|
(4,207.3
|
)
|
|
$
|
(169.6
|
)
|
|
$
|
(39.0
|
)
|
|
$
|
0.2
|
|
|
$
|
(444.1
|
)
|
Adoption of accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
34.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.0
|
|
|||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(84.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(84.3
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.7
|
|
|
—
|
|
|
7.7
|
|
|||||||
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(76.6
|
)
|
||||||||||||||
Stock and other incentive plans
|
0.3
|
|
|
—
|
|
|
(15.8
|
)
|
|
—
|
|
|
17.7
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|||||||
March 31, 2018
|
297.7
|
|
|
$
|
37.7
|
|
|
$
|
3,918.1
|
|
|
$
|
(4,257.6
|
)
|
|
$
|
(151.9
|
)
|
|
$
|
(31.3
|
)
|
|
$
|
0.2
|
|
|
$
|
(484.8
|
)
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
165.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
165.1
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.1
|
|
|
—
|
|
|
9.1
|
|
|||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174.2
|
|
||||||||||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||||||
Stock and other incentive plans
|
0.1
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|||||||
June 30, 2018
|
297.8
|
|
|
$
|
37.7
|
|
|
$
|
3,918.3
|
|
|
$
|
(4,092.5
|
)
|
|
$
|
(147.6
|
)
|
|
$
|
(22.2
|
)
|
|
$
|
—
|
|
|
$
|
(306.3
|
)
|
Name
|
|
Location
|
|
Business Segment
|
|
Status of Operations
|
Northshore
|
|
Minnesota
|
|
Mining and Pelletizing
|
|
Active
|
United Taconite
|
|
Minnesota
|
|
Mining and Pelletizing
|
|
Active
|
Tilden
|
|
Michigan
|
|
Mining and Pelletizing
|
|
Active
|
Empire
|
|
Michigan
|
|
Mining and Pelletizing
|
|
Indefinitely Idled
|
Toledo HBI
|
|
Ohio
|
|
Metallics
|
|
Construction Stage
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
160.8
|
|
|
$
|
165.1
|
|
|
$
|
138.7
|
|
|
$
|
80.8
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(26.3
|
)
|
|
(32.3
|
)
|
|
(51.4
|
)
|
|
(65.8
|
)
|
||||
Income tax benefit (expense)
|
(22.0
|
)
|
|
1.8
|
|
|
(18.3
|
)
|
|
(13.9
|
)
|
||||
Depreciation, depletion and amortization
|
(21.0
|
)
|
|
(25.5
|
)
|
|
(40.9
|
)
|
|
(49.4
|
)
|
||||
EBITDA
|
$
|
230.1
|
|
|
$
|
221.1
|
|
|
$
|
249.3
|
|
|
$
|
209.9
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange remeasurement
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
Impact of discontinued operations
|
(0.4
|
)
|
|
(54.7
|
)
|
|
(0.4
|
)
|
|
(117.8
|
)
|
||||
Gain (loss) on extinguishment of debt
|
(17.9
|
)
|
|
0.2
|
|
|
(18.2
|
)
|
|
0.2
|
|
||||
Severance costs
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
248.5
|
|
|
$
|
275.7
|
|
|
$
|
269.6
|
|
|
$
|
328.0
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA:
|
|
|
|
|
|
|
|
||||||||
Mining and Pelletizing
|
$
|
274.6
|
|
|
$
|
296.0
|
|
|
$
|
317.4
|
|
|
$
|
368.5
|
|
Metallics
|
(1.1
|
)
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(1.5
|
)
|
||||
Corporate and Other (including discontinued operations)
|
(43.4
|
)
|
|
(73.7
|
)
|
|
(66.2
|
)
|
|
(157.1
|
)
|
||||
Total EBITDA
|
$
|
230.1
|
|
|
$
|
221.1
|
|
|
$
|
249.3
|
|
|
$
|
209.9
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Mining and Pelletizing
|
$
|
280.5
|
|
|
$
|
301.3
|
|
|
$
|
328.0
|
|
|
$
|
378.4
|
|
Metallics
|
(1.1
|
)
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(1.5
|
)
|
||||
Corporate
|
(30.9
|
)
|
|
(24.4
|
)
|
|
(56.5
|
)
|
|
(48.9
|
)
|
||||
Total Adjusted EBITDA
|
$
|
248.5
|
|
|
$
|
275.7
|
|
|
$
|
269.6
|
|
|
$
|
328.0
|
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Segment
|
|
Finished Goods
|
|
Work-in-Process
|
|
Total Inventory
|
|
Finished Goods
|
|
Work-in-Process
|
|
Total Inventory
|
||||||||||||
Mining and Pelletizing
|
|
$
|
186.2
|
|
|
$
|
30.4
|
|
|
$
|
216.6
|
|
|
$
|
77.8
|
|
|
$
|
10.1
|
|
|
$
|
87.9
|
|
Metallics
|
|
—
|
|
|
4.0
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Intersegment elimination
|
|
—
|
|
|
(1.6
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$
|
186.2
|
|
|
$
|
32.8
|
|
|
$
|
219.0
|
|
|
$
|
77.8
|
|
|
$
|
10.1
|
|
|
$
|
87.9
|
|
|
(In Millions)
|
||||||
|
June 30,
2019 |
|
December 31,
2018 |
||||
Land rights and mineral rights
|
$
|
549.6
|
|
|
$
|
549.6
|
|
Office and information technology
|
70.6
|
|
|
70.0
|
|
||
Buildings
|
95.4
|
|
|
87.2
|
|
||
Mining equipment
|
575.8
|
|
|
548.5
|
|
||
Processing equipment
|
740.3
|
|
|
645.8
|
|
||
Electric power facilities
|
58.7
|
|
|
58.7
|
|
||
Land improvements
|
23.8
|
|
|
23.8
|
|
||
Asset retirement obligation
|
14.9
|
|
|
14.8
|
|
||
Other
|
27.6
|
|
|
25.2
|
|
||
Construction-in-progress
|
501.3
|
|
|
284.8
|
|
||
|
2,658.0
|
|
|
2,308.4
|
|
||
Allowance for depreciation and depletion
|
(1,060.7
|
)
|
|
(1,022.4
|
)
|
||
|
$
|
1,597.3
|
|
|
$
|
1,286.0
|
|
(In Millions)
|
||||||||||||||||||
June 30, 2019
|
||||||||||||||||||
Debt Instrument
|
|
Annual Effective
Interest Rate
|
|
Total Principal Amount
|
|
Debt Issuance Costs
|
|
Unamortized Discounts
|
|
Total Debt
|
||||||||
Secured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 4.875% 2024 Senior Notes
|
|
5.00%
|
|
$
|
400.0
|
|
|
$
|
(5.2
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
392.8
|
|
Unsecured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
$316.25 Million 1.50% 2025 Convertible Senior Notes
|
|
6.26%
|
|
316.3
|
|
|
(5.1
|
)
|
|
(70.3
|
)
|
|
240.9
|
|
||||
$1.075 Billion 5.75% 2025 Senior Notes
|
|
6.01%
|
|
473.3
|
|
|
(4.0
|
)
|
|
(6.0
|
)
|
|
463.3
|
|
||||
$750 Million 5.875% 2027 Senior Notes
|
|
6.49%
|
|
750.0
|
|
|
(6.7
|
)
|
|
(28.7
|
)
|
|
714.6
|
|
||||
$800 Million 6.25% 2040 Senior Notes
|
|
6.34%
|
|
298.4
|
|
|
(2.2
|
)
|
|
(3.3
|
)
|
|
292.9
|
|
||||
ABL Facility
|
|
N/A
|
|
450.0
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
2,104.5
|
|
(In Millions)
|
||||||||||||||||||
December 31, 2018
|
||||||||||||||||||
Debt Instrument
|
|
Annual Effective
Interest Rate
|
|
Total Principal Amount
|
|
Debt Issuance Costs
|
|
Unamortized Discounts
|
|
Total Debt
|
||||||||
Secured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
$400 Million 4.875% 2024 Senior Notes
|
|
5.00%
|
|
$
|
400.0
|
|
|
$
|
(5.7
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
392.1
|
|
Unsecured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
$700 Million 4.875% 2021 Senior Notes
|
|
4.89%
|
|
124.0
|
|
|
(0.2
|
)
|
|
—
|
|
|
123.8
|
|
||||
$316.25 Million 1.50% 2025 Convertible Senior Notes
|
|
6.26%
|
|
316.3
|
|
|
(5.5
|
)
|
|
(75.6
|
)
|
|
235.2
|
|
||||
$1.075 Billion 5.75% 2025 Senior Notes
|
|
6.01%
|
|
1,073.3
|
|
|
(9.9
|
)
|
|
(14.6
|
)
|
|
1,048.8
|
|
||||
$800 Million 6.25% 2040 Senior Notes
|
|
6.34%
|
|
298.4
|
|
|
(2.3
|
)
|
|
(3.3
|
)
|
|
292.8
|
|
||||
ABL Facility
|
|
N/A
|
|
450.0
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
||||
Fair Value Adjustment to Interest Rate Hedge
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
$
|
2,092.9
|
|
|
|
(In Millions)
|
||||||
|
|
Three and Six Months Ended
June 30, 2018
|
||||||
Debt Instrument
|
|
Debt Extinguished
|
|
Gain on Extinguishment
|
||||
$400 Million 5.90% 2020 Senior Notes
|
|
$
|
0.5
|
|
|
$
|
—
|
|
$500 Million 4.80% 2020 Senior Notes
|
|
0.1
|
|
|
—
|
|
||
$700 Million 4.875% 2021 Senior Notes
|
|
13.2
|
|
|
0.1
|
|
||
$1.075 Billion 5.75% 2025 Senior Notes
|
|
1.7
|
|
|
0.1
|
|
||
|
|
$
|
15.5
|
|
|
$
|
0.2
|
|
|
|
(In Millions)
|
||
|
|
Maturities of Debt
|
||
2019
|
|
$
|
—
|
|
2020
|
|
—
|
|
|
2021
|
|
—
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
2024
|
|
400.0
|
|
|
2025 and thereafter
|
|
1,838.0
|
|
|
Total maturities of debt
|
|
$
|
2,238.0
|
|
|
(In Millions)
|
||||||
|
June 30, 2019
|
|
December 31, 2018
|
||||
Available borrowing base on ABL Facility
1
|
$
|
450.0
|
|
|
$
|
323.7
|
|
Letter of credit obligations
2
|
(61.1
|
)
|
|
(55.0
|
)
|
||
Borrowing capacity available
3
|
$
|
388.9
|
|
|
$
|
268.7
|
|
|
|
|
|
||||
1
The ABL Facility has a maximum borrowing base of $450 million. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.
|
|||||||
2
We issued standby letters of credit with certain financial institutions in order to support business obligations including, but not limited to, workers compensation, environmental obligations and certain Metallics' contracts.
|
|||||||
3
As of June 30, 2019 and December 31, 2018, we had no loans drawn under the ABL Facility.
|
|
(In Millions)
|
||||||||||||||
|
June 30, 2019
|
||||||||||||||
|
Quoted Prices in Active
Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
—
|
|
|
$
|
302.3
|
|
|
$
|
—
|
|
|
$
|
302.3
|
|
Derivative assets
|
—
|
|
|
0.2
|
|
|
118.1
|
|
|
118.3
|
|
||||
Total
|
$
|
—
|
|
|
$
|
302.5
|
|
|
$
|
118.1
|
|
|
$
|
420.6
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
Total
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
|
(In Millions)
|
||||||||||||||
|
December 31, 2018
|
||||||||||||||
|
Quoted Prices in Active
Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
0.8
|
|
|
$
|
542.6
|
|
|
$
|
—
|
|
|
$
|
543.4
|
|
Derivative assets
|
—
|
|
|
0.1
|
|
|
91.4
|
|
|
91.5
|
|
||||
Total
|
$
|
0.8
|
|
|
$
|
542.7
|
|
|
$
|
91.4
|
|
|
$
|
634.9
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
3.7
|
|
|
$
|
—
|
|
|
$
|
3.7
|
|
Total
|
$
|
—
|
|
|
$
|
3.7
|
|
|
$
|
—
|
|
|
$
|
3.7
|
|
|
(In Millions)
|
||||||||||||||
|
Level 3 Liabilities
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Beginning balance
|
$
|
(9.8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.7
|
)
|
Total gains (losses) included in earnings
|
4.5
|
|
|
(3.7
|
)
|
|
(5.3
|
)
|
|
(4.3
|
)
|
||||
Settlements
|
5.3
|
|
|
0.7
|
|
|
5.3
|
|
|
3.0
|
|
||||
Ending balance - June 30
|
$
|
—
|
|
|
$
|
(3.0
|
)
|
|
$
|
—
|
|
|
$
|
(3.0
|
)
|
Total losses for the period included in earnings attributable to the change in unrealized losses on liabilities still held at the reporting date
|
$
|
—
|
|
|
$
|
(3.0
|
)
|
|
$
|
—
|
|
|
$
|
(3.0
|
)
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
4.2
|
|
|
$
|
4.6
|
|
|
$
|
8.3
|
|
|
$
|
9.3
|
|
Interest cost
|
8.6
|
|
|
7.5
|
|
|
17.3
|
|
|
15.1
|
|
||||
Expected return on plan assets
|
(13.7
|
)
|
|
(15.0
|
)
|
|
(27.3
|
)
|
|
(30.0
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Prior service costs
|
0.3
|
|
|
0.6
|
|
|
0.6
|
|
|
1.1
|
|
||||
Net actuarial loss
|
5.9
|
|
|
5.3
|
|
|
11.8
|
|
|
10.6
|
|
||||
Net periodic benefit cost
|
$
|
5.3
|
|
|
$
|
3.0
|
|
|
$
|
10.7
|
|
|
$
|
6.1
|
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
0.4
|
|
|
$
|
0.5
|
|
|
$
|
0.8
|
|
|
$
|
1.0
|
|
Interest cost
|
2.4
|
|
|
2.0
|
|
|
4.7
|
|
|
4.1
|
|
||||
Expected return on plan assets
|
(4.2
|
)
|
|
(4.6
|
)
|
|
(8.4
|
)
|
|
(9.2
|
)
|
||||
Amortization:
|
|
|
|
|
|
|
|
||||||||
Prior service credits
|
(0.5
|
)
|
|
(0.7
|
)
|
|
(1.0
|
)
|
|
(1.5
|
)
|
||||
Net actuarial loss
|
1.2
|
|
|
1.3
|
|
|
2.5
|
|
|
2.5
|
|
||||
Net periodic benefit credit
|
$
|
(0.7
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(3.1
|
)
|
Grant Date
|
|
Grant Date Market Price
|
|
Average Expected Term (Years)
|
|
Expected Volatility
|
|
Risk-Free Interest Rate
|
|
Dividend Yield
|
|
Fair Value
|
|
Fair Value (Percent of Grant Date Market Price)
|
||||
February 19, 2019
|
|
$
|
11.24
|
|
|
2.87
|
|
67.5%
|
|
2.55%
|
|
—%
|
|
$
|
18.31
|
|
|
162.90%
|
|
(In Millions)
|
||||||
|
June 30,
2019 |
|
December 31,
2018 |
||||
Environmental
|
$
|
2.4
|
|
|
$
|
2.5
|
|
Mine closure
1
|
177.1
|
|
|
172.4
|
|
||
Total environmental and mine closure obligations
|
179.5
|
|
|
174.9
|
|
||
Less current portion
|
2.8
|
|
|
2.9
|
|
||
Long-term environmental and mine closure obligations
|
$
|
176.7
|
|
|
$
|
172.0
|
|
|
|
|
|
||||
1
Includes our active operating mines, our indefinitely idled Empire mine and a closed mine formerly operating as LTV Steel Mining Company.
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||
Derivative Instrument
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||||||
Derivatives designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
|
|
Derivative assets
|
|
$
|
0.2
|
|
|
Derivative assets
|
|
$
|
0.1
|
|
|
Other current liabilities
|
|
$
|
2.6
|
|
|
Other current liabilities
|
|
$
|
3.7
|
|
Derivatives not designated as hedging instruments under ASC 815:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer supply agreement
|
|
Derivative assets
|
|
$
|
102.4
|
|
|
Derivative assets
|
|
$
|
89.3
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
Provisional pricing arrangements
|
|
Derivative assets
|
|
15.7
|
|
|
Derivative assets
|
|
2.1
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||
Total derivatives not designated as hedging instruments under ASC 815
|
|
|
|
$
|
118.1
|
|
|
|
|
$
|
91.4
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
Total derivatives
|
|
|
|
$
|
118.3
|
|
|
|
|
$
|
91.5
|
|
|
|
|
$
|
2.6
|
|
|
|
|
$
|
3.7
|
|
|
(In Millions)
|
||||||||||
|
June 30, 2019
|
|
December 31, 2018
|
||||||||
|
Notional Amount
|
|
Unit of Measure
|
|
Varying Maturity Dates
|
|
Notional Amount
|
|
Unit of Measure
|
|
Varying Maturity Dates
|
Natural gas
|
9.0
|
|
MMBtu
|
|
July 2019 - November 2020
|
|
1.8
|
|
MMBtu
|
|
January 2019 - August 2019
|
Diesel
|
5.0
|
|
Gallons
|
|
July 2019 - December 2019
|
|
11.0
|
|
Gallons
|
|
January 2019 - December 2019
|
|
|
(In Millions)
|
||||||
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
Net cash used by operating activities
|
|
|
|
|
||||
Asia Pacific Iron Ore
|
|
$
|
(1.5
|
)
|
|
$
|
(31.7
|
)
|
Canadian Operations
|
|
—
|
|
|
(14.6
|
)
|
||
|
|
$
|
(1.5
|
)
|
|
$
|
(46.3
|
)
|
|
|
|
|
|
||||
Net cash provided by investing activities
|
|
|
|
|
||||
Asia Pacific Iron Ore
|
|
$
|
0.1
|
|
|
$
|
14.1
|
|
|
|
$
|
0.1
|
|
|
$
|
14.1
|
|
|
|
(In Millions)
|
||||||||||||||
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
Loss from Discontinued Operations
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues from product sales and services
|
|
$
|
—
|
|
|
$
|
70.1
|
|
|
$
|
—
|
|
|
$
|
129.1
|
|
Cost of goods sold
|
|
—
|
|
|
(106.1
|
)
|
|
—
|
|
|
(230.2
|
)
|
||||
Sales margin
|
|
—
|
|
|
(36.0
|
)
|
|
—
|
|
|
(101.1
|
)
|
||||
Other operating expense
|
|
(0.4
|
)
|
|
(16.2
|
)
|
|
(0.8
|
)
|
|
(18.8
|
)
|
||||
Other expense
|
|
(0.1
|
)
|
|
(1.1
|
)
|
|
(0.2
|
)
|
|
(2.2
|
)
|
||||
Impairment of long-lived assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.6
|
)
|
||||
Loss from discontinued operations, net of tax
|
|
$
|
(0.5
|
)
|
|
$
|
(53.3
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(124.7
|
)
|
|
(In Millions)
|
||||||||||
|
Postretirement Benefit Liability, net of tax
|
|
Derivative Financial Instruments, net of tax
|
|
Accumulated Other Comprehensive Loss
|
||||||
December 31, 2018
|
$
|
(281.1
|
)
|
|
$
|
(2.8
|
)
|
|
$
|
(283.9
|
)
|
Other comprehensive income before reclassifications
|
0.2
|
|
|
2.5
|
|
|
2.7
|
|
|||
Net loss reclassified from accumulated other comprehensive loss
|
5.5
|
|
|
0.2
|
|
|
5.7
|
|
|||
March 31, 2019
|
$
|
(275.4
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(275.5
|
)
|
Other comprehensive income (loss) before reclassifications
|
0.3
|
|
|
(2.3
|
)
|
|
(2.0
|
)
|
|||
Net loss reclassified from accumulated other comprehensive loss
|
5.5
|
|
|
0.2
|
|
|
5.7
|
|
|||
June 30, 2019
|
$
|
(269.6
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
(271.8
|
)
|
|
(In Millions)
|
||||||||||||||
|
Postretirement Benefit Liability, net of tax
|
|
Foreign Currency Translation
|
|
Derivative Financial Instruments, net of tax
|
|
Accumulated Other Comprehensive Loss
|
||||||||
December 31, 2017
|
$
|
(263.9
|
)
|
|
$
|
225.4
|
|
|
$
|
(0.5
|
)
|
|
$
|
(39.0
|
)
|
Other comprehensive income before reclassifications
|
0.5
|
|
|
0.7
|
|
|
0.4
|
|
|
1.6
|
|
||||
Net loss (gain) reclassified from accumulated other comprehensive loss
|
6.2
|
|
|
—
|
|
|
(0.1
|
)
|
|
6.1
|
|
||||
March 31, 2018
|
$
|
(257.2
|
)
|
|
$
|
226.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
(31.3
|
)
|
Other comprehensive income before reclassifications
|
0.2
|
|
|
2.2
|
|
|
0.2
|
|
|
2.6
|
|
||||
Net loss reclassified from accumulated other comprehensive loss
|
6.5
|
|
|
—
|
|
|
—
|
|
|
6.5
|
|
||||
June 30, 2018
|
$
|
(250.5
|
)
|
|
$
|
228.3
|
|
|
$
|
—
|
|
|
$
|
(22.2
|
)
|
|
(In Millions)
|
||||||
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Capital additions
|
$
|
320.9
|
|
|
$
|
149.3
|
|
Less:
|
|
|
|
||||
Non-cash accruals
|
3.6
|
|
|
34.9
|
|
||
Right-of-use assets – finance leases
|
24.8
|
|
|
—
|
|
||
Grants
|
(8.4
|
)
|
|
—
|
|
||
Cash paid for capital expenditures including deposits
|
$
|
300.9
|
|
|
$
|
114.4
|
|
|
|
|
|
Mine
|
|
Cleveland-Cliffs Inc.
|
|
ArcelorMittal
|
|
U.S. Steel
|
|||
Hibbing
|
|
23.0
|
%
|
|
62.3
|
%
|
|
14.7
|
%
|
|
(In Millions, Except Per Share Amounts)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income from continuing operations
|
$
|
161.4
|
|
|
$
|
229.4
|
|
|
$
|
139.3
|
|
|
$
|
216.0
|
|
Loss from discontinued operations, net of tax
|
(0.6
|
)
|
|
(64.3
|
)
|
|
(0.6
|
)
|
|
(135.2
|
)
|
||||
Net income
|
$
|
160.8
|
|
|
$
|
165.1
|
|
|
$
|
138.7
|
|
|
$
|
80.8
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
275.8
|
|
|
297.6
|
|
|
282.6
|
|
|
297.4
|
|
||||
$316.25 million 1.50% 2025 Convertible Senior Notes
|
6.7
|
|
|
—
|
|
|
6.9
|
|
|
—
|
|
||||
Employee stock plans
|
3.0
|
|
|
3.7
|
|
|
4.1
|
|
|
3.7
|
|
||||
Diluted
|
285.5
|
|
|
301.3
|
|
|
293.6
|
|
|
301.1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share - basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.59
|
|
|
$
|
0.77
|
|
|
$
|
0.49
|
|
|
$
|
0.73
|
|
Discontinued operations
|
—
|
|
|
(0.22
|
)
|
|
—
|
|
|
(0.46
|
)
|
||||
|
$
|
0.59
|
|
|
$
|
0.55
|
|
|
$
|
0.49
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share - diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.57
|
|
|
$
|
0.76
|
|
|
$
|
0.47
|
|
|
$
|
0.72
|
|
Discontinued operations
|
—
|
|
|
(0.21
|
)
|
|
—
|
|
|
(0.45
|
)
|
||||
|
$
|
0.57
|
|
|
$
|
0.55
|
|
|
$
|
0.47
|
|
|
$
|
0.27
|
|
Unaudited Condensed Consolidating Statement of Financial Position
|
|||||||||||||||||||
As of June 30, 2019
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
374.2
|
|
|
$
|
0.4
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
377.2
|
|
Accounts receivable, net
|
8.1
|
|
|
188.8
|
|
|
0.3
|
|
|
(4.1
|
)
|
|
193.1
|
|
|||||
Inventories
|
—
|
|
|
219.0
|
|
|
—
|
|
|
—
|
|
|
219.0
|
|
|||||
Supplies and other inventories
|
—
|
|
|
110.8
|
|
|
—
|
|
|
—
|
|
|
110.8
|
|
|||||
Derivative assets
|
0.2
|
|
|
118.1
|
|
|
—
|
|
|
—
|
|
|
118.3
|
|
|||||
Income tax receivable, current
|
58.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58.7
|
|
|||||
Other current assets
|
8.5
|
|
|
24.1
|
|
|
9.7
|
|
|
—
|
|
|
42.3
|
|
|||||
TOTAL CURRENT ASSETS
|
449.7
|
|
|
661.2
|
|
|
12.6
|
|
|
(4.1
|
)
|
|
1,119.4
|
|
|||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
11.6
|
|
|
1,534.9
|
|
|
50.8
|
|
|
—
|
|
|
1,597.3
|
|
|||||
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits for property, plant and equipment
|
—
|
|
|
37.4
|
|
|
14.8
|
|
|
—
|
|
|
52.2
|
|
|||||
Income tax receivable, non-current
|
58.6
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
62.7
|
|
|||||
Deferred income taxes
|
442.1
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
443.3
|
|
|||||
Investment in subsidiaries
|
1,701.2
|
|
|
35.2
|
|
|
—
|
|
|
(1,736.4
|
)
|
|
—
|
|
|||||
Long-term intercompany notes
|
—
|
|
|
—
|
|
|
121.3
|
|
|
(121.3
|
)
|
|
—
|
|
|||||
Other non-current assets
|
16.1
|
|
|
100.8
|
|
|
1.4
|
|
|
—
|
|
|
118.3
|
|
|||||
TOTAL OTHER ASSETS
|
2,218.0
|
|
|
177.5
|
|
|
138.7
|
|
|
(1,857.7
|
)
|
|
676.5
|
|
|||||
TOTAL ASSETS
|
$
|
2,679.3
|
|
|
$
|
2,373.6
|
|
|
$
|
202.1
|
|
|
$
|
(1,861.8
|
)
|
|
$
|
3,393.2
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
7.8
|
|
|
$
|
180.2
|
|
|
$
|
4.2
|
|
|
$
|
(4.1
|
)
|
|
$
|
188.1
|
|
Accrued employment costs
|
16.1
|
|
|
42.2
|
|
|
0.1
|
|
|
—
|
|
|
58.4
|
|
|||||
Accrued interest
|
31.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31.3
|
|
|||||
Partnership distribution payable
|
—
|
|
|
44.1
|
|
|
—
|
|
|
—
|
|
|
44.1
|
|
|||||
Other current liabilities
|
26.2
|
|
|
82.1
|
|
|
7.2
|
|
|
—
|
|
|
115.5
|
|
|||||
TOTAL CURRENT LIABILITIES
|
81.4
|
|
|
348.6
|
|
|
11.5
|
|
|
(4.1
|
)
|
|
437.4
|
|
|||||
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES
|
64.0
|
|
|
414.8
|
|
|
(239.5
|
)
|
|
—
|
|
|
239.3
|
|
|||||
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
|
—
|
|
|
157.1
|
|
|
19.6
|
|
|
—
|
|
|
176.7
|
|
|||||
LONG-TERM DEBT
|
2,104.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,104.5
|
|
|||||
LONG-TERM INTERCOMPANY NOTES
|
121.3
|
|
|
—
|
|
|
—
|
|
|
(121.3
|
)
|
|
—
|
|
|||||
OTHER LIABILITIES
|
22.5
|
|
|
120.1
|
|
|
7.1
|
|
|
—
|
|
|
149.7
|
|
|||||
TOTAL LIABILITIES
|
2,393.7
|
|
|
1,040.6
|
|
|
(201.3
|
)
|
|
(125.4
|
)
|
|
3,107.6
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
TOTAL EQUITY
|
285.6
|
|
|
1,333.0
|
|
|
403.4
|
|
|
(1,736.4
|
)
|
|
285.6
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
2,679.3
|
|
|
$
|
2,373.6
|
|
|
$
|
202.1
|
|
|
$
|
(1,861.8
|
)
|
|
$
|
3,393.2
|
|
Unaudited Condensed Consolidating Statement of Financial Position
|
|||||||||||||||||||
As of December 31, 2018
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
819.8
|
|
|
$
|
0.7
|
|
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
823.2
|
|
Accounts receivable, net
|
9.2
|
|
|
221.3
|
|
|
0.3
|
|
|
(4.1
|
)
|
|
226.7
|
|
|||||
Inventories
|
—
|
|
|
87.9
|
|
|
—
|
|
|
—
|
|
|
87.9
|
|
|||||
Supplies and other inventories
|
—
|
|
|
93.2
|
|
|
—
|
|
|
—
|
|
|
93.2
|
|
|||||
Derivative assets
|
0.1
|
|
|
91.4
|
|
|
—
|
|
|
—
|
|
|
91.5
|
|
|||||
Income tax receivable, current
|
117.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
117.3
|
|
|||||
Other current assets
|
10.0
|
|
|
16.9
|
|
|
12.9
|
|
|
—
|
|
|
39.8
|
|
|||||
TOTAL CURRENT ASSETS
|
956.4
|
|
|
511.4
|
|
|
15.9
|
|
|
(4.1
|
)
|
|
1,479.6
|
|
|||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
13.3
|
|
|
1,221.9
|
|
|
50.8
|
|
|
—
|
|
|
1,286.0
|
|
|||||
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits for property, plant and equipment
|
—
|
|
|
68.4
|
|
|
14.6
|
|
|
—
|
|
|
83.0
|
|
|||||
Income tax receivable, non-current
|
117.2
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
121.3
|
|
|||||
Deferred income taxes
|
463.6
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
464.8
|
|
|||||
Investment in subsidiaries
|
1,262.3
|
|
|
50.8
|
|
|
—
|
|
|
(1,313.1
|
)
|
|
—
|
|
|||||
Long-term intercompany notes
|
—
|
|
|
—
|
|
|
121.3
|
|
|
(121.3
|
)
|
|
—
|
|
|||||
Other non-current assets
|
8.0
|
|
|
85.4
|
|
|
1.5
|
|
|
—
|
|
|
94.9
|
|
|||||
TOTAL OTHER ASSETS
|
1,851.1
|
|
|
208.7
|
|
|
138.6
|
|
|
(1,434.4
|
)
|
|
764.0
|
|
|||||
TOTAL ASSETS
|
$
|
2,820.8
|
|
|
$
|
1,942.0
|
|
|
$
|
205.3
|
|
|
$
|
(1,438.5
|
)
|
|
$
|
3,529.6
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
5.3
|
|
|
$
|
181.4
|
|
|
$
|
4.2
|
|
|
$
|
(4.1
|
)
|
|
$
|
186.8
|
|
Accrued employment costs
|
28.5
|
|
|
45.4
|
|
|
0.1
|
|
|
—
|
|
|
74.0
|
|
|||||
Accrued interest
|
38.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38.4
|
|
|||||
Partnership distribution payable
|
—
|
|
|
43.5
|
|
|
—
|
|
|
—
|
|
|
43.5
|
|
|||||
Other current liabilities
|
30.6
|
|
|
86.7
|
|
|
8.2
|
|
|
—
|
|
|
125.5
|
|
|||||
TOTAL CURRENT LIABILITIES
|
102.8
|
|
|
357.0
|
|
|
12.5
|
|
|
(4.1
|
)
|
|
468.2
|
|
|||||
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES
|
64.3
|
|
|
414.4
|
|
|
(230.0
|
)
|
|
—
|
|
|
248.7
|
|
|||||
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS
|
—
|
|
|
152.1
|
|
|
19.9
|
|
|
—
|
|
|
172.0
|
|
|||||
LONG-TERM DEBT
|
2,092.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,092.9
|
|
|||||
LONG-TERM INTERCOMPANY NOTES
|
121.3
|
|
|
—
|
|
|
—
|
|
|
(121.3
|
)
|
|
—
|
|
|||||
OTHER LIABILITIES
|
15.3
|
|
|
99.5
|
|
|
8.8
|
|
|
—
|
|
|
123.6
|
|
|||||
TOTAL LIABILITIES
|
2,396.6
|
|
|
1,023.0
|
|
|
(188.8
|
)
|
|
(125.4
|
)
|
|
3,105.4
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
TOTAL EQUITY
|
424.2
|
|
|
919.0
|
|
|
394.1
|
|
|
(1,313.1
|
)
|
|
424.2
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
2,820.8
|
|
|
$
|
1,942.0
|
|
|
$
|
205.3
|
|
|
$
|
(1,438.5
|
)
|
|
$
|
3,529.6
|
|
Unaudited Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the Six Months Ended June 30, 2019
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided (used) by operating activities
|
$
|
20.1
|
|
|
$
|
134.0
|
|
|
$
|
(3.0
|
)
|
|
$
|
—
|
|
|
$
|
151.1
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property, plant and equipment
|
(1.2
|
)
|
|
(293.2
|
)
|
|
—
|
|
|
—
|
|
|
(294.4
|
)
|
|||||
Deposits for property, plant and equipment
|
—
|
|
|
(6.3
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(6.5
|
)
|
|||||
Intercompany investing
|
(153.3
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
154.5
|
|
|
—
|
|
|||||
Other investing activities
|
—
|
|
|
8.4
|
|
|
0.1
|
|
|
—
|
|
|
8.5
|
|
|||||
Net cash used by investing activities
|
(154.5
|
)
|
|
(292.3
|
)
|
|
(0.1
|
)
|
|
154.5
|
|
|
(292.4
|
)
|
|||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Repurchase of common shares
|
(252.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(252.9
|
)
|
|||||
Dividends paid
|
(28.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28.9
|
)
|
|||||
Proceeds from issuance of debt
|
720.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
720.9
|
|
|||||
Debt issuance costs
|
(6.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|||||
Repurchase of debt
|
(729.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(729.3
|
)
|
|||||
Intercompany financing
|
—
|
|
|
152.9
|
|
|
1.6
|
|
|
(154.5
|
)
|
|
—
|
|
|||||
Other financing activities
|
(14.2
|
)
|
|
5.1
|
|
|
(1.8
|
)
|
|
—
|
|
|
(10.9
|
)
|
|||||
Net cash provided (used) by financing activities
|
(311.2
|
)
|
|
158.0
|
|
|
(0.2
|
)
|
|
(154.5
|
)
|
|
(307.9
|
)
|
|||||
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN OTHER CURRENT ASSETS RELATED TO DISCONTINUED OPERATIONS
|
(445.6
|
)
|
|
(0.3
|
)
|
|
(3.3
|
)
|
|
—
|
|
|
(449.2
|
)
|
|||||
LESS: DECREASE IN CASH AND CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS, CLASSIFIED WITHIN OTHER CURRENT ASSETS
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
|
(3.2
|
)
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(445.6
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(446.0
|
)
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
819.8
|
|
|
0.7
|
|
|
2.7
|
|
|
—
|
|
|
823.2
|
|
|||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
374.2
|
|
|
$
|
0.4
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
377.2
|
|
Unaudited Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the Six Months Ended June 30, 2018
|
|||||||||||||||||||
(In Millions)
|
|||||||||||||||||||
|
Cleveland-Cliffs Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided (used) by operating activities
|
$
|
(82.1
|
)
|
|
$
|
83.5
|
|
|
$
|
(50.7
|
)
|
|
$
|
—
|
|
|
$
|
(49.3
|
)
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property, plant and equipment
|
(0.3
|
)
|
|
(41.8
|
)
|
|
—
|
|
|
—
|
|
|
(42.1
|
)
|
|||||
Deposits for property, plant and equipment
|
—
|
|
|
(67.6
|
)
|
|
(4.7
|
)
|
|
—
|
|
|
(72.3
|
)
|
|||||
Intercompany investing
|
(35.2
|
)
|
|
(5.5
|
)
|
|
14.6
|
|
|
26.1
|
|
|
—
|
|
|||||
Proceeds on sales of assets
|
—
|
|
|
0.4
|
|
|
14.2
|
|
|
—
|
|
|
14.6
|
|
|||||
Net cash provided (used) by investing activities
|
(35.5
|
)
|
|
(114.5
|
)
|
|
24.1
|
|
|
26.1
|
|
|
(99.8
|
)
|
|||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issuance costs
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||||
Repurchase of debt
|
(15.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.3
|
)
|
|||||
Intercompany financing
|
(14.6
|
)
|
|
31.5
|
|
|
9.2
|
|
|
(26.1
|
)
|
|
—
|
|
|||||
Other financing activities
|
(1.5
|
)
|
|
(1.0
|
)
|
|
(6.4
|
)
|
|
—
|
|
|
(8.9
|
)
|
|||||
Net cash provided (used) by financing activities
|
(32.9
|
)
|
|
30.5
|
|
|
2.8
|
|
|
(26.1
|
)
|
|
(25.7
|
)
|
|||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|||||
DECREASE IN CASH AND CASH EQUIVALENTS, INCLUDING CASH CLASSIFIED WITHIN OTHER CURRENT ASSETS RELATED TO DISCONTINUED OPERATIONS
|
(150.5
|
)
|
|
(0.5
|
)
|
|
(24.8
|
)
|
|
—
|
|
|
(175.8
|
)
|
|||||
LESS: DECREASE IN CASH AND CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS, CLASSIFIED WITHIN OTHER CURRENT ASSETS
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(150.5
|
)
|
|
(0.5
|
)
|
|
(24.8
|
)
|
|
—
|
|
|
(175.8
|
)
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
948.9
|
|
|
2.1
|
|
|
27.3
|
|
|
—
|
|
|
978.3
|
|
|||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
798.4
|
|
|
$
|
1.6
|
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
802.5
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
|
|
Changes due to:
|
|
|
||||||||||||||||||
|
|
Three Months Ended
June 30, |
|
Revenue
and cost rate
|
|
Sales volume
|
|
Freight and reimburse-ment
|
|
Total change
|
||||||||||||||
|
|
2019
|
|
2018
|
|
|
|
|
||||||||||||||||
Revenues from product sales and services
|
|
$
|
747.2
|
|
|
$
|
714.3
|
|
|
$
|
(0.2
|
)
|
|
$
|
29.6
|
|
|
$
|
3.5
|
|
|
$
|
32.9
|
|
Cost of goods sold
|
|
(482.6
|
)
|
|
(429.8
|
)
|
|
(32.0
|
)
|
|
(17.3
|
)
|
|
(3.5
|
)
|
|
(52.8
|
)
|
||||||
Sales margin
|
|
$
|
264.6
|
|
|
$
|
284.5
|
|
|
$
|
(32.2
|
)
|
|
$
|
12.3
|
|
|
$
|
—
|
|
|
$
|
(19.9
|
)
|
|
|
Three Months Ended
June 30, |
|
|
|
|
|||||||||
Per Ton Information
|
|
2019
|
|
2018
|
|
Difference
|
|
Percent change
|
|||||||
Realized product revenue rate
1
|
|
$
|
112.64
|
|
|
$
|
112.60
|
|
|
$
|
0.04
|
|
|
—
|
%
|
Cash cost of goods sold rate
1,2
|
|
67.00
|
|
|
62.32
|
|
|
4.68
|
|
|
7.5
|
%
|
|||
Depreciation, depletion & amortization
|
|
3.15
|
|
|
2.61
|
|
|
0.54
|
|
|
20.7
|
%
|
|||
Total cost of goods sold
|
|
70.15
|
|
|
64.93
|
|
|
5.22
|
|
|
8.0
|
%
|
|||
Sales margin
|
|
$
|
42.49
|
|
|
$
|
47.67
|
|
|
$
|
(5.18
|
)
|
|
(10.9
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Sales tons
3
(In thousands)
|
|
6,227
|
|
|
5,968
|
|
|
|
|
|
|||||
Production tons
3
(In thousands):
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
6,666
|
|
|
6,970
|
|
|
|
|
|
|||||
Cliffs’ share of total
|
|
5,177
|
|
|
5,512
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
1
Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin.
|
|||||||||||||||
2
Cash cost of goods sold rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
|||||||||||||||
3
Tons are long tons.
|
•
|
Higher full year estimated Platts 62% Price as of
June 30, 2019
, compared to the prior year period's full-year estimated Platts 62% Price, which positively affected the realized revenue rate by $17 per long ton or $105 million; and
|
•
|
Higher full-year estimated pellet premiums which positively affected the realized revenue rate by $5 per long ton or $31 million.
|
•
|
These increases were offset partially by a decrease in the full year hot-rolled coil steel price, which negatively affected the realized revenue rate by $21 per long ton or $133 million during the second quarter of 2019.
|
•
|
Unfavorable change in the full-year standard cost driven by increased royalties and labor costs of $9 million, or $1 per long ton, increased commodity supply and transportation rates of $8 million, or $1 per long ton, and increased maintenance and stripping costs of $5 million, or $1 per long ton;
|
•
|
An unfavorable impact of $7 million, or $1 per long ton, to the full-year standard cost as a result of an expected LIFO layer liquidation in the prior year which was not recurring; and
|
•
|
An increase in sales volume of
0.3 million
long tons, which resulted in increased costs of
$17 million
period-over-period.
|
|
|
(In Millions)
|
||||||||||||||||||||||
|
|
|
|
Changes due to:
|
|
|
||||||||||||||||||
|
|
Six Months Ended
June 30, |
|
Revenue
and cost rate
|
|
Sales volume
|
|
Freight
|
|
Total change
|
||||||||||||||
|
|
2019
|
|
2018
|
|
|
|
|
||||||||||||||||
Revenues from product sales and services
|
|
$
|
904.2
|
|
|
$
|
894.3
|
|
|
$
|
(16.9
|
)
|
|
$
|
22.5
|
|
|
$
|
4.3
|
|
|
$
|
9.9
|
|
Cost of goods sold
|
|
(608.7
|
)
|
|
(548.3
|
)
|
|
(43.0
|
)
|
|
(13.1
|
)
|
|
(4.3
|
)
|
|
(60.4
|
)
|
||||||
Sales margin
|
|
$
|
295.5
|
|
|
$
|
346.0
|
|
|
$
|
(59.9
|
)
|
|
$
|
9.4
|
|
|
$
|
—
|
|
|
$
|
(50.5
|
)
|
|
|
Six Months Ended
June 30, |
|
|
|
|
|||||||||
Per Ton Information
|
|
2019
|
|
2018
|
|
Difference
|
|
Percent change
|
|||||||
Realized product revenue rate
1
|
|
$
|
108.89
|
|
|
$
|
110.99
|
|
|
$
|
(2.10
|
)
|
|
(1.9
|
)%
|
Cash cost of goods sold rate
1,2
|
|
65.99
|
|
|
61.20
|
|
|
4.79
|
|
|
7.8
|
%
|
|||
Depreciation, depletion & amortization
|
|
4.90
|
|
|
4.14
|
|
|
0.76
|
|
|
18.4
|
%
|
|||
Total cost of goods sold
|
|
70.89
|
|
|
65.34
|
|
|
5.55
|
|
|
8.5
|
%
|
|||
Sales margin
|
|
$
|
38.00
|
|
|
$
|
45.65
|
|
|
$
|
(7.65
|
)
|
|
(16.8
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Sales tons
3
(In thousands)
|
|
7,777
|
|
|
7,579
|
|
|
|
|
|
|||||
Production tons
3
(In thousands):
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
12,345
|
|
|
12,860
|
|
|
|
|
|
|||||
Cliffs’ share of total
|
|
9,578
|
|
|
10,012
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
1
Excludes revenues and expenses related to domestic freight, which are offsetting and have no impact on sales margin.
|
|||||||||||||||
2
Cash cost of goods sold rate is a non-GAAP financial measure. Refer to "Non-GAAP Reconciliation" for reconciliation in dollars back to our consolidated financial statements.
|
|||||||||||||||
3
Tons are long tons.
|
•
|
Lower full-year hot-rolled coil steel price, which negatively affected the realized revenue rate for current-year sales by $20 per long ton or $158 million.
|
•
|
This decrease was offset partially by higher full-year estimated Platts 62% Price as of
June 30, 2019
, compared to the prior-year period, which positively affected the realized revenue rate by $15 per long ton or $114 million; and
|
•
|
Higher full-year estimated pellet premiums, which positively affected the realized revenue rate by $4 per long ton or $30 million.
|
•
|
Unfavorable change in the full-year standard cost driven by increased royalties and labor costs, due to increased revenue, of $11 million, or $1 per long ton, increased commodity supply and transportation rates of $9 million, or $1 per long ton, and increased maintenance and stripping costs of $7 million, or $1 per long ton;
|
•
|
An unfavorable impact of $9 million, or $1 per long ton, to the full-year standard cost as a result of an expected LIFO layer liquidation in the prior year which was not recurring; and
|
•
|
An increase in sales volume of
0.2 million
long tons, which resulted in increased costs of
$13 million
period-over-period.
|
|
(In Millions)
|
||||||||||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||
|
2019
|
|
2018
|
|
Variance
Favorable/ (Unfavorable) |
|
2019
|
|
2018
|
|
Variance
Favorable/
(Unfavorable)
|
||||||||||||
Selling, general and administrative expenses
|
$
|
(30.6
|
)
|
|
$
|
(26.2
|
)
|
|
$
|
(4.4
|
)
|
|
$
|
(58.7
|
)
|
|
$
|
(51.3
|
)
|
|
$
|
(7.4
|
)
|
Miscellaneous – net
|
(5.6
|
)
|
|
(4.1
|
)
|
|
(1.5
|
)
|
|
(9.2
|
)
|
|
(10.2
|
)
|
|
1.0
|
|
||||||
|
$
|
(36.2
|
)
|
|
$
|
(30.3
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
(67.9
|
)
|
|
$
|
(61.5
|
)
|
|
$
|
(6.4
|
)
|
|
(In Millions)
|
||||||||||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||
|
2019
|
|
2018
|
|
Variance
Favorable/ (Unfavorable) |
|
2019
|
|
2018
|
|
Variance
Favorable/
(Unfavorable)
|
||||||||||||
Interest expense, net
|
$
|
(26.1
|
)
|
|
$
|
(31.2
|
)
|
|
$
|
5.1
|
|
|
$
|
(51.2
|
)
|
|
$
|
(63.6
|
)
|
|
$
|
12.4
|
|
Gain (loss) on extinguishment of debt
|
(17.9
|
)
|
|
0.2
|
|
|
(18.1
|
)
|
|
(18.2
|
)
|
|
0.2
|
|
|
(18.4
|
)
|
||||||
Other non-operating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net periodic benefit costs other than service cost component
|
(0.1
|
)
|
|
3.7
|
|
|
(3.8
|
)
|
|
(0.2
|
)
|
|
7.3
|
|
|
(7.5
|
)
|
||||||
Other
|
0.7
|
|
|
0.7
|
|
|
—
|
|
|
1.2
|
|
|
1.5
|
|
|
(0.3
|
)
|
||||||
|
$
|
(43.4
|
)
|
|
$
|
(26.6
|
)
|
|
$
|
(16.8
|
)
|
|
$
|
(68.4
|
)
|
|
$
|
(54.6
|
)
|
|
$
|
(13.8
|
)
|
|
(In Millions)
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
160.8
|
|
|
$
|
165.1
|
|
|
$
|
138.7
|
|
|
$
|
80.8
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(26.3
|
)
|
|
(32.3
|
)
|
|
(51.4
|
)
|
|
(65.8
|
)
|
||||
Income tax benefit (expense)
|
(22.0
|
)
|
|
1.8
|
|
|
(18.3
|
)
|
|
(13.9
|
)
|
||||
Depreciation, depletion and amortization
|
(21.0
|
)
|
|
(25.5
|
)
|
|
(40.9
|
)
|
|
(49.4
|
)
|
||||
EBITDA
|
$
|
230.1
|
|
|
$
|
221.1
|
|
|
$
|
249.3
|
|
|
$
|
209.9
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange remeasurement
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
Impact of discontinued operations
|
(0.4
|
)
|
|
(54.7
|
)
|
|
(0.4
|
)
|
|
(117.8
|
)
|
||||
Gain (loss) on extinguishment of debt
|
(17.9
|
)
|
|
0.2
|
|
|
(18.2
|
)
|
|
0.2
|
|
||||
Severance costs
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
248.5
|
|
|
$
|
275.7
|
|
|
$
|
269.6
|
|
|
$
|
328.0
|
|
|
|
|
|
|
|
|
|
||||||||
EBITDA:
|
|
|
|
|
|
|
|
||||||||
Mining and Pelletizing
|
$
|
274.6
|
|
|
$
|
296.0
|
|
|
$
|
317.4
|
|
|
$
|
368.5
|
|
Metallics
|
(1.1
|
)
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(1.5
|
)
|
||||
Corporate and Other (including discontinued operations)
|
(43.4
|
)
|
|
(73.7
|
)
|
|
(66.2
|
)
|
|
(157.1
|
)
|
||||
Total EBITDA
|
$
|
230.1
|
|
|
$
|
221.1
|
|
|
$
|
249.3
|
|
|
$
|
209.9
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Mining and Pelletizing
|
$
|
280.5
|
|
|
$
|
301.3
|
|
|
$
|
328.0
|
|
|
$
|
378.4
|
|
Metallics
|
(1.1
|
)
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(1.5
|
)
|
||||
Corporate
|
(30.9
|
)
|
|
(24.4
|
)
|
|
(56.5
|
)
|
|
(48.9
|
)
|
||||
Total Adjusted EBITDA
|
$
|
248.5
|
|
|
$
|
275.7
|
|
|
$
|
269.6
|
|
|
$
|
328.0
|
|
|
|
2019 Outlook Summary
|
Per Long Ton Information
|
Mining and Pelletizing
|
|
Cost of goods sold rate
|
$74 - $79
|
|
Less:
|
|
|
Freight expense rate
1
|
$8
|
|
Depreciation, depletion & amortization rate
|
$4
|
|
Cash cost of goods sold rate
|
$62 - $67
|
|
|
|
|
Sales volume (million long tons)
|
20.0
|
|
Production volume (million long tons)
|
20.0
|
|
|
||
1
Freight has an offsetting amount in revenue and has no impact on sales margin.
|
•
|
uncertainty and weaknesses in global economic conditions, including downward pressure on prices caused by oversupply or imported products, reduced market demand and risks related to U.S. government actions with respect to Section 232 of the Trade Expansion Act (as amended by the Trade Act of 1974), the United States-Mexico-Canada Agreement and/or other trade agreements, treaties or policies;
|
•
|
continued volatility of iron ore and steel prices and other trends, which may impact the price-adjustment calculations under our sales contracts;
|
•
|
our ability to successfully diversify our product mix and add new customers beyond our traditional blast furnace clientele;
|
•
|
our ability to cost-effectively achieve planned production rates or levels, including at our HBI plant;
|
•
|
our ability to successfully identify and consummate any strategic investments or development projects, including our HBI plant;
|
•
|
the impact of our customers reducing their steel production due to increased market share of steel produced using other methods or lighter-weight steel alternatives;
|
•
|
our actual economic iron ore reserves or reductions in current mineral estimates, including whether any mineralized material qualifies as a reserve;
|
•
|
the outcome of any contractual disputes with our customers, joint venture partners or significant energy, material or service providers or any other litigation or arbitration;
|
•
|
problems or uncertainties with sales volume or mix, productivity, tons mined, transportation, mine closure obligations, environmental liabilities, employee-benefit costs and other risks of the mining industry;
|
•
|
impacts of existing and increasing governmental regulation and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorization of, or from, any governmental or regulatory entity and costs related to implementing improvements to ensure compliance with regulatory changes;
|
•
|
our ability to maintain adequate liquidity, our level of indebtedness and the availability of capital could limit cash flow available to fund working capital, planned capital expenditures, acquisitions and other general corporate purposes or ongoing needs of our business;
|
•
|
our ability to continue to pay cash dividends, and the amount and timing of any cash dividends;
|
•
|
our ability to maintain appropriate relations with unions and employees;
|
•
|
the ability of our customers, joint venture partners and third party service providers to meet their obligations to us on a timely basis or at all;
|
•
|
events or circumstances that could impair or adversely impact the viability of a mine or production plant and the carrying value of associated assets, as well as any resulting impairment charges;
|
•
|
uncertainties associated with natural disasters, weather conditions, unanticipated geological conditions, supply or price of energy, equipment failures and other unexpected events;
|
•
|
adverse changes in interest rates and tax laws; and
|
•
|
the potential existence of significant deficiencies or material weakness in our internal control over financial reporting.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares
(or Units) Purchased
1
|
|
Average Price Paid per Share
(or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
2
|
||||||
April 1 - 30, 2019
|
|
1,464
|
|
|
$
|
10.38
|
|
|
—
|
|
|
$
|
128,595,269
|
|
May 1 - 31, 2019
|
|
12,884,533
|
|
|
$
|
9.96
|
|
|
12,884,533
|
|
|
$
|
229,356
|
|
June 1 - 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
229,356
|
|
|
|
12,885,997
|
|
|
$
|
9.96
|
|
|
12,884,533
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
1
Includes 1,464 shares that were delivered to us to satisfy tax withholding obligations due upon the vesting or payment of stock awards.
|
||||||||||||||
2
On November 26, 2018, we announced a new share repurchase program which was authorized by the Board of Directors, pursuant to which we may buy back our outstanding common shares in the open market or in private negotiated transactions up to a maximum of $200 million, excluding commissions and fees. On April 25, 2019, we announced that the Board of Directors increased the common share repurchase authorization by an additional $100 million, excluding commissions and fees. The program may be executed through open-market purchases, including through Rule 10b5-1 agreements, or privately negotiated transactions. The authorization is effective until December 31, 2019.
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Exhibit
|
|
Indenture, dated as of May 13, 2019, among Cleveland-Cliffs Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Cliffs' Form 8-K on May 14, 2019 and incorporated herein by reference)
|
|
|
Registration Rights Agreement, dated as of May 13, 2019, among Cleveland-Cliffs Inc., the guarantors party thereto and Goldman Sachs & Co. LLC, as the initial purchaser (filed as Exhibit 10.1 to Cliffs' Form 8-K on May 14, 2019 and incorporated herein by reference)
|
|
|
Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Lourenco Goncalves as of July 19, 2019 (filed herewith)
|
|
|
Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Keith A. Koci as of July 19, 2019 (filed herewith)
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Lourenco Goncalves, Chairman, President and Chief Executive Officer of Cleveland-Cliffs Inc., as of July 19, 2019 (filed herewith)
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Keith A. Koci, Executive Vice President, Chief Financial Officer of Cleveland-Cliffs Inc., as of July 19, 2019 (filed herewith)
|
|
|
Mine Safety Disclosures (filed herewith)
|
|
101.INS
|
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
CLEVELAND-CLIFFS INC.
|
||||
|
|
|
|
|
|||
|
|
|
By:
|
|
/s/ R. Christopher Cebula
|
||
|
|
|
|
|
Name:
|
|
R. Christopher Cebula
|
|
|
|
|
|
Title:
|
|
Vice President, Corporate Controller & Chief Accounting Officer
|
|
|
|
|
|
|
|
|
Date:
|
July 19, 2019
|
|
|
|
|
|
|
1 Year Cleveland Cliffs Chart |
1 Month Cleveland Cliffs Chart |
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