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Dec 31, 2019
Cleveland-Cliffs Q4 2019 Earnings Report
Cleveland-Cliffs' fourth-quarter results decreased compared to the previous year, but the company announced the acquisition of AK Steel.
Key Takeaways
Cleveland-Cliffs Inc. reported a net income of $63 million, or $0.23 per diluted share, for the fourth quarter of 2019. This includes $7 million in costs related to the acquisition of AK Steel. Consolidated revenues were $534 million, compared to $696 million in the prior-year quarter. Adjusted EBITDA was $111 million, compared to $188 million in the fourth quarter of 2018.
Net income for the fourth quarter was $63 million, or $0.23 per diluted share, including acquisition-related costs.
Consolidated revenues for the fourth quarter were $534 million, a decrease from $696 million in the prior-year quarter.
Adjusted EBITDA for the fourth quarter was $111 million, down from $188 million in the fourth quarter of 2018.
The company announced the acquisition of AK Steel, expected to close in the first quarter of 2020.
Cleveland-Cliffs
Cleveland-Cliffs
Forward Guidance
Cliffs expects to generate approximately $300-325 million of net income and $550-575 million of Adjusted EBITDA for the full-year 2020 on a standalone basis, based on iron ore prices of $90 per metric ton, steel prices of $650 per short ton, and pellet premiums of $50 per metric ton.
Positive Outlook
- Iron ore prices of $90 per metric ton.
- Steel prices of $650 per short ton.
- Pellet premiums of $50 per metric ton.
- Expects to receive approximately $60 million in cash tax refunds during the third quarter of 2020.
- Becoming a leading supplier of the most sophisticated carbon and stainless steel products to high-end clients, including engineered parts to the automotive industry as a Tier 1 supplier to several different models of cars, SUVs and trucks.
Challenges Ahead
- $125 million in interest expense.
- $25 million in tax expense (all non-cash).
- $100 million in depreciation, depletion, and amortization.
- 2020 capital spending expectation is $350-$400 million, including the remaining spend to complete the Toledo HBI production plant, sustaining capital, and capitalized interest.
- The quarter's results were negatively impacted by an unfavorable true-up of previously sold volumes due to lower pellet premiums and HRC prices, as well as unfavorable customer mix.