CLEVELAND–(BUSINESS WIRE)–Cleveland-Cliffs Inc. (NYSE: CLF) today reported results for the first quarter ended March 31, 2022.
Consolidated revenue for the first quarter of 2022 was $6 billion, compared to $4 billion in the first quarter of last year.
In the first quarter of 2022, the company recorded net income of $801 million, or $1.50 per diluted share.This includes the following one-time non-cash charges totaling $111 million, or $0.21 per diluted share:
In the first quarter of last year, the company recorded net income of $41 million, or $0.07 per diluted share.
Adjusted EBITDA1 for the first quarter of 2022 was $1.5 billion compared to $513 million for the first quarter of 2021.
(A) Beginning in 2022, the company has assigned corporate SG&A to its operating segments.Previous periods have been adjusted to reflect this change.The knockout line now only includes sales between departments.
Lourenco Goncalves, chairman, president and chief executive officer of Cliffs, said: “Our first quarter results clearly demonstrated the success we achieved when we renewed our fixed price contracts last year. Although spot steel prices increased from the fourth quarter to the first quarter This decline has had a lagged impact on our results, but we are able to continue to deliver strong profitability. As this trend continues, we expect to record another free cash flow record in 2022.”
Mr. Goncalves continued: “Russian aggression in Ukraine has made it clear to everyone that we at Cleveland Cliffs have been explaining to our customers for some time that overextended supply chains are weak and prone to collapse, especially steel supplies. The chain relies on imported raw materials. No steel company can produce high-spec flat steel without using pig iron or iron substitutes such as HBI or DRI as raw materials. Cleveland-Cliffs uses iron ore pellets from Minnesota and Michigan , produce all the pig iron and HBI we need in Ohio, Michigan, and Indiana. That way, we create and support high-paying middle-class jobs in the U.S. We don’t import pig iron from Russia; and we don’t import HBI, DRI, or slab . We are best-in-class in every aspect of ESG – E, S and G.”
Mr. Goncalves concluded: “For the past eight years, our strategy has been to protect and strengthen the Cleveland-Cliffs region from the consequences of deglobalization, which we have always believed was inevitable. The importance of American manufacturing and the reliability of the US-centric vertically integrated footprint has been proven by Russia’s invasion of Ukraine’s raw material and shale gas-rich Donets Coal Basin (Donbass) region. While other flat steel makers scrambled to buy them When we get the ingredients we need and pay premium prices, we stand out from the crowd as we prepare for the current geopolitical climate.”
Net steel production in Q1 2022 was 3.6 million tonnes, comprising 34% coated, 25% hot rolled, 18% cold rolled, 6% plate, 5% stainless and electrical, and 12% of other steels, including slabs and rails.
Steelmaking revenue of $5.8 billion includes $1.8 billion or 31% of sales to distributors and processors; $1.6 billion or 28% of automotive sales; $1.5 billion or 27% of sales to infrastructure and manufacturing markets; and $816 million, or 14 percent of sales, to steel producers.
Steelmaking cost of sales for the first quarter of 2022 included $290 million in depreciation, depletion and amortization, including $68 million in accelerated depreciation related to the indefinite idleness of the Indiana Port #4 blast furnace.
The company had total liquidity of $2.1 billion as of April 20, 2022, having completed the redemption of all of its 9.875% senior secured notes due 2025, which were issued earlier this week Finish.
The company reduced principal long-term debt by $254 million in the first quarter of 2022.In addition, Cliffs repurchased 1 million shares during the quarter at an average price of $18.98 per share, using $19 million in cash.
Cliffs raised its full-year 2022 average selling price forecast by $220 to $1,445 a net tonne, compared with previous guidance of $1,225 a net tonne, using the same methodology it provided last quarter.Growth is due to higher-than-expected renewal prices for fixed-price contracts reset on April 1, 2022; expected spread between hot-rolled and cold-rolled steel increased; higher futures curve currently implies full-year 2022 HRC The average price of timber is US$1,300 per net ton.
Cleveland-Cliffs Inc. will host a conference call on April 22, 2022 at 10:00 AM ET.The call will be broadcast live and archived on Cliffs’ website at www.clevelandcliffs.com.
Cleveland-Cliffs is the largest flat steel producer in North America.Founded in 1847, Cliffs is a mine operator and the largest manufacturer of iron ore pellets in North America.The company is vertically integrated from mined raw materials, DRI and scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing.We are the largest steel supplier to the North American automotive industry and serve a variety of other markets due to our comprehensive line of flat steel products.Headquartered in Cleveland, Ohio, Cleveland-Cliffs employs approximately 26,000 people in operations in the United States and Canada.
This press release contains statements that constitute “forward-looking statements” within the meaning of the federal securities laws.All statements other than historical facts, including, without limitation, statements regarding our current expectations, estimates and projections about our industry or business, are forward-looking statements.We caution investors that any forward-looking statements are subject to risks and uncertainties that could cause actual results and future trends to differ materially from those expressed or implied by such forward-looking statements.Investors are cautioned not to place undue reliance on forward-looking statements.Risks and uncertainties that could cause actual results to differ from those described in forward-looking statements include: continued volatility in market prices for steel, iron ore and scrap metal, which directly and indirectly affect the prices of the products we sell to our customers; Uncertainties associated with the highly competitive and cyclical steel industry and our reliance on steel demand from the automotive industry, which has been experiencing trends towards light weighting and supply chain disruptions, such as semiconductor shortages, could lead to lower steel production being Consumption; underlying weaknesses and uncertainties in global economic conditions, global steelmaking excess capacity, iron ore oversupply, general steel imports and reduced market demand, including due to the prolonged COVID-19 pandemic, conflict or otherwise; due to ongoing adverse effects of severe financial difficulties, bankruptcy, temporary or permanent closures or operational challenges of one or more of our major customers (including customers in the automotive market, key suppliers or contractors) due to the COVID-19 pandemic or otherwise, may resulting in reduced demand for our products, increased difficulty in collecting receivables, and customer and/or supplier claims of force majeure or other reasons for non-performance of their contractual obligations to us; operational disruptions related to the ongoing COVID-19 pandemic, Including the increased risk that most of our employees or on-site contractors may become ill or unable to perform their day-to-day job functions; discussions with the U.S. government regarding the Trade Expansion Act of 1962 (as amended by the Trade Act of 1974), the U.S.-Mexico-Canada Agreement and/ or other trade agreements, tariffs, treaties or policies related to action under Section 232, and the uncertainty of obtaining and maintaining effective anti-dumping and countervailing duty orders to offset the harmful effects of unfair trade imports; existing and The impact of increasing government regulations, including potential environmental regulations related to climate change and carbon emissions, and associated costs and liabilities, including failure to obtain or maintain required operational and environmental permits, approvals, modifications, or other authorizations, or from any governmental or regulatory bodies and costs associated with implementing improvements to ensure compliance with regulatory changes, including potential financial assurance requirements; the potential impact of our operations on the environment or exposure to hazardous substances; our ability to maintain adequate liquidity, our Debt levels and capital availability may limit the financial flexibility and cash flow we need to fund working capital, planned capital expenditures, acquisitions and other general corporate purposes or the continuing needs of our business; our ability to Scope or complete reduction of our debt or return of capital to shareholders; adverse changes in credit ratings, interest rates, foreign currency exchange rates and tax laws; related to commercial and commercial disputes, environmental matters, government investigations, occupational or personal injury claims, property damage, labor and Results and costs of litigation, claims, arbitrations, or governmental proceedings related to employment matters or litigation involving estates; operations and other matters; uncertainty about the cost or availability of critical manufacturing equipment and spare parts; supply chain disruptions or energy (including electricity, natural gas, etc.) and diesel fuel) or critical raw materials and supplies (including iron ore, industrial gaschange in the cost, quality or availability of metallurgical coal, graphite electrodes, scrap metal, chromium, zinc, coke) and metallurgical coal; and shipping products to our customers, internal transfers of manufacturing inputs or products between our facilities, or shipping to us Supplier-related issues or disruptions of raw materials; uncertainties related to natural or man-made disasters, severe weather conditions, unexpected geological conditions, critical equipment failures, infectious disease outbreaks, tailings dam failures and other unforeseen events; our information technology interruptions or failures of systems, including those related to cybersecurity; liabilities and costs associated with any business decision to temporarily or indefinitely idle or permanently close an operating facility or mine, which may adversely affect the carrying value of the underlying asset, and incurring impairment charges or closure and recovery obligations, and uncertainty related to restarting any previously idled operating facilities or mines; our realization of expected synergies and benefits from recent acquisitions and the successful integration of acquired operations into our existing operations our ability to maintain our relationships with customers, suppliers and employees, including the uncertainties associated with maintaining our relationships with customers, suppliers and employees and our known and unknown liabilities in connection with acquisitions; our level of self-insurance and our access to adequate third-party insurance to fully Ability to cover potential adverse events and business risks; challenges to maintaining our social license to operate with stakeholders, including the impact of our operations on local communities, reputational impact of operating in carbon-intensive industries that generate greenhouse gas emissions , and our ability to develop a consistent operating and safety record; our ability to successfully identify and refine any strategic capital investment or development project, cost-effectively achieve planned productivity or levels, diversify our product portfolio and add new customers; Decreases in our actual economic mineral reserves or current estimates of mineral reserves, and any title defect or loss of any lease, license, easement or other possession interest in any mining property; availability and continued availability of workers filling critical operating positions Potential workforce shortages resulting from the COVID-19 pandemic and our ability to attract, hire, develop and retain key personnel; our ability to maintain satisfactory industrial relations with unions and employees; due to changes in the value of planned assets or lack of funding unexpected or higher costs related to pension and OPEB obligations; the amount and timing of repurchases of our common stock; and our internal control over financial reporting may have material deficiencies or material deficiencies.
See Part I – Item 1A for additional factors affecting Cliffs’ business.Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the SEC.
In addition to the consolidated financial statements presented in accordance with US GAAP, the company also presents EBITDA and Adjusted EBITDA on a consolidated basis.EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management in evaluating operating performance.These measures should not be presented in isolation from, in lieu of, or in preference to financial information prepared and presented in accordance with U.S. GAAP.The presentation of these measures may differ from non-GAAP financial measures used by other companies.The table below provides a reconciliation of these consolidated measures to their most directly comparable GAAP measures.
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