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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 | |
---|---|---|---|---|---|---|---|---|
0.20 | 1.20% | 16.90 | 30,442 | 13:38:36 |
☒ | 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 | ☐ |
Page Number | |||||||||||||||||
DEFINITIONS | |||||||||||||||||
PART I - FINANCIAL INFORMATION | |||||||||||||||||
Item 1. | Financial Statements | ||||||||||||||||
Statements of Unaudited Condensed Consolidated Financial Position as of September 30, 2022 and December 31, 2021 | |||||||||||||||||
Statements of Unaudited Condensed Consolidated Operations for the Three and Nine Months Ended September 30, 2022 and 2021 | |||||||||||||||||
Statements of Unaudited Condensed Consolidated Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 | |||||||||||||||||
Statements of Unaudited Condensed Consolidated Cash Flows for the Nine Months Ended September 30, 2022 and 2021 | |||||||||||||||||
Statements of Unaudited Condensed Consolidated Changes in Equity for the Nine Months Ended September 30, 2022 and 2021 | |||||||||||||||||
Notes to Unaudited Condensed Consolidated Financial Statements | |||||||||||||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||||||||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||||||||||||||
Item 4. | Controls and Procedures | ||||||||||||||||
PART II - OTHER INFORMATION | |||||||||||||||||
Item 1. | Legal Proceedings | ||||||||||||||||
Item 1A. | Risk Factors | ||||||||||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||||||||||||||
Item 4. | Mine Safety Disclosures | ||||||||||||||||
Item 5. | Other Information | ||||||||||||||||
Item 6. | Exhibits | ||||||||||||||||
Signatures | |||||||||||||||||
Abbreviation or acronym | Term | |||||||
4.625% 2029 Senior Notes | 4.625% Senior Guaranteed Notes due 2029 issued by Cleveland-Cliffs Inc. on February 17, 2021 in an aggregate principal amount of $500 million | |||||||
4.875% 2031 Senior Notes | 4.875% Senior Guaranteed Notes due 2031 issued by Cleveland-Cliffs Inc. on February 17, 2021 in an aggregate principal amount of $500 million | |||||||
ABL Facility | Asset-Based Revolving Credit Agreement, dated as of March 13, 2020, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent, as amended as of March 27, 2020, and December 9, 2020, and as may be further amended from time to time | |||||||
Adjusted EBITDA | EBITDA, excluding certain items such as EBITDA of noncontrolling interests, asset impairment, extinguishment of debt, severance, acquisition-related costs, acquisition-related loss on equity method investment, amortization of inventory step-up and impacts of discontinued operations | |||||||
AK Steel | AK Steel Holding Corporation (n/k/a Cleveland-Cliffs Steel Holding Corporation) and its consolidated subsidiaries, including AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation), its direct, wholly owned subsidiary, collectively, unless stated otherwise or the context indicates otherwise | |||||||
AOCI | Accumulated Other Comprehensive Income (Loss) | |||||||
ArcelorMittal | ArcelorMittal S.A., a company organized under the laws of Luxembourg and the former ultimate parent company of ArcelorMittal USA | |||||||
ArcelorMittal USA | Substantially all of the operations of the former ArcelorMittal USA LLC, its subsidiaries and certain affiliates, collectively | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
Board | The Board of Directors of Cleveland-Cliffs Inc. | |||||||
BOF | Basic oxygen furnace | |||||||
CERCLA | Comprehensive Environmental Response, Compensation and Liability Act of 1980 | |||||||
CHIPS Act | The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 | |||||||
COVID-19 | A novel strain of coronavirus that the World Health Organization declared a global pandemic in March 2020 | |||||||
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act | |||||||
EAF | Electric arc furnace | |||||||
EBITDA | Earnings before interest, taxes, depreciation and amortization | |||||||
EPA | U.S. Environmental Protection Agency | |||||||
EPS | Earnings per share | |||||||
Exchange Act | Securities Exchange Act of 1934, as amended | |||||||
FASB | Financial Accounting Standards Board | |||||||
Fe | Iron | |||||||
FMSH Act | Federal Mine Safety and Health Act of 1977, as amended | |||||||
FPT | Ferrous Processing and Trading Company, including certain related entities | |||||||
FPT Acquisition | The purchase of FPT, subject to the terms and conditions set forth in the FPT Acquisition Agreement | |||||||
FPT Acquisition Agreement | Securities Purchase Agreement, dated as of October 8, 2021, by and between Cleveland-Cliffs Inc. and Anthony Soave Revocable Trust u/a/d January 14, 1987, as amended and restated | |||||||
GAAP | Accounting principles generally accepted in the United States | |||||||
GHG | Greenhouse gas | |||||||
GOES | Grain oriented electrical steel | |||||||
HBI | Hot briquetted iron | |||||||
HRC | Hot-rolled coil steel | |||||||
IRB | Industrial Revenue Bond | |||||||
Long ton | 2,240 pounds | |||||||
Metric ton | 2,205 pounds | |||||||
MSHA | U.S. Mine Safety and Health Administration | |||||||
Net ton | 2,000 pounds | |||||||
NOES | Non-oriented electrical steel | |||||||
NPDES | National Pollutant Discharge Elimination System, authorized by the Clean Water Act | |||||||
OPEB | Other postretirement benefits | |||||||
Platts 62% price | Platts IODEX 62% Fe Fines CFR North China | |||||||
RCRA | Resource Conservation and Recovery Act | |||||||
RI/FS | Remedial Investigation/Feasibility Study | |||||||
SEC | U.S. Securities and Exchange Commission | |||||||
Section 232 | Section 232 of the Trade Expansion Act of 1962, as amended | |||||||
Securities Act | Securities Act of 1933, as amended | |||||||
SunCoke Middletown | Middletown Coke Company, LLC, a subsidiary of SunCoke Energy, Inc. |
Abbreviation or acronym | Term | |||||||
Topic 805 | ASC Topic 805, Business Combinations | |||||||
Topic 815 | ASC Topic 815, Derivatives and Hedging | |||||||
U.S. | United States of America | |||||||
U.S. Steel | United States Steel Corporation and its subsidiaries, collectively, unless stated otherwise or the context indicates otherwise | |||||||
USW | United Steelworkers | |||||||
VEBA | Voluntary employee benefit association trusts | |||||||
VIE | Variable interest entity |
Item 1. | Financial Statements |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 56 | $ | 48 | |||||||
Accounts receivable, net | 2,301 | 2,154 | |||||||||
Inventories | 5,542 | 5,188 | |||||||||
Other current assets | 426 | 263 | |||||||||
Total current assets | 8,325 | 7,653 | |||||||||
Non-current assets: | |||||||||||
Property, plant and equipment, net | 9,030 | 9,186 | |||||||||
Goodwill | 1,141 | 1,116 | |||||||||
Pension and OPEB, asset | 390 | 224 | |||||||||
Other non-current assets | 802 | 796 | |||||||||
TOTAL ASSETS | $ | 19,688 | $ | 18,975 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 2,361 | $ | 2,073 | |||||||
Accrued employment costs | 479 | 585 | |||||||||
Other current liabilities | 740 | 903 | |||||||||
Total current liabilities | 3,580 | 3,561 | |||||||||
Non-current liabilities: | |||||||||||
Long-term debt | 4,475 | 5,238 | |||||||||
Pension liability, non-current | 464 | 578 | |||||||||
OPEB liability, non-current | 2,287 | 2,383 | |||||||||
Other non-current liabilities | 1,614 | 1,441 | |||||||||
TOTAL LIABILITIES | 12,420 | 13,201 | |||||||||
Commitments and contingencies (See Note 18) | |||||||||||
Equity: | |||||||||||
Common shares - par value $0.125 per share | |||||||||||
Authorized - 1,200,000,000 shares (2021 - 1,200,000,000 shares); | |||||||||||
Issued - 531,051,530 shares (2021 - 506,832,537 shares); | |||||||||||
Outstanding - 515,297,720 shares (2021 - 500,158,955 shares) | 66 | 63 | |||||||||
Capital in excess of par value of shares | 4,864 | 4,892 | |||||||||
Retained earnings (deficit) | 1,548 | (1) | |||||||||
Cost of 15,753,810 common shares in treasury (2021 - 6,673,582 shares) | (280) | (82) | |||||||||
Accumulated other comprehensive income | 810 | 618 | |||||||||
Total Cliffs shareholders' equity | 7,008 | 5,490 | |||||||||
Noncontrolling interest | 260 | 284 | |||||||||
TOTAL EQUITY | 7,268 | 5,774 | |||||||||
TOTAL LIABILITIES AND EQUITY | $ | 19,688 | $ | 18,975 |
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues | $ | 5,653 | $ | 6,004 | $ | 17,945 | $ | 15,098 | |||||||||||||||
Operating costs: | |||||||||||||||||||||||
Cost of goods sold | (5,305) | (4,229) | (15,367) | (11,838) | |||||||||||||||||||
Selling, general and administrative expenses | (124) | (116) | (353) | (329) | |||||||||||||||||||
Miscellaneous – net | (37) | (10) | (104) | (38) | |||||||||||||||||||
Total operating costs | (5,466) | (4,355) | (15,824) | (12,205) | |||||||||||||||||||
Operating income | 187 | 1,649 | 2,121 | 2,893 | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense, net | (64) | (81) | (205) | (258) | |||||||||||||||||||
Gain (loss) on extinguishment of debt | 4 | — | (76) | (88) | |||||||||||||||||||
Net periodic benefit credits other than service cost component | 49 | 46 | 148 | 139 | |||||||||||||||||||
Other non-operating income (expense) | (1) | 1 | (6) | 5 | |||||||||||||||||||
Total other expense | (12) | (34) | (139) | (202) | |||||||||||||||||||
Income from continuing operations before income taxes | 175 | 1,615 | 1,982 | 2,691 | |||||||||||||||||||
Income tax expense | (10) | (334) | (404) | (559) | |||||||||||||||||||
Income from continuing operations | 165 | 1,281 | 1,578 | 2,132 | |||||||||||||||||||
Income from discontinued operations, net of tax | — | 1 | 2 | 2 | |||||||||||||||||||
Net income | 165 | 1,282 | 1,580 | 2,134 | |||||||||||||||||||
Income attributable to noncontrolling interest | (13) | (8) | (31) | (39) | |||||||||||||||||||
Net income attributable to Cliffs shareholders | $ | 152 | $ | 1,274 | $ | 1,549 | $ | 2,095 | |||||||||||||||
Earnings per common share attributable to Cliffs shareholders - basic | |||||||||||||||||||||||
Continuing operations | $ | 0.30 | $ | 2.46 | $ | 2.98 | $ | 3.87 | |||||||||||||||
Discontinued operations | — | — | — | — | |||||||||||||||||||
$ | 0.30 | $ | 2.46 | $ | 2.98 | $ | 3.87 | ||||||||||||||||
Earnings per common share attributable to Cliffs shareholders - diluted | |||||||||||||||||||||||
Continuing operations | $ | 0.29 | $ | 2.33 | $ | 2.95 | $ | 3.69 | |||||||||||||||
Discontinued operations | — | — | — | — | |||||||||||||||||||
$ | 0.29 | $ | 2.33 | $ | 2.95 | $ | 3.69 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 165 | $ | 1,282 | $ | 1,580 | $ | 2,134 | |||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Changes in pension and OPEB, net of tax | 93 | 6 | 94 | 20 | |||||||||||||||||||
Changes in foreign currency translation | (2) | — | (4) | (1) | |||||||||||||||||||
Changes in derivative financial instruments, net of tax | 61 | 83 | 102 | 137 | |||||||||||||||||||
Total other comprehensive income | 152 | 89 | 192 | 156 | |||||||||||||||||||
Comprehensive income | 317 | 1,371 | 1,772 | 2,290 | |||||||||||||||||||
Comprehensive income attributable to noncontrolling interests | (13) | (8) | (31) | (39) | |||||||||||||||||||
Comprehensive income attributable to Cliffs shareholders | $ | 304 | $ | 1,363 | $ | 1,741 | $ | 2,251 |
(In Millions) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | 1,580 | $ | 2,134 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation, depletion and amortization | 788 | 664 | |||||||||
Impairment of long-lived assets | 29 | 1 | |||||||||
Deferred income taxes | 210 | 557 | |||||||||
Pension and OPEB credits | (81) | (59) | |||||||||
Loss on extinguishment of debt | 76 | 88 | |||||||||
Amortization of inventory step-up | — | 129 | |||||||||
Other | 75 | 79 | |||||||||
Changes in operating assets and liabilities, net of business combination: | |||||||||||
Receivables and other assets | (108) | (1,166) | |||||||||
Inventories | (348) | (793) | |||||||||
Income taxes | (109) | (1) | |||||||||
Pension and OPEB payments and contributions | (174) | (279) | |||||||||
Payables, accrued expenses and other liabilities | (4) | 294 | |||||||||
Net cash provided by operating activities | 1,934 | 1,648 | |||||||||
INVESTING ACTIVITIES | |||||||||||
Purchase of property, plant and equipment | (716) | (473) | |||||||||
Acquisition of FPT, net of cash acquired | (31) | — | |||||||||
Acquisition of ArcelorMittal USA, net of cash acquired | — | 54 | |||||||||
Other investing activities | 20 | 5 | |||||||||
Net cash used by investing activities | (727) | (414) | |||||||||
FINANCING ACTIVITIES | |||||||||||
Series B Redeemable Preferred Stock redemption | — | (1,343) | |||||||||
Proceeds from issuance of common shares | — | 322 | |||||||||
Repurchase of common shares | (210) | — | |||||||||
Proceeds from issuance of debt | — | 1,000 | |||||||||
Repayments of debt | (1,355) | (1,346) | |||||||||
Borrowings under credit facilities | 4,650 | 4,353 | |||||||||
Repayments under credit facilities | (4,169) | (4,160) | |||||||||
Other financing activities | (115) | (130) | |||||||||
Net cash used by financing activities | (1,199) | (1,304) | |||||||||
Net increase (decrease) in cash and cash equivalents | 8 | (70) | |||||||||
Cash and cash equivalents at beginning of period | 48 | 112 | |||||||||
Cash and cash equivalents at end of period | $ | 56 | $ | 42 |
(In Millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Earnings (Deficit) | Common Shares in Treasury | AOCI | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | 500 | $ | 63 | $ | 4,892 | $ | (1) | $ | (82) | $ | 618 | $ | 284 | $ | 5,774 | ||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 801 | — | 97 | 13 | 911 | |||||||||||||||||||||||||||||||||||||||
Redemption of convertible debt | 24 | 3 | (28) | — | — | — | — | (25) | |||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | 2 | — | (16) | — | 11 | — | — | (5) | |||||||||||||||||||||||||||||||||||||||
Common stock repurchases | (1) | — | — | — | (19) | — | — | (19) | |||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (28) | (28) | |||||||||||||||||||||||||||||||||||||||
March 31, 2022 | 525 | $ | 66 | $ | 4,848 | $ | 800 | $ | (90) | $ | 715 | $ | 269 | $ | 6,608 | ||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | 596 | — | (57) | 5 | 544 | |||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | — | — | 7 | — | 1 | — | — | 8 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchases | (8) | — | — | — | (157) | — | — | (157) | |||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (9) | (9) | |||||||||||||||||||||||||||||||||||||||
June 30, 2022 | 517 | $ | 66 | $ | 4,855 | $ | 1,396 | $ | (246) | $ | 658 | $ | 265 | $ | 6,994 | ||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 152 | — | 152 | 13 | 317 | |||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | — | — | 9 | — | — | — | — | 9 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchases | (2) | — | — | — | (34) | — | — | (34) | |||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (18) | (18) | |||||||||||||||||||||||||||||||||||||||
September 30, 2022 | 515 | $ | 66 | $ | 4,864 | $ | 1,548 | $ | (280) | $ | 810 | $ | 260 | $ | 7,268 |
(In Millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Earnings (Deficit) | Common Shares in Treasury | AOCI (Loss) | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | 478 | $ | 63 | $ | 5,431 | $ | (2,989) | $ | (354) | $ | (133) | $ | 323 | $ | 2,341 | ||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 41 | — | 13 | 16 | 70 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 20 | — | 78 | — | 244 | — | — | 322 | |||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | 1 | — | (22) | — | 17 | — | — | (5) | |||||||||||||||||||||||||||||||||||||||
Acquisition of ArcelorMittal USA - Measurement period adjustments | — | — | — | — | — | — | (1) | (1) | |||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (8) | (8) | |||||||||||||||||||||||||||||||||||||||
March 31, 2021 | 499 | $ | 63 | $ | 5,487 | $ | (2,948) | $ | (93) | $ | (120) | $ | 330 | $ | 2,719 | ||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 780 | — | 54 | 15 | 849 | |||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | 1 | — | 4 | — | 6 | — | — | 10 | |||||||||||||||||||||||||||||||||||||||
Acquisition of ArcelorMittal USA - Measurement period adjustments | — | — | — | — | — | — | (13) | (13) | |||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (24) | (24) | |||||||||||||||||||||||||||||||||||||||
June 30, 2021 | 500 | $ | 63 | $ | 5,491 | $ | (2,168) | $ | (87) | $ | (66) | $ | 308 | $ | 3,541 | ||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 1,274 | — | 89 | 8 | 1,371 | |||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | — | — | 5 | — | 4 | — | — | 9 | |||||||||||||||||||||||||||||||||||||||
Series B Redeemable Preferred Stock redemption | — | — | (605) | — | — | — | — | (605) | |||||||||||||||||||||||||||||||||||||||
Repurchase of convertible debt | — | — | (4) | — | — | — | — | (4) | |||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (22) | (22) | |||||||||||||||||||||||||||||||||||||||
September 30, 2021 | 500 | $ | 63 | $ | 4,887 | $ | (894) | $ | (83) | $ | 23 | $ | 294 | $ | 4,290 |
(In Millions) | |||||||||||
2022 | 2021 | ||||||||||
Allowance for credit losses as of January 1 | $ | (4) | $ | (5) | |||||||
Increase in allowance | (1) | — | |||||||||
Allowance for credit losses as of September 30 | $ | (5) | $ | (5) |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Product inventories | |||||||||||
Finished and semi-finished goods | $ | 3,084 | $ | 2,814 | |||||||
Raw materials | 2,111 | 2,070 | |||||||||
Total product inventories | 5,195 | 4,884 | |||||||||
Manufacturing supplies and critical spares | 347 | 304 | |||||||||
Inventories | $ | 5,542 | $ | 5,188 |
(In Millions) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Capital additions | $ | 736 | $ | 572 | |||||||
Less: | |||||||||||
Non-cash accruals | (10) | 64 | |||||||||
Right-of-use assets - finance leases | 30 | 35 | |||||||||
Cash paid for capital expenditures including deposits | $ | 716 | $ | 473 |
(In Millions) | |||||
Cash consideration: | |||||
Cash consideration pursuant to the FPT Acquisition Agreement | $ | 778 | |||
Cash consideration paid related to Internal Revenue Code Section 338(h)(10) | 23 | ||||
Total cash consideration | 801 | ||||
Fair value of settlement of a pre-existing relationship | (20) | ||||
Total purchase consideration | $ | 781 |
(In Millions) | |||||||||||||||||
Initial Allocation of Consideration | Measurement Period Adjustments | Updated Allocation | |||||||||||||||
Cash and cash equivalents | $ | 9 | $ | — | $ | 9 | |||||||||||
Accounts receivable, net | 233 | 2 | 235 | ||||||||||||||
Inventories | 137 | (1) | 136 | ||||||||||||||
Other current assets | 4 | — | 4 | ||||||||||||||
Property, plant and equipment | 179 | 12 | 191 | ||||||||||||||
Other non-current assets | 74 | (11) | 63 | ||||||||||||||
Accounts payable | (122) | — | (122) | ||||||||||||||
Accrued employment costs | (8) | — | (8) | ||||||||||||||
Other current liabilities | (9) | — | (9) | ||||||||||||||
Other non-current liabilities | (21) | (1) | (22) | ||||||||||||||
Net identifiable assets acquired | 476 | 1 | 477 | ||||||||||||||
Goodwill | 279 | 25 | 304 | ||||||||||||||
Total net assets acquired | $ | 755 | $ | 26 | $ | 781 |
(In Millions) | Weighted Average Life (In Years) | ||||||||||
Customer relationships | $ | 13 | 15 | ||||||||
Supplier relationships | 21 | 18 | |||||||||
Trade names and trademarks | 7 | 15 | |||||||||
Total identifiable intangible assets | $ | 41 | 17 |
(In Millions) | (In Millions) | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Steelmaking: | |||||||||||||||||||||||
Automotive | $ | 1,734 | $ | 1,149 | $ | 4,985 | $ | 3,577 | |||||||||||||||
Infrastructure and manufacturing | 1,462 | 1,603 | 4,619 | 3,889 | |||||||||||||||||||
Distributors and converters | 1,468 | 2,447 | 5,137 | 5,672 | |||||||||||||||||||
Steel producers | 847 | 670 | 2,740 | 1,572 | |||||||||||||||||||
Total Steelmaking | 5,511 | 5,869 | 17,481 | 14,710 | |||||||||||||||||||
Other Businesses: | |||||||||||||||||||||||
Automotive | 113 | 105 | 359 | 306 | |||||||||||||||||||
Infrastructure and manufacturing | 14 | 12 | 43 | 33 | |||||||||||||||||||
Distributors and converters | 15 | 18 | 62 | 49 | |||||||||||||||||||
Total Other Businesses | 142 | 135 | 464 | 388 | |||||||||||||||||||
Total revenues | $ | 5,653 | $ | 6,004 | $ | 17,945 | $ | 15,098 |
(Dollars in Millions, Sales Volumes in Thousands of Net Tons) | |||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Revenue | Volume | Revenue | Volume | ||||||||||||||||||||
Steelmaking: | |||||||||||||||||||||||
Hot-rolled steel | $ | 1,050 | 1,055 | $ | 1,800 | 1,332 | |||||||||||||||||
Cold-rolled steel | 740 | 530 | 935 | 728 | |||||||||||||||||||
Coated steel | 1,757 | 1,203 | 1,635 | 1,291 | |||||||||||||||||||
Stainless and electrical steel | 596 | 196 | 441 | 177 | |||||||||||||||||||
Plate | 432 | 228 | 357 | 244 | |||||||||||||||||||
Other steel products | 370 | 423 | 374 | 381 | |||||||||||||||||||
Other | 566 | N/A | 327 | N/A | |||||||||||||||||||
Total Steelmaking | 5,511 | 5,869 | |||||||||||||||||||||
Other Businesses: | |||||||||||||||||||||||
Other | 142 | N/A | 135 | N/A | |||||||||||||||||||
Total revenues | $ | 5,653 | $ | 6,004 |
(Dollars in Millions, Sales Volumes in Thousands of Net Tons) | |||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Revenue | Volume | Revenue | Volume | ||||||||||||||||||||
Steelmaking: | |||||||||||||||||||||||
Hot-rolled steel | $ | 3,495 | 2,996 | $ | 4,204 | 3,900 | |||||||||||||||||
Cold-rolled steel | 2,593 | 1,771 | 2,352 | 2,196 | |||||||||||||||||||
Coated steel | 5,338 | 3,636 | 4,338 | 3,907 | |||||||||||||||||||
Stainless and electrical steel | 1,765 | 579 | 1,201 | 512 | |||||||||||||||||||
Plate | 1,306 | 687 | 929 | 792 | |||||||||||||||||||
Other steel products | 1,121 | 1,244 | 1,009 | 1,195 | |||||||||||||||||||
Other | 1,863 | N/A | 677 | N/A | |||||||||||||||||||
Total Steelmaking | 17,481 | 14,710 | |||||||||||||||||||||
Other Businesses: | |||||||||||||||||||||||
Other | 464 | N/A | 388 | N/A | |||||||||||||||||||
Total revenues | $ | 17,945 | $ | 15,098 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 165 | $ | 1,282 | $ | 1,580 | $ | 2,134 | |||||||||||||||
Less: | |||||||||||||||||||||||
Interest expense, net | (64) | (81) | (205) | (258) | |||||||||||||||||||
Income tax expense | (10) | (334) | (404) | (559) | |||||||||||||||||||
Depreciation, depletion and amortization | (237) | (239) | (788) | (664) | |||||||||||||||||||
476 | 1,936 | 2,977 | 3,615 | ||||||||||||||||||||
Less: | |||||||||||||||||||||||
EBITDA of noncontrolling interests1 | 22 | 17 | 57 | 60 | |||||||||||||||||||
Asset impairment | — | — | (29) | — | |||||||||||||||||||
Gain (loss) on extinguishment of debt | 4 | — | (76) | (88) | |||||||||||||||||||
Severance costs | (2) | (3) | (9) | (15) | |||||||||||||||||||
Acquisition-related costs excluding severance costs | — | (1) | (1) | (3) | |||||||||||||||||||
Acquisition-related loss on equity method investment | — | — | — | (18) | |||||||||||||||||||
Amortization of inventory step-up | — | (11) | — | (129) | |||||||||||||||||||
Impact of discontinued operations | — | 1 | 2 | 2 | |||||||||||||||||||
Total Adjusted EBITDA | $ | 452 | $ | 1,933 | $ | 3,033 | $ | 3,806 | |||||||||||||||
1 EBITDA of noncontrolling interests includes the following: | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | $ | 13 | $ | 8 | $ | 31 | $ | 39 | |||||||||||||||
Depreciation, depletion and amortization | 9 | 9 | 26 | 21 | |||||||||||||||||||
EBITDA of noncontrolling interests | $ | 22 | $ | 17 | $ | 57 | $ | 60 |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Assets: | |||||||||||
Steelmaking | $ | 18,843 | $ | 18,326 | |||||||
Other Businesses | 313 | 306 | |||||||||
Total segment assets | 19,156 | 18,632 | |||||||||
Corporate/Eliminations | 532 | 343 | |||||||||
Total assets | $ | 19,688 | $ | 18,975 |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Land, land improvements and mineral rights | $ | 1,396 | $ | 1,291 | |||||||
Buildings | 914 | 889 | |||||||||
Equipment | 9,042 | 8,709 | |||||||||
Other | 232 | 229 | |||||||||
Construction in progress | 534 | 408 | |||||||||
Total property, plant and equipment1 | 12,118 | 11,526 | |||||||||
Allowance for depreciation and depletion | (3,088) | (2,340) | |||||||||
Property, plant and equipment, net | $ | 9,030 | $ | 9,186 | |||||||
1 Includes right-of-use assets related to finance leases of $389 million and $411 million as of September 30, 2022 and December 31, 2021, respectively. |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Steelmaking | $ | 967 | $ | 942 | |||||||
Other Businesses | 174 | 174 | |||||||||
Total goodwill | $ | 1,141 | $ | 1,116 |
(In Millions) | |||||||||||||||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||||||||||
Intangible assets1: | |||||||||||||||||||||||||||||||||||
Customer relationships | $ | 90 | $ | (12) | $ | 78 | $ | 95 | $ | (8) | $ | 87 | |||||||||||||||||||||||
Developed technology | 60 | (9) | 51 | 60 | (6) | 54 | |||||||||||||||||||||||||||||
Trade names and trademarks | 18 | (4) | 14 | 18 | (2) | 16 | |||||||||||||||||||||||||||||
Mining permits | 72 | (26) | 46 | 72 | (26) | 46 | |||||||||||||||||||||||||||||
Supplier relationships | 21 | (1) | 20 | 18 | — | 18 | |||||||||||||||||||||||||||||
Total intangible assets | $ | 261 | $ | (52) | $ | 209 | $ | 263 | $ | (42) | $ | 221 | |||||||||||||||||||||||
Intangible liabilities2: | |||||||||||||||||||||||||||||||||||
Above-market supply contracts | $ | (71) | $ | 18 | $ | (53) | $ | (71) | $ | 14 | $ | (57) | |||||||||||||||||||||||
1 Intangible assets are classified as Other non-current assets. Amortization related to mining permits is recognized in Cost of goods sold. Amortization of all other intangible assets is recognized in Selling, general and administrative expenses. | |||||||||||||||||||||||||||||||||||
2 Intangible liabilities are classified as Other non-current liabilities. Amortization of all intangible liabilities is recognized in Cost of goods sold. |
(In Millions) | ||||||||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||||||||
9.875% 2025 Senior Secured Notes | Cliffs | 10.57% | $ | — | $ | 607 | ||||||||||||||||||||
6.750% 2026 Senior Secured Notes | Cliffs | 6.99% | 829 | 845 | ||||||||||||||||||||||
Senior Unsecured Notes: | ||||||||||||||||||||||||||
1.500% 2025 Convertible Senior Notes | Cliffs | 6.26% | — | 294 | ||||||||||||||||||||||
7.000% 2027 Senior Notes | Cliffs | 9.24% | 73 | 73 | ||||||||||||||||||||||
7.000% 2027 AK Senior Notes | AK Steel | 9.24% | 56 | 56 | ||||||||||||||||||||||
5.875% 2027 Senior Notes | Cliffs | 6.49% | 556 | 556 | ||||||||||||||||||||||
4.625% 2029 Senior Notes | Cliffs | 4.63% | 370 | 500 | ||||||||||||||||||||||
4.875% 2031 Senior Notes | Cliffs | 4.88% | 326 | 500 | ||||||||||||||||||||||
6.250% 2040 Senior Notes | Cliffs | 6.34% | 235 | 263 | ||||||||||||||||||||||
IRBs due 2024 to 2028 | AK Steel | Various | — | 66 | ||||||||||||||||||||||
ABL Facility | Cliffs2 | Variable3 | 2,090 | 1,609 | ||||||||||||||||||||||
Total principal amount | 4,535 | 5,369 | ||||||||||||||||||||||||
Unamortized discounts and issuance costs | (60) | (131) | ||||||||||||||||||||||||
Total long-term debt | $ | 4,475 | $ | 5,238 | ||||||||||||||||||||||
1 Unless otherwise noted, references in this column and throughout this NOTE 8 - DEBT AND CREDIT FACILITIES to "Cliffs" are to Cleveland-Cliffs Inc., and references to "AK Steel" are to AK Steel Corporation (n/k/a Cleveland-Cliffs Steel Corporation). | ||||||||||||||||||||||||||
2 Refers to Cleveland-Cliffs Inc. as borrower under our ABL Facility. | ||||||||||||||||||||||||||
3 Our ABL Facility annual effective interest rate was 4.23% and 1.87%, respectively, as of September 30, 2022 and December 31, 2021. |
(In Millions) | ||||||||||||||||||||||||||
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||
Debt Instrument | Debt Extinguished | Gain on Extinguishment | Debt Extinguished | Gain (Loss) on Extinguishment | ||||||||||||||||||||||
9.875% 2025 Senior Secured Notes | $ | — | $ | — | $ | 607 | $ | (85) | ||||||||||||||||||
6.750% 2026 Senior Notes | — | — | 16 | (1) | ||||||||||||||||||||||
1.500% 2025 Convertible Senior Notes | — | — | 294 | (16) | ||||||||||||||||||||||
4.625% 2029 Senior Notes | — | — | 130 | 8 | ||||||||||||||||||||||
4.875% 2031 Senior Notes | 13 | 1 | 174 | 13 | ||||||||||||||||||||||
6.250% 2040 Senior Notes | 28 | 3 | 28 | 3 | ||||||||||||||||||||||
IRBs due 2024 to 2028 | — | — | 66 | 2 | ||||||||||||||||||||||
Total | $ | 41 | $ | 4 | $ | 1,315 | $ | (76) |
(In Millions) | ||||||||
Maturities of Debt | ||||||||
2022 (remaining period of year) | $ | — | ||||||
2023 | — | |||||||
2024 | — | |||||||
2025 | 2,090 | |||||||
2026 | 829 | |||||||
Thereafter | 1,616 | |||||||
Total maturities of debt | $ | 4,535 |
(In Millions) | |||||||||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
Classification | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Senior notes | Level 1 | $ | 2,385 | $ | 2,219 | $ | 3,561 | $ | 3,911 | ||||||||||||||||||||
IRBs due 2024 to 2028 | Level 1 | — | — | 68 | 66 | ||||||||||||||||||||||||
ABL Facility - outstanding balance | Level 2 | 2,090 | 2,090 | 1,609 | 1,609 | ||||||||||||||||||||||||
Total | $ | 4,475 | $ | 4,309 | $ | 5,238 | $ | 5,586 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Service cost | $ | 11 | $ | 14 | $ | 35 | $ | 42 | |||||||||||||||
Interest cost | 32 | 26 | 95 | 78 | |||||||||||||||||||
Expected return on plan assets | (93) | (89) | (277) | (269) | |||||||||||||||||||
Amortization: | |||||||||||||||||||||||
Prior service costs | 1 | 1 | 1 | 1 | |||||||||||||||||||
Net actuarial loss | 4 | 8 | 11 | 24 | |||||||||||||||||||
Net periodic benefit credits | $ | (45) | $ | (40) | $ | (135) | $ | (124) |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Service cost | $ | 11 | $ | 13 | $ | 32 | $ | 38 | |||||||||||||||
Interest cost | 19 | 19 | 59 | 56 | |||||||||||||||||||
Expected return on plan assets | (10) | (10) | (29) | (30) | |||||||||||||||||||
Amortization: | |||||||||||||||||||||||
Prior service costs (credits) | 1 | (2) | 1 | (2) | |||||||||||||||||||
Net actuarial loss (gain) | (3) | 1 | (9) | 3 | |||||||||||||||||||
Net periodic benefit costs | $ | 18 | $ | 21 | $ | 54 | $ | 65 |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Asset retirement obligations1 | $ | 522 | $ | 449 | |||||||
Less: current portion | 17 | 35 | |||||||||
Long-term asset retirement obligations | $ | 505 | $ | 414 | |||||||
1 Includes $279 million and $293 million related to our active operations as of September 30, 2022 and December 31, 2021, respectively. |
(In Millions) | |||||||||||
2022 | 2021 | ||||||||||
Asset retirement obligation as of January 1 | $ | 449 | $ | 342 | |||||||
Increase from acquisitions | — | 57 | |||||||||
Accretion expense | 21 | 13 | |||||||||
Reclassification from environmental obligations | 63 | — | |||||||||
Revision in estimated cash flows | 22 | — | |||||||||
Remediation payments | (33) | (20) | |||||||||
Asset retirement obligation as of September 30 | $ | 522 | $ | 392 |
September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||
Commodity Contracts | Unit of Measure | Maturity Dates | Notional Amount | Notional Amount | ||||||||||||||||||||||
Natural Gas | MMBtu | October 2022 - May 2025 | 138,380,000 | 92,591,000 | ||||||||||||||||||||||
Zinc | Metric tons | October 2022 - December 2022 | 4,023 | 16,092 | ||||||||||||||||||||||
Electricity | Megawatt hours | January 2023 - December 2023 | 432,043 | — | ||||||||||||||||||||||
Tin | Metric tons | October 2022 - December 2023 | 225 | — |
(In Millions) | ||||||||||||||
Balance Sheet Location | September 30, 2022 | December 31, 2021 | ||||||||||||
Other current assets | $ | 86 | $ | 40 | ||||||||||
Other non-current assets | 54 | — | ||||||||||||
Other current liabilities | (24) | (10) | ||||||||||||
Other non-current liabilities | (8) | (4) |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Foreign Currency Translation | |||||||||||||||||||||||
Beginning balance | $ | (1) | $ | 2 | $ | 1 | $ | 3 | |||||||||||||||
Other comprehensive loss before reclassifications | (2) | — | (4) | (1) | |||||||||||||||||||
Ending balance | $ | (3) | $ | 2 | $ | (3) | $ | 2 | |||||||||||||||
Derivative Instruments | |||||||||||||||||||||||
Beginning balance | $ | 109 | $ | 53 | $ | 68 | $ | (1) | |||||||||||||||
Other comprehensive income before reclassifications | 154 | 118 | 292 | 192 | |||||||||||||||||||
Income tax | (38) | (25) | (69) | (40) | |||||||||||||||||||
Other comprehensive income before reclassifications, net of tax | 116 | 93 | 223 | 152 | |||||||||||||||||||
Gains reclassified from AOCI to net income1 | (74) | (13) | (158) | (19) | |||||||||||||||||||
Income tax expense2 | 19 | 3 | 37 | 4 | |||||||||||||||||||
Net gains reclassified from AOCI to net income | (55) | (10) | (121) | (15) | |||||||||||||||||||
Ending balance | $ | 170 | $ | 136 | $ | 170 | $ | 136 | |||||||||||||||
Pension and OPEB | |||||||||||||||||||||||
Beginning balance | $ | 550 | $ | (121) | $ | 549 | $ | (135) | |||||||||||||||
Other comprehensive income before reclassifications4 | 119 | — | 119 | — | |||||||||||||||||||
Income tax | (28) | — | (28) | — | |||||||||||||||||||
Other comprehensive income before reclassifications, net of tax | 91 | — | 91 | — | |||||||||||||||||||
Losses reclassified from AOCI to net income3 | 3 | 8 | 4 | 26 | |||||||||||||||||||
Income tax benefit2 | (1) | (2) | (1) | (6) | |||||||||||||||||||
Net losses reclassified from AOCI to net income | 2 | 6 | 3 | 20 | |||||||||||||||||||
Ending balance | $ | 643 | $ | (115) | $ | 643 | $ | (115) | |||||||||||||||
Total AOCI Ending Balance | $ | 810 | $ | 23 | $ | 810 | $ | 23 | |||||||||||||||
1 Amounts recognized in Cost of goods sold in the Statements of Unaudited Condensed Consolidated Operations. | |||||||||||||||||||||||
2 Amounts recognized in Income tax expense in the Statements of Unaudited Condensed Consolidated Operations. | |||||||||||||||||||||||
3 Amounts recognized in Net periodic benefit credits other than service cost component in the Statements of Unaudited Condensed Consolidated Operations. | |||||||||||||||||||||||
4 Amounts relate to the net actuarial gain triggered by the interim remeasurement on the pension and OPEB plans affected by the USW labor agreement with our legacy mining operations. Refer to NOTE 10 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information. |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Cash and cash equivalents | $ | — | $ | — | |||||||
Inventories | 34 | 20 | |||||||||
Property, plant and equipment, net | 292 | 300 | |||||||||
Accounts payable | (24) | (12) | |||||||||
Other assets (liabilities), net | (22) | (12) | |||||||||
Noncontrolling interests | (280) | (296) |
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Income from continuing operations | $ | 165 | $ | 1,281 | $ | 1,578 | $ | 2,132 | |||||||||||||||
Income from continuing operations attributable to noncontrolling interest | (13) | (8) | (31) | (39) | |||||||||||||||||||
Net income from continuing operations attributable to Cliffs shareholders | 152 | 1,273 | 1,547 | 2,093 | |||||||||||||||||||
Income from discontinued operations, net of tax | — | 1 | 2 | 2 | |||||||||||||||||||
Net income attributable to Cliffs shareholders | $ | 152 | $ | 1,274 | $ | 1,549 | $ | 2,095 | |||||||||||||||
Weighted average number of shares: | |||||||||||||||||||||||
Basic | 516 | 500 | 520 | 497 | |||||||||||||||||||
Redeemable preferred shares | — | 17 | — | 44 | |||||||||||||||||||
Convertible senior notes1 | — | 24 | 2 | 21 | |||||||||||||||||||
Employee stock plans | 3 | 6 | 4 | 5 | |||||||||||||||||||
Diluted | 519 | 547 | 526 | 567 | |||||||||||||||||||
Earnings per common share attributable to Cliffs shareholders - basic2: | |||||||||||||||||||||||
Continuing operations | $ | 0.30 | $ | 2.46 | $ | 2.98 | $ | 3.87 | |||||||||||||||
Discontinued operations | — | — | — | — | |||||||||||||||||||
$ | 0.30 | $ | 2.46 | $ | 2.98 | $ | 3.87 | ||||||||||||||||
Earnings per common share attributable to Cliffs shareholders - diluted: | |||||||||||||||||||||||
Continuing operations | $ | 0.29 | $ | 2.33 | $ | 2.95 | $ | 3.69 | |||||||||||||||
Discontinued operations | — | — | — | — | |||||||||||||||||||
$ | 0.29 | $ | 2.33 | $ | 2.95 | $ | 3.69 | ||||||||||||||||
1 On January 1, 2022, we adopted ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). We utilized the modified retrospective method of adoption; using this approach, the guidance was applied to transactions outstanding as of the beginning of the fiscal year. | |||||||||||||||||||||||
2 For the three and nine months ended September 30, 2021, basic earnings per share is calculated by dividing Net income attributable to Cliffs shareholders, less $42 million and $172 million, respectively, of earnings attributed to Series B Participating Redeemable Preferred Stock, by the weighted average number of basic common shares outstanding during the period presented. |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Environmental obligations | $ | 143 | $ | 207 | |||||||
Less: current portion | 18 | 20 | |||||||||
Long-term environmental obligations | $ | 125 | $ | 187 |
(In Millions) | |||||||||||||||||||||||
Pension Benefits | OPEB | ||||||||||||||||||||||
Actual | Pro forma | Actual | Pro forma | ||||||||||||||||||||
September 30, 2022 | September 30, 2022 | September 30, 2022 | September 30, 2022 | ||||||||||||||||||||
Non-current assets | $ | 227 | $ | 227 | $ | 163 | $ | 163 | |||||||||||||||
Current liabilities | (4) | (4) | (130) | (94) | |||||||||||||||||||
Non-current liabilities | (464) | (558) | (2,287) | (801) | |||||||||||||||||||
Funded Status | $ | (241) | $ | (335) | $ | (2,254) | $ | (732) |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
(In Millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||
Revenue | % | Revenue | % | Revenue | % | Revenue | % | ||||||||||||||||||||||||||||||||||||||||
Automotive | $ | 1,847 | 33 | % | $ | 1,254 | 21 | % | $ | 5,344 | 30 | % | $ | 3,883 | 26 | % | |||||||||||||||||||||||||||||||
Infrastructure and manufacturing | 1,476 | 26 | % | 1,615 | 27 | % | 4,662 | 26 | % | 3,922 | 26 | % | |||||||||||||||||||||||||||||||||||
Distributors and converters | 1,483 | 26 | % | 2,465 | 41 | % | 5,199 | 29 | % | 5,721 | 38 | % | |||||||||||||||||||||||||||||||||||
Steel producers | 847 | 15 | % | 670 | 11 | % | 2,740 | 15 | % | 1,572 | 10 | % | |||||||||||||||||||||||||||||||||||
Total revenues | $ | 5,653 | $ | 6,004 | $ | 17,945 | $ | 15,098 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Income tax expense | $ | (10) | $ | (334) | $ | (404) | $ | (559) | |||||||||||||||
Effective tax rate | 6 | % | 21 | % | 20 | % | 21 | % |
(In Millions) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 165 | $ | 1,282 | $ | 1,580 | $ | 2,134 | |||||||||||||||
Less: | |||||||||||||||||||||||
Interest expense, net | (64) | (81) | (205) | (258) | |||||||||||||||||||
Income tax expense | (10) | (334) | (404) | (559) | |||||||||||||||||||
Depreciation, depletion and amortization | (237) | (239) | (788) | (664) | |||||||||||||||||||
Total EBITDA | $ | 476 | $ | 1,936 | $ | 2,977 | $ | 3,615 | |||||||||||||||
Less: | |||||||||||||||||||||||
EBITDA of noncontrolling interests1 | $ | 22 | $ | 17 | $ | 57 | $ | 60 | |||||||||||||||
Asset impairment | — | — | (29) | — | |||||||||||||||||||
Gain (loss) on extinguishment of debt | 4 | — | (76) | (88) | |||||||||||||||||||
Severance costs | (2) | (3) | (9) | (15) | |||||||||||||||||||
Acquisition-related costs excluding severance costs | — | (1) | (1) | (3) | |||||||||||||||||||
Acquisition-related loss on equity method investment | — | — | — | (18) | |||||||||||||||||||
Amortization of inventory step-up | — | (11) | — | (129) | |||||||||||||||||||
Impact of discontinued operations | — | 1 | 2 | 2 | |||||||||||||||||||
Total Adjusted EBITDA | $ | 452 | $ | 1,933 | $ | 3,033 | $ | 3,806 | |||||||||||||||
1 EBITDA of noncontrolling interests includes the following: | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | $ | 13 | $ | 8 | $ | 31 | $ | 39 | |||||||||||||||
Depreciation, depletion and amortization | 9 | 9 | 26 | 21 | |||||||||||||||||||
EBITDA of noncontrolling interests | $ | 22 | $ | 17 | $ | 57 | $ | 60 |
Three Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Steel shipments (in thousands of net tons) | 3,635 | 4,153 | (12) | % | |||||||||||||
Average selling price per net ton of steel products | $ | 1,360 | $ | 1,334 | 2 | % | |||||||||||
Revenues (in millions) | $ | 5,511 | $ | 5,869 | (6) | % | |||||||||||
Cost of goods sold (in millions) | $ | (5,167) | $ | (4,098) | 26 | % | |||||||||||
Gross margin (in millions) | $ | 344 | $ | 1,771 | (81) | % | |||||||||||
Gross margin percentage | 6 | % | 30 | % | |||||||||||||
Adjusted EBITDA (in millions) | $ | 436 | $ | 1,934 | (77) | % |
Nine Months Ended September 30, | |||||||||||||||||
2022 | 2021 | % Change | |||||||||||||||
Steel shipments (in thousands of net tons) | 10,913 | 12,502 | (13) | % | |||||||||||||
Average selling price per net ton of steel products | $ | 1,431 | $ | 1,122 | 28 | % | |||||||||||
Revenues (in millions) | $ | 17,481 | $ | 14,710 | 19 | % | |||||||||||
Cost of goods sold (in millions) | $ | (14,948) | $ | (11,472) | 30 | % | |||||||||||
Gross margin (in millions) | $ | 2,533 | $ | 3,238 | (22) | % | |||||||||||
Gross margin percentage | 14 | % | 22 | % | |||||||||||||
Adjusted EBITDA (in millions) | $ | 2,967 | $ | 3,796 | (22) | % |
(In Millions) | |||||
September 30, 2022 | |||||
Cash and cash equivalents | $ | 56 | |||
Available borrowing base on ABL Facility1 | $ | 4,500 | |||
Borrowings | (2,090) | ||||
Letter of credit obligations | (166) | ||||
Borrowing capacity available | $ | 2,244 | |||
1 As of September 30, 2022, the ABL Facility had a maximum borrowing base of $4.5 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. | |||||
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Current assets | $ | 7,876 | $ | 6,539 | |||||||
Non-current assets | 9,950 | 12,753 | |||||||||
Current liabilities | (3,786) | (3,222) | |||||||||
Non-current liabilities | (8,294) | (9,081) | |||||||||
(In Millions) | |||||
Nine Months Ended | |||||
September 30, 2022 | |||||
Revenues | $ | 16,658 | |||
Cost of goods sold | (14,216) | ||||
Income from continuing operations | 1,347 | ||||
Net income | 1,349 | ||||
Net income attributable to Cliffs shareholders | 1,349 |
(In Millions) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Balances with non-Guarantor subsidiaries: | |||||||||||
Accounts receivable, net | $ | 494 | $ | 199 | |||||||
Accounts payable | (812) | (186) | |||||||||
Balances with other related parties: | |||||||||||
Accounts receivable, net | $ | 9 | $ | 3 | |||||||
Accounts payable | (12) | (7) | |||||||||
(In Millions) | ||||||||||||||
Commodity Derivative | 10% Change | 25% Change | ||||||||||||
Natural gas | $ | 75 | $ | 187 | ||||||||||
Electricity | 3 | 8 | ||||||||||||
Zinc | 1 | 3 | ||||||||||||
Tin | — | 1 |
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) Purchased1 | 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 Programs2 | ||||||||||||||||||||||
July 1 - 31, 2022 | 1,000,851 | $ | 16.70 | 1,000,000 | $ | 807,562,950 | ||||||||||||||||||||
August 1 - 31, 2022 | 1,000,120 | $ | 17.28 | 1,000,000 | $ | 790,302,500 | ||||||||||||||||||||
September 1 - 30, 2022 | 149 | $ | 17.47 | — | $ | 790,302,500 | ||||||||||||||||||||
Total | 2,001,120 | $ | 16.99 | 2,000,000 | ||||||||||||||||||||||
1 Includes 851 shares that were delivered to us in July 2022, 120 shares that were delivered to us in August 2022, and 149 shares that were delivered to us in September 2022 to satisfy tax withholding obligations due upon the vesting or payment of stock awards. | ||||||||||||||||||||||||||
2 On February 11, 2022, we announced that the Board authorized a program to repurchase our outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $1 billion. We are not obligated to make any purchases, and the program may be suspended or discontinued at any time. The share repurchase program does not have a specific expiration date. |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Exhibit | |||||||
Schedule of the obligated group, including the parent and issuer and the subsidiary guarantors that have guaranteed the obligations under the 6.75% 2026 Senior Secured Notes, the 5.875% 2027 Senior Notes, the 7.00% 2027 Senior Notes, the 4.625% 2029 Senior Notes and the 4.875% 2031 Senior Notes issued by Cleveland-Cliffs Inc. (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 Lourenco Goncalves as of October 26, 2022 (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 Celso L. Goncalves Jr. as of October 26, 2022 (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 October 26, 2022 (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 Celso L. Goncalves Jr., Executive Vice President, Chief Financial Officer of Cleveland-Cliffs Inc., as of October 26, 2022 (filed herewith). | ||||||||
Mine Safety Disclosures (filed herewith). | ||||||||
101 | The following financial information from Cleveland-Cliffs Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Statements of Unaudited Condensed Consolidated Financial Position, (ii) the Statements of Unaudited Condensed Consolidated Operations, (iii) the Statements of Unaudited Condensed Consolidated Comprehensive Income, (iv) the Statements of Unaudited Condensed Consolidated Cash Flows, (v) the Statements of Unaudited Condensed Consolidated Changes in Equity, and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements. | |||||||
104 | The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL and contained in Exhibit 101. |
CLEVELAND-CLIFFS INC. | |||||||||||||||||||||||
By: | /s/ Kimberly A. Floriani | ||||||||||||||||||||||
Name: | Kimberly A. Floriani | ||||||||||||||||||||||
Title: | Senior Vice President, Controller & Chief Accounting Officer | ||||||||||||||||||||||
Date: | October 26, 2022 |
1 Year Cleveland Cliffs Chart |
1 Month Cleveland Cliffs Chart |
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