CLEVELAND, Feb. 9, 2017 /PRNewswire/ -- Cliffs Natural
Resources Inc. (NYSE: CLF) today reported fourth-quarter and
full-year results for the period ended December 31, 2016.
Fourth-quarter 2016 consolidated revenues of $754 million increased 58 percent from the prior
year's fourth-quarter revenues of $476
million. As a result of increased volumes sold, cost of
goods sold increased by 32 percent to $573
million compared to $433
million reported in the fourth quarter of 2015.
For the fourth quarter of 2016, the Company recorded net income
of $81 million compared to a net loss
of $58 million recorded in the
prior-year quarter. The Company recorded net income attributable to
Cliffs' common shareholders of $79
million, compared to a net loss attributable to Cliffs'
common shareholders of $60 million
recorded in the fourth quarter of 2015.
For the fourth-quarter of 2016, adjusted EBITDA1 was
$174 million, compared to
$76 million in the fourth quarter of
2015.
|
|
|
Adjusted
EBITDA1 by Segment (in millions)
|
|
|
U.S.
Iron Ore
|
|
Asia Pacific
Iron Ore
|
|
Corporate/
Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
Q4 2016
Adjusted
EBITDA1 (in millions)
|
|
$
|
151.0
|
|
|
$
|
59.7
|
|
|
$
|
(36.9)
|
|
|
$
|
173.8
|
|
YTD 2016
Adjusted
EBITDA1 (in millions)
|
|
$
|
359.6
|
|
|
$
|
132.9
|
|
|
$
|
(119.0)
|
|
|
$
|
373.5
|
|
Full-Year Consolidated Results
Full-year 2016
consolidated revenues of $2.1 billion
increased 5 percent from the prior year's revenues of $2.0 billion. Cost of goods sold decreased by 3
percent to $1.7 billion compared to
$1.8 billion reported in 2015.
For the full-year 2016, the Company recorded net income of
$199 million compared to a net loss
of $748 million recorded in the prior
year. The Company recorded full-year net income attributable to
Cliffs' common shareholders of $174
million, compared to a net loss attributable to Cliffs'
common shareholders of $788 million,
recorded in 2015.
For the full-year 2016, adjusted EBITDA1 was
$374 million, compared to
$293 million in 2015.
Lourenco Goncalves, Chairman,
President and Chief Executive Officer, said: "2016 was the year in
which we finalized the execution of the operational, commercial and
financial actions necessary to ensure Cliffs will have a great
future. Among the actions accomplished last year are several new
sales agreements entered with clients, including the renewal of our
long-term supply contract with our largest customer, and a number
of capital markets transactions that were successfully executed to
reduce debt and extend our maturity runway." Mr. Goncalves added:
"Despite the undeniable fact that the underlying business
environment was far from ideal during almost all of 2016, the
environmentally compliant and safety oriented performance of the
Cliffs teams in the United States
and in Australia resulted in a
very profitable year with strong cash flow generation." Mr.
Goncalves concluded: "We are excited about Cliffs and about our
future. A much more favorable business environment in the U.S. and
a newly adopted rational behavior in the international iron ore
market support the work we have done internally in our company.
With a much lower debt profile and extended maturities, and several
new and more favorable commercial agreements that we put in place
in 2016, we expect Cliffs to deliver strong and sustainable results
in 2017."
Reporting Matters
Given that the Company anticipates
running its mines at full capacity going forward, Cliffs will
provide more simplified disclosures with respect to reporting
operating cost performance at its two business units. Accordingly,
the Company will no longer separate cash cost of goods sold and
operating expense rate into "cash production cost per ton" and
"non-production cash cost per ton." Idle cost was a significant
component of non-production cash cost in 2015 and 2016.
U.S. Iron
Ore
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Volumes - In
Thousands of Long Tons
|
|
|
|
|
|
|
|
|
Total sales
volume
|
|
6,881
|
|
|
4,501
|
|
|
18,224
|
|
|
17,292
|
|
Total production
volume
|
|
4,923
|
|
|
4,340
|
|
|
15,982
|
|
|
19,317
|
|
Sales Margin - In
Millions
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
579.0
|
|
|
$
|
372.9
|
|
|
$
|
1,554.5
|
|
|
$
|
1,525.4
|
|
Cost of goods sold
and operating expenses
|
|
453.0
|
|
|
323.5
|
|
|
1,278.8
|
|
|
1,298.3
|
|
Sales
margin
|
|
$
|
126.0
|
|
|
$
|
49.4
|
|
|
$
|
275.7
|
|
|
$
|
227.1
|
|
Sales Margin - Per
Long Ton
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
73.86
|
|
|
$
|
74.23
|
|
|
$
|
75.71
|
|
|
$
|
79.12
|
|
|
|
|
|
|
|
|
|
|
Cash cost of goods
sold and operating expense rate2
|
|
52.80
|
|
|
57.19
|
|
|
55.97
|
|
|
60.27
|
|
Depreciation,
depletion and amortization
|
|
2.75
|
|
|
6.07
|
|
|
4.61
|
|
|
5.72
|
|
Cost of goods sold
and operating expenses*
|
|
55.55
|
|
|
63.26
|
|
|
60.58
|
|
|
65.99
|
|
Sales
margin
|
|
$
|
18.31
|
|
|
$
|
10.97
|
|
|
$
|
15.13
|
|
|
$
|
13.13
|
|
|
|
|
|
|
|
|
|
|
*Excludes revenues
and expenses related to domestic freight, which are offsetting and
have no impact on sales margin. Revenues and expenses also exclude
venture partner cost reimbursements.
|
U.S. Iron Ore pellet sales volume in the fourth quarter of 2016
was 6.9 million long tons, a 53 percent increase when compared with
4.5 million long tons sold in the fourth quarter of 2015. The
increase was a result of improved steel market conditions driving
increased pellet demand and new customer arrangements in
2016.
Cash cost of goods sold and operating expense rate2
in U.S. Iron Ore was $52.80 per long
ton, down 8 percent from $57.19 per
long ton in the prior year's fourth quarter. The decrease was
driven by the absence of idle costs and a supplies inventory
write-off that were incurred in the prior-year quarter, as well as
a favorable asset retirement obligation adjustment.
Asia Pacific Iron
Ore
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Volumes - In
Thousands of Metric Tons
|
|
|
|
|
|
|
|
|
Total sales
volume
|
|
2,937
|
|
|
2,917
|
|
|
11,642
|
|
|
11,627
|
|
Total production
volume
|
|
3,264
|
|
|
3,068
|
|
|
11,839
|
|
|
11,722
|
|
Sales Margin - In
Millions
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services
|
|
$
|
175.0
|
|
|
$
|
103.1
|
|
|
$
|
554.5
|
|
|
$
|
487.9
|
|
Cost of goods sold
and operating expenses
|
|
119.5
|
|
|
109.2
|
|
|
440.9
|
|
|
478.5
|
|
Sales
margin
|
|
$
|
55.5
|
|
|
$
|
(6.1)
|
|
|
$
|
113.6
|
|
|
$
|
9.4
|
|
Sales Margin - Per
Metric Ton
|
|
|
|
|
|
|
|
|
Revenues from product
sales and services*
|
|
$
|
57.30
|
|
|
$
|
33.73
|
|
|
$
|
45.85
|
|
|
$
|
39.93
|
|
|
|
|
|
|
|
|
|
|
Cash cost of goods
sold and operating expense rate2
|
|
36.40
|
|
|
33.70
|
|
|
33.94
|
|
|
36.95
|
|
Depreciation,
depletion and amortization
|
|
2.01
|
|
|
2.13
|
|
|
2.16
|
|
|
2.18
|
|
Cost of goods sold
and operating expenses*
|
|
38.41
|
|
|
35.83
|
|
|
36.10
|
|
|
39.13
|
|
Sales
margin
|
|
$
|
18.89
|
|
|
$
|
(2.10)
|
|
|
$
|
9.75
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
*Excludes revenues
and expenses related to freight, which are offsetting and have no
impact on sales margin.
|
Fourth-quarter 2016 Asia Pacific Iron Ore sales volume of 2.9
million metric tons increased 1 percent from the prior-year quarter
due primarily to the size of vessel shipments.
Cash cost of goods sold and operating expense rate2
in Asia Pacific Iron Ore was $36.40
per metric ton in the fourth quarter of 2016, an 8 percent increase
from $33.70 in the prior-year
quarter. The increase was attributable to higher royalties and an
unfavorable exchange rate compared to the prior-year quarter. The
change was also driven by increased mining and haulage costs as
market conditions allowed the operating footprint to expand.
Other Income Statement Items
Cliffs' fourth-quarter
2016 SG&A expenses were $36
million. This represents a 29 percent increase when compared
to the fourth-quarter 2015 expenses of $28
million. The increase was driven primarily by higher
incentive compensation due to stronger results. The increase was
also driven by spending related to the research and development of
alternative iron products, which is classified as SG&A.
Cliffs' net interest expense during the fourth quarter was
$44 million, a 27 percent decrease
when compared to the fourth-quarter 2015 expense of $60 million, as a result of numerous liability
management activities executed by the Company during 2016. The
Company noted that of the $44 million
expense, $36 million was a cash
expense and the remainder is considered non-cash.
Debt and Cash Flow
Total debt at the end of the fourth
quarter of 2016 was $2.2 billion,
versus $2.7 billion at the end of the
fourth quarter of 2015. Fourth quarter cash and cash equivalents
totaled $323 million, compared to
$285 million at the end of the fourth
quarter of 2015.
At the end of the fourth quarter of 2016, Cliffs had net
debt3 of $1.8 billion,
compared to $2.4 billion of net
debt3 at the end of the fourth quarter of 2015.
Capital expenditures during the quarter were $23 million, in line with the prior-year quarter.
Full-year 2016 capital expenditures were $69
million, a 15 percent reduction compared to $81 million in the prior year.
Cliffs also reported depreciation, depletion and amortization of
$27 million in the fourth quarter of
2016.
Outlook
In 2017, Cliffs expects to generate
$510 million of net income and
$850 million of adjusted
EBITDA1. This expectation is based on the assumption
that iron ore and steel prices will average levels consistent with
the full month of January throughout 2017. In future quarters,
Cliffs anticipates continuing to update 2017 net income and
adjusted EBITDA1 guidance.
Segment Outlook
Consistent with the SEC's recent
guidance on the presentation of non-GAAP financial measures, the
Company will be taking a more robust approach to reconciling its
non-GAAP measures. Cliffs will begin providing guidance for
cost of goods sold and operating expense rate including freight and
venture partner's cost reimbursements, which have offsetting
amounts in revenue and have no impact on sales margin. In the 2017
outlook summary below, a reconciliation to cash costs of goods sold
and operating expense rate2 is provided for Cliffs' two
business segments, consistent with how guidance was previously
shown.
|
|
2017 Outlook
Summary
|
Per Sales Ton
Information
|
U.S. Iron Ore
(A)
|
Asia Pacific
Iron
Ore (B)
|
Cost of goods sold
and operating expense rate
|
$70 - $75
|
$37 - $42
|
Less:
|
|
|
Freight and venture partner's cost reimbursements expense rate
(C)
|
$11
|
$2
|
Depreciation, depletion & amortization rate
|
$4
|
$1
|
Cash cost of goods
sold and operating expense rate2
|
$55 - $60
|
$34 - $39
|
|
|
|
Sales volume (million
tons)
|
19.0
|
11.5
|
Production volume
(million tons)
|
19.0
|
11.5
|
(A) U.S. Iron Ore
tons are reported in long tons of pellets.
|
(B) Asia Pacific Iron
Ore tons are reported in metric tons of lump and fines.
|
(C) The freight and
venture partners' cost reimbursements have offsetting amounts in
revenue and have no impact on sales margin.
|
U.S. Iron Ore Outlook (Long Tons)
As previously disclosed, for 2017, Cliffs expects full-year sales
and production volumes of approximately 19 million long tons from
its U.S. Iron Ore business. This compares to 18.2 million long tons
of sales and 16.0 million long tons of production in 2016.
Cliffs' full-year 2017 U.S. Iron Ore cash cost of goods sold and
operating expense2 expectation is $55 - $60 per long ton, which compares to
$56 per long ton for the full-year
2016.
Asia Pacific Iron Ore Outlook (Metric Tons, F.O.B. the
port)
Cliffs' full-year 2017 Asia Pacific Iron Ore expected sales and
production volume is approximately 11.5 million tons. The product
mix is expected to contain 50 percent lump ore and 50 percent
fines.
Based on a full-year average exchange rate of $0.75 U.S. Dollar to Australian Dollar, Cliffs'
full-year 2017 cash cost of goods sold and operating
expense2 expectation is $34 -
$39 per metric ton, which compares to $34 per metric ton for the full-year 2016. The
increase in range is attributable to higher expected royalties and
increased mining and haulage costs as market conditions have
allowed the operating footprint to expand.
SG&A Expenses and Other
Expectations
Full-year 2017 SG&A expenses are expected
to be approximately $100 million, an
$18 million reduction from the
full-year 2016 expense. Cliffs also notes that of the $100 million expectation, approximately
$25 million is considered
non-cash.
The Company's full-year 2017 interest expense is expected to be
approximately $175 million, compared
to $201 million recorded in 2016.
Consolidated full-year 2017 depreciation, depletion and
amortization is expected to be approximately $100 million.
Capital Budget Update
Cliffs expects full-year 2017
capital expenditures to be $105
million, which includes approximately $40 million related to the completion of the
Mustang Project at the United Taconite mine.
Conference Call Information
Cliffs Natural Resources
Inc. will host a conference call this morning, February 9, 2017, at 10
a.m. ET. The call will be broadcast live and archived on
Cliffs' website: www.cliffsnaturalresources.com.
About Cliffs Natural Resources Inc.
Cliffs Natural
Resources Inc. is a leading mining and natural resources company.
Founded in 1847, Cliffs Natural Resources Inc. is recognized as the
largest and oldest independent iron ore mining company in
the United States. The
Company is a major supplier of iron ore pellets to the North
American steel industry from its mines and pellet plants located in
Michigan and Minnesota. Cliffs also operates an iron ore
mining complex in Western
Australia. Driven by the core values of safety, social,
environmental and capital stewardship, Cliffs' employees endeavor
to provide all stakeholders operating and financial
transparency.
Forward-Looking Statements
This release contains
statements that constitute "forward-looking statements" within the
meaning of the federal securities laws. As a general matter,
forward-looking statements relate to anticipated trends and
expectations rather than historical matters. Forward-looking
statements are subject to uncertainties and factors relating to
Cliffs' operations and business environment that are difficult to
predict and may be beyond our control. Such uncertainties and
factors may cause actual results to differ materially from those
expressed or implied by the forward-looking statements. These
statements speak only as of the date of this release, and we
undertake no ongoing obligation, other than that imposed by law, to
update these statements. Uncertainties and risk factors that
could affect Cliffs' future performance and cause results to differ
from the forward-looking statements in this release include, but
are not limited to: uncertainty and weaknesses in global economic
conditions, including downward pressure on prices caused by
oversupply or imported products, the impact of any reduced barriers
to trade, the outcomes of recently filed and forthcoming trade
cases, reduced market demand and any change to the economic growth
rate in China; continued
volatility of iron ore and steel prices and other trends, including
the supply approach of the major iron ore producers, affecting our
financial condition, results of operations or future prospects,
specifically the impact of price-adjustment factors on our sales
contracts; our level of indebtedness could limit cash flow
available to fund working capital, capital expenditures,
acquisitions and other general corporate purposes or ongoing needs
of our business; availability of capital and our ability to
maintain adequate liquidity; our ability to successfully conclude
the CCAA process in a manner that minimizes cash outflows and
associated liabilities; 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;
uncertainty relating to restructurings in the steel industry and/or
affecting the steel industry; 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; the ability of our customers and joint venture
partners to meet their obligations to us on a timely basis or at
all; problems or uncertainties with productivity, tons mined,
transportation, mine-closure obligations, environmental
liabilities, employee-benefit costs and other risks of the mining
industry; our ability to reach agreement with our customers
regarding any modifications to sales contract provisions, renewals
or new arrangements; our actual levels of capital spending; our
ability to successfully diversify our product mix and add new
customers beyond our traditional blast furnace clientele; our
actual economic iron ore reserves or reductions in current mineral
estimates, including whether any mineralized material qualifies as
a reserve; our ability to cost-effectively achieve planned
production rates or levels; our ability to successfully identify
and consummate any strategic investments or development projects;
changes in sales volume or mix; events or circumstances that could
impair or adversely impact the viability of a mine and the carrying
value of associated assets, as well as any resulting impairment
charges; our ability to maintain appropriate relations with unions
and employees; 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;
uncertainties associated with natural disasters, weather
conditions, unanticipated geological conditions, supply or price of
energy, equipment failures and other unexpected events; adverse
changes in currency values, currency exchange rates, interest rates
and tax laws; risks related to international operations; and the
potential existence of significant deficiencies or material
weakness in our internal control over financial reporting.
For additional factors affecting the business of Cliffs, refer
to Part I – Item 1A. Risk Factors of our Annual Report on Form
10-K for the year ended December 31,
2015. You are urged to carefully consider these risk
factors.
FINANCIAL TABLES FOLLOW
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES STATEMENTS OF UNAUDITED CONDENSED
CONSOLIDATED OPERATIONS
|
|
|
|
|
|
(In Millions,
Except Per Share Amounts)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
REVENUES FROM PRODUCT
SALES AND SERVICES
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
676.5
|
|
|
$
|
432.5
|
|
|
$
|
1,913.5
|
|
|
$
|
1,832.4
|
|
Freight and venture
partners' cost reimbursements
|
|
77.5
|
|
|
43.5
|
|
|
195.5
|
|
|
180.9
|
|
|
|
754.0
|
|
|
476.0
|
|
|
2,109.0
|
|
|
2,013.3
|
|
COST OF GOODS SOLD
AND OPERATING EXPENSES
|
|
(572.5)
|
|
|
(432.7)
|
|
|
(1,719.7)
|
|
|
(1,776.8)
|
|
SALES
MARGIN
|
|
181.5
|
|
|
43.3
|
|
|
389.3
|
|
|
236.5
|
|
OTHER OPERATING
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(36.0)
|
|
|
(27.8)
|
|
|
(117.8)
|
|
|
(110.0)
|
|
Impairment of
goodwill and other long-lived assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3)
|
|
Miscellaneous -
net
|
|
(13.8)
|
|
|
9.0
|
|
|
(30.7)
|
|
|
28.1
|
|
|
|
(49.8)
|
|
|
(18.8)
|
|
|
(148.5)
|
|
|
(85.2)
|
|
OPERATING
INCOME
|
|
131.7
|
|
|
24.5
|
|
|
240.8
|
|
|
151.3
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(44.3)
|
|
|
(60.3)
|
|
|
(200.5)
|
|
|
(228.5)
|
|
Gain on
extinguishment/restructuring of debt
|
|
2.2
|
|
|
—
|
|
|
166.3
|
|
|
392.9
|
|
Other non-operating
income (expense)
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
|
(2.6)
|
|
|
|
(42.1)
|
|
|
(59.9)
|
|
|
(33.8)
|
|
|
161.8
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY LOSS FROM
VENTURES
|
|
89.6
|
|
|
(35.4)
|
|
|
207.0
|
|
|
313.1
|
|
INCOME TAX BENEFIT
(EXPENSE)
|
|
10.5
|
|
|
0.6
|
|
|
12.2
|
|
|
(169.3)
|
|
EQUITY LOSS FROM
VENTURES, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS
|
|
100.1
|
|
|
(34.8)
|
|
|
219.2
|
|
|
143.7
|
|
LOSS FROM
DISCONTINUED OPERATIONS, net of tax
|
|
(19.3)
|
|
|
(23.1)
|
|
|
(19.9)
|
|
|
(892.1)
|
|
NET INCOME
(LOSS)
|
|
80.8
|
|
|
(57.9)
|
|
|
199.3
|
|
|
(748.4)
|
|
INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST
|
|
(1.7)
|
|
|
(2.4)
|
|
|
(25.2)
|
|
|
(0.9)
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS SHAREHOLDERS
|
|
$
|
79.1
|
|
|
$
|
(60.3)
|
|
|
$
|
174.1
|
|
|
$
|
(749.3)
|
|
PREFERRED STOCK
DIVIDENDS
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.4)
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLIFFS COMMON SHAREHOLDERS
|
|
$
|
79.1
|
|
|
$
|
(60.3)
|
|
|
$
|
174.1
|
|
|
$
|
(787.7)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.43
|
|
|
$
|
(0.24)
|
|
|
$
|
0.98
|
|
|
$
|
0.63
|
|
Discontinued
operations
|
|
(0.08)
|
|
|
(0.15)
|
|
|
(0.10)
|
|
|
(5.77)
|
|
|
|
$
|
0.35
|
|
|
$
|
(0.39)
|
|
|
$
|
0.88
|
|
|
$
|
(5.14)
|
|
EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS -
DILUTED
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.42
|
|
|
$
|
(0.24)
|
|
|
$
|
0.97
|
|
|
$
|
0.63
|
|
Discontinued
operations
|
|
(0.08)
|
|
|
(0.15)
|
|
|
(0.10)
|
|
|
(5.76)
|
|
|
|
$
|
0.34
|
|
|
$
|
(0.39)
|
|
|
$
|
0.87
|
|
|
$
|
(5.13)
|
|
AVERAGE NUMBER OF
SHARES (IN THOUSANDS)
|
|
|
|
|
|
|
|
|
Basic
|
|
231,273
|
|
|
153,278
|
|
|
197,659
|
|
|
153,230
|
|
Diluted
|
|
234,640
|
|
|
153,278
|
|
|
200,145
|
|
|
153,605
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
POSITION
|
|
|
|
|
|
(In
Millions)
|
|
|
December
31,
|
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
323.4
|
|
|
$
|
285.2
|
|
Accounts receivable,
net
|
|
128.7
|
|
|
40.2
|
|
Inventories
|
|
178.4
|
|
|
329.6
|
|
Supplies and other
inventories
|
|
91.4
|
|
|
110.4
|
|
Loans to and accounts
receivables from the Canadian Entities
|
|
48.6
|
|
|
72.9
|
|
Insurance coverage
receivable
|
|
—
|
|
|
93.5
|
|
Other current
assets
|
|
54.1
|
|
|
50.9
|
|
TOTAL CURRENT
ASSETS
|
|
824.6
|
|
|
982.7
|
|
PROPERTY, PLANT AND
EQUIPMENT, NET
|
|
984.4
|
|
|
1,059.0
|
|
OTHER NON-CURRENT
ASSETS
|
|
114.9
|
|
|
93.8
|
|
TOTAL OTHER
ASSETS
|
|
114.9
|
|
|
93.8
|
|
TOTAL
ASSETS
|
|
$
|
1,923.9
|
|
|
$
|
2,135.5
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable
|
|
$
|
107.6
|
|
|
$
|
106.3
|
|
Accrued employment
costs
|
|
56.1
|
|
|
53.0
|
|
State and local taxes
payable
|
|
28.3
|
|
|
35.2
|
|
Accrued
expenses
|
|
41.1
|
|
|
32.4
|
|
Accrued
interest
|
|
40.2
|
|
|
53.3
|
|
Accrued
royalties
|
|
26.2
|
|
|
17.3
|
|
Contingent
liabilities
|
|
0.2
|
|
|
96.5
|
|
Insured
loss
|
|
—
|
|
|
93.5
|
|
Other current
liabilities
|
|
91.4
|
|
|
94.2
|
|
TOTAL CURRENT
LIABILITIES
|
|
391.1
|
|
|
581.7
|
|
TOTAL POSTEMPLOYMENT
BENEFIT LIABILITIES
|
|
280.5
|
|
|
221.0
|
|
ENVIRONMENTAL AND
MINE CLOSURE OBLIGATIONS
|
|
193.9
|
|
|
231.2
|
|
LONG-TERM
DEBT
|
|
2,175.1
|
|
|
2,699.4
|
|
OTHER
LIABILITIES
|
|
213.8
|
|
|
213.8
|
|
TOTAL
LIABILITIES
|
|
3,254.4
|
|
|
3,947.1
|
|
EQUITY
|
|
|
|
|
CLIFFS SHAREHOLDERS'
DEFICIT
|
|
(1,464.3)
|
|
|
(1,981.4)
|
|
NONCONTROLLING
INTEREST
|
|
133.8
|
|
|
169.8
|
|
TOTAL
DEFICIT
|
|
(1,330.5)
|
|
|
(1,811.6)
|
|
TOTAL LIABILITIES AND
DEFICIT
|
|
$
|
1,923.9
|
|
|
$
|
2,135.5
|
|
CLIFFS NATURAL
RESOURCES INC. AND SUBSIDIARIES
STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED CASH
FLOWS
|
|
|
|
|
|
(In
Millions)
|
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
(loss)
|
|
$
|
199.3
|
|
|
$
|
(748.4)
|
|
Adjustments to
reconcile net income (loss) to net cash provided (used) by
operating activities:
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
115.4
|
|
|
134.0
|
|
Impairment of
goodwill and other long-lived assets
|
|
—
|
|
|
76.6
|
|
Deferred income
taxes
|
|
—
|
|
|
159.8
|
|
Changes in deferred
revenue and below-market sales contracts
|
|
(20.5)
|
|
|
(42.6)
|
|
Gain on
extinguishment/restructuring of debt
|
|
(166.3)
|
|
|
(392.9)
|
|
Loss on
deconsolidation, net of cash deconsolidated
|
|
17.5
|
|
|
668.3
|
|
Loss (gain) on sale
of North American Coal mines
|
|
(2.1)
|
|
|
(9.3)
|
|
Other
|
|
32.6
|
|
|
113.0
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Receivables and other
assets
|
|
43.2
|
|
|
369.1
|
|
Product
inventories
|
|
157.8
|
|
|
(62.0)
|
|
Payables and accrued
expenses
|
|
(73.9)
|
|
|
(227.7)
|
|
Net cash provided by
operating activities
|
|
303.0
|
|
|
37.9
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(69.1)
|
|
|
(80.8)
|
|
Investments in DIP
and pre-petition financing
|
|
(1.5)
|
|
|
(14.0)
|
|
Proceeds from DIP and
pre-petition financing
|
|
8.3
|
|
|
—
|
|
Proceeds (uses) from
sale of North American Coal mines
|
|
3.6
|
|
|
(15.2)
|
|
Other investing
activities
|
|
0.8
|
|
|
6.8
|
|
Net cash used in
investing activities
|
|
(57.9)
|
|
|
(103.2)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Net proceeds from
issuance of common shares
|
|
287.4
|
|
|
—
|
|
Proceeds from first
lien notes offering
|
|
—
|
|
|
503.5
|
|
Debt issuance
costs
|
|
(5.2)
|
|
|
(33.6)
|
|
Borrowings under
credit facilities
|
|
105.0
|
|
|
309.8
|
|
Repayment under
credit facilities
|
|
(105.0)
|
|
|
(309.8)
|
|
Repayments of
equipment loans
|
|
(95.6)
|
|
|
(45.4)
|
|
Repurchase of
debt
|
|
(305.4)
|
|
|
(225.9)
|
|
Contributions by
joint ventures, net
|
|
(3.2)
|
|
|
0.1
|
|
Distributions of
partnership equity
|
|
(59.9)
|
|
|
(40.6)
|
|
Preferred stock
dividends
|
|
—
|
|
|
(51.2)
|
|
Other financing
activities
|
|
(24.5)
|
|
|
(45.9)
|
|
Net cash provided
(used) by financing activities
|
|
(206.4)
|
|
|
61.0
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
|
(0.5)
|
|
|
(1.4)
|
|
INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS
|
|
38.2
|
|
|
(5.7)
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF YEAR
|
|
285.2
|
|
|
290.9
|
|
CASH AND CASH
EQUIVALENTS AT END OF YEAR
|
|
$
|
323.4
|
|
|
$
|
285.2
|
|
1 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION - EBITDA
AND ADJUSTED EBITDA RESULTS
In addition to the consolidated financial statements presented
in accordance with U.S. GAAP, the Company has presented EBITDA and
adjusted EBITDA on both a consolidated basis and on a segment
basis, which are non-GAAP financial measures that management uses
in evaluating operating performance. The presentation of these
measures is not intended to be considered in isolation from, as a
substitute for, or as superior to, the financial information
prepared and presented in accordance with U.S. GAAP. The
presentation of these measures may be different from non-GAAP
financial measures used by other companies. A reconciliation of
these consolidated measures to their most directly comparable GAAP
measures is provided in the table below.
|
|
(In
Millions)
|
|
(In
Millions)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Income
(Loss)
|
|
$
|
80.8
|
|
|
$
|
(57.9)
|
|
|
$
|
199.3
|
|
|
$
|
(748.4)
|
|
Less:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(44.3)
|
|
|
(60.7)
|
|
|
(200.5)
|
|
|
(231.4)
|
|
Income tax benefit
(expense)
|
|
10.5
|
|
|
4.0
|
|
|
12.2
|
|
|
(163.3)
|
|
Depreciation,
depletion and amortization
|
|
(26.5)
|
|
|
(34.9)
|
|
|
(115.4)
|
|
|
(134.0)
|
|
EBITDA
|
|
$
|
141.1
|
|
|
$
|
33.7
|
|
|
$
|
503.0
|
|
|
$
|
(219.7)
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
Gain on
extinguishment/restructuring of debt
|
|
2.2
|
|
|
—
|
|
|
166.3
|
|
|
392.9
|
|
Impact of
discontinued operations
|
|
(19.3)
|
|
|
(26.1)
|
|
|
(19.9)
|
|
|
(892.0)
|
|
Foreign exchange
remeasurement
|
|
(15.6)
|
|
|
1.1
|
|
|
(16.8)
|
|
|
16.3
|
|
Severance and
contractor termination costs
|
|
—
|
|
|
(0.9)
|
|
|
(0.1)
|
|
|
(10.2)
|
|
Supplies inventory
write-off
|
|
—
|
|
|
(16.3)
|
|
|
—
|
|
|
(16.3)
|
|
Impairment of
goodwill and other long-lived assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3)
|
|
Adjusted
EBITDA
|
|
173.8
|
|
|
75.9
|
|
|
373.5
|
|
|
292.9
|
|
|
NON-GAAP
RECONCILIATION - EBITDA AND ADJUSTED EBITDA OUTLOOK
|
|
|
|
|
|
(In
Millions)
|
|
|
Year Ending
December 31,
|
|
|
2017
|
Net Income
(Loss)
|
|
$
|
510.0
|
|
Less:
|
|
|
Interest expense,
net
|
|
(175.0)
|
|
Income tax benefit
(expense)
|
|
(65.0)
|
|
Depreciation,
depletion and amortization
|
|
(100.0)
|
|
EBITDA
|
|
$
|
850.0
|
|
|
|
|
Less:
|
|
|
Adjustments*
|
|
$
|
—
|
|
Adjusted
EBITDA
|
|
$
|
850.0
|
|
*Adjustments to
EBITDA are unpredictable by nature and thus cannot be
forecasted.
|
2 CLIFFS NATURAL RESOURCES
INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
EXPLANATIONS
The Company presents cash cost of goods sold and operating
expense rate per long/metric ton, which is a non-GAAP financial
measure that management uses in evaluating operating
performance. Cliffs believes the presentation of non-GAAP
cash cost of goods sold and operating expenses is useful to
investors because it excludes depreciation, depletion and
amortization, which are non-cash, and freight and venture partners'
cost reimbursements, which have no impact on sales margin, thus
providing a more accurate view of the cash outflows related to the
sale of iron ore. The presentation of this measure is not
intended to be considered in isolation from, as a substitute for,
or as superior to, the financial information prepared and presented
in accordance with U.S. GAAP. The presentation of this
measure may be different from non-GAAP financial measures used by
other companies. Below is a reconciliation in dollars of this
non-GAAP measure to our consolidated financial statements for the
three months and years ended December 31,
2016 and 2015.
|
|
(In
Millions)
|
|
|
Three Months Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
U.S. Iron
Ore
|
|
Asia Pacific Iron
Ore
|
|
Total
|
|
U.S. Iron
Ore
|
|
Asia Pacific Iron
Ore
|
|
Total
|
Cost of goods sold
and operating expenses
|
|
$
|
(453.0)
|
|
|
$
|
(119.5)
|
|
|
$
|
(572.5)
|
|
|
$
|
(323.5)
|
|
|
$
|
(109.2)
|
|
|
$
|
(432.7)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight and
reimbursements
|
|
(70.8)
|
|
|
(6.7)
|
|
|
(77.5)
|
|
|
(38.8)
|
|
|
(4.7)
|
|
|
(43.5)
|
|
Depreciation,
depletion & amortization
|
|
(18.9)
|
|
|
(5.9)
|
|
|
(24.8)
|
|
|
(27.3)
|
|
|
(6.2)
|
|
|
(33.5)
|
|
Cash cost of goods
sold and operating expenses
|
|
$
|
(363.3)
|
|
|
$
|
(106.9)
|
|
|
$
|
(470.2)
|
|
|
$
|
(257.4)
|
|
|
$
|
(98.3)
|
|
|
$
|
(355.7)
|
|
|
|
(In
Millions)
|
|
|
Year Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
U.S. Iron
Ore
|
|
Asia Pacific Iron
Ore
|
|
Total
|
|
U.S. Iron
Ore
|
|
Asia Pacific Iron
Ore
|
|
Total
|
Cost of goods sold
and operating expenses
|
|
$
|
(1,278.8)
|
|
|
$
|
(440.9)
|
|
|
$
|
(1,719.7)
|
|
|
$
|
(1,298.3)
|
|
|
$
|
(478.5)
|
|
|
$
|
(1,776.8)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight and
reimbursements
|
|
(174.8)
|
|
|
(20.7)
|
|
|
(195.5)
|
|
|
(157.3)
|
|
|
(23.6)
|
|
|
(180.9)
|
|
Depreciation,
depletion & amortization
|
|
(84.0)
|
|
|
(25.1)
|
|
|
(109.1)
|
|
|
(98.9)
|
|
|
(25.3)
|
|
|
(124.2)
|
|
Cash cost of goods
sold and operating expenses
|
|
$
|
(1,020.0)
|
|
|
$
|
(395.1)
|
|
|
$
|
(1,415.1)
|
|
|
$
|
(1,042.1)
|
|
|
$
|
(429.6)
|
|
|
$
|
(1,471.7)
|
|
3 NET DEBT
RECONCILIATION
Net debt is a non-GAAP financial measure that management uses in
evaluating financial position. The presentation of this measure is
not intended to be considered in isolation from, as a substitute
for, or as superior to, the financial information prepared and
presented in accordance with U.S. GAAP. The presentation of this
measure may be different from non-GAAP financial measures used by
other companies. Net debt is defined as long-term debt plus the
current portion of short term debt, less cash and cash equivalents
and undiscounted interest. A reconciliation of this measure to its
most directly comparable GAAP measure is provided in the table
below.
|
|
(In
Millions)
|
|
|
December
31,
2016
|
|
December
31,
2015
|
Long-term
debt
|
|
$
|
2,175.1
|
|
|
$
|
2,699.4
|
|
Short-term debt and
current portion of long-term debt
|
|
17.5
|
|
|
—
|
|
Total Debt
|
|
$
|
2,192.6
|
|
|
$
|
2,699.4
|
|
Less:
|
|
|
|
|
Cash and cash
equivalents
|
|
323.4
|
|
|
285.2
|
|
Undiscounted
interest
|
|
65.7
|
|
|
—
|
|
Net Debt
|
|
$
|
1,803.5
|
|
|
$
|
2,414.2
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cliffs-natural-resources-inc-reports-fourth-quarter-and-full-year-2016-results-300404721.html
SOURCE Cliffs Natural Resources Inc.