☒ | 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 | |||||||||||||||||||
Statements of Unaudited Condensed Consolidated Operations for the Three | |||||||||||||||||||
Statements of Unaudited Condensed Consolidated Comprehensive Income (Loss) for the Three | |||||||||||||||||||
Statements of Unaudited Condensed Consolidated Cash Flows for the | |||||||||||||||||||
Statements of Unaudited Condensed Consolidated Changes in Equity for the Three | |||||||||||||||||||
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 | |||||||
4.875% 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, | |||||||
Acquisitions | The AK Steel Merger and AM USA Transaction, together | |||||||
Adjusted EBITDA | EBITDA, excluding certain items such as EBITDA of noncontrolling interests, extinguishment of debt, severance, acquisition-related costs, amortization of inventory step-up and impacts of discontinued operations | |||||||
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 | ||||||||
The merger of Merger Sub with and into AK Steel, with AK Steel surviving the merger as a wholly owned subsidiary of | ||||||||
AK Steel Merger Agreement | Agreement and Plan of Merger, dated as of December 2, 2019, among | |||||||
AM USA Transaction | The acquisition of ArcelorMittal USA, consummated on December 9, 2020 | |||||||
AM USA Transaction Agreement | Transaction Agreement, dated as of September 28, 2020, by and between Cleveland-Cliffs Inc. and ArcelorMittal | |||||||
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, and Kote and Tek, collectively | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
Board | The Board of Directors of Cleveland-Cliffs Inc. | |||||||
CARES Act | Coronavirus Aid, Relief, and Economic Security Act | |||||||
CERCLA | Comprehensive Environmental Response, Compensation and Liability Act of 1980 | |||||||
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 | |||||||
EDC | Export Development Canada | |||||||
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 | |||||||
GAAP | Accounting principles generally accepted in the United States | |||||||
GHG | Greenhouse gas | |||||||
HBI | Hot briquetted iron | |||||||
Hibbing | Iron ore mining property owned by Hibbing Taconite Company, an unincorporated joint venture between subsidiaries of Cliffs and U.S. Steel | |||||||
HRC | Hot-rolled coil steel | |||||||
IRB | Industrial Revenue Bond | |||||||
Kote and Tek | I/N Kote L.P. (n/k/a Cleveland-Cliffs Kote L.P.) and I/N Tek L.P. (n/k/a Cleveland-Cliffs Tek L.P.), former joint ventures between subsidiaries of the former ArcelorMittal USA LLC and Nippon Steel Corporation | |||||||
Long ton | 2,240 pounds | |||||||
Merger Sub | Pepper Merger Sub Inc., a direct, wholly owned subsidiary of Cliffs prior to the AK Steel Merger | |||||||
Metric ton | 2,205 pounds | |||||||
U.S. Mine Safety and Health Administration | ||||||||
Net ton | 2,000 pounds | |||||||
National Pollutant Discharge Elimination System, authorized by the Clean Water Act | ||||||||
OPEB | Other postretirement benefits | |||||||
Platts 62% | Platts IODEX 62% Fe Fines | |||||||
Abbreviation or acronym | Term | |||||||
RI/FS | Remedial Investigation/Feasibility Study | |||||||
SAAR | Seasonally Adjusted Annualized Rate | |||||||
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, | |||||||
Topic 805 | ASC Topic 805, Business Combinations | |||||||
Topic 815 | ASC Topic 815, Derivatives and Hedging | |||||||
Tubular Components | Cleveland-Cliffs Tubular Components LLC (f/k/a AK Tube LLC), an indirect, wholly owned subsidiary of AK | |||||||
U.S. | United States of America | |||||||
U.S. Steel | U.S. Steel Corporation and its subsidiaries, collectively, unless stated otherwise or the context indicates otherwise | |||||||
Variable |
Item 1. | Financial Statements |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 73.7 | $ | 352.6 | |||
Accounts receivable, net | 482.2 | 94.0 | |||||
Inventories | 1,933.6 | 317.4 | |||||
Income tax receivable, current | 62.6 | 58.6 | |||||
Other current assets | 90.2 | 75.3 | |||||
Total current assets | 2,642.3 | 897.9 | |||||
Non-current assets: | |||||||
Property, plant and equipment, net | 4,547.9 | 1,929.0 | |||||
Goodwill | 139.3 | 2.1 | |||||
Intangible assets, net | 192.6 | 48.1 | |||||
Income tax receivable, non-current | 4.1 | 62.7 | |||||
Deferred income taxes | 506.5 | 459.5 | |||||
Right-of-use asset, operating lease | 213.0 | 11.7 | |||||
Other non-current assets | 245.0 | 92.8 | |||||
TOTAL ASSETS | $ | 8,490.7 | $ | 3,503.8 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 504.8 | $ | 193.2 | |||
Accrued liabilities | 288.3 | 126.3 | |||||
Other current liabilities | 244.9 | 89.9 | |||||
Total current liabilities | 1,038.0 | 409.4 | |||||
Non-current liabilities: | |||||||
Long-term debt | 4,451.6 | 2,113.8 | |||||
Operating lease liability, non-current | 191.5 | 10.5 | |||||
Intangible liabilities, net | 72.3 | — | |||||
Pension and OPEB liabilities | 1,159.6 | 311.5 | |||||
Asset retirement obligations | 181.1 | 163.2 | |||||
Other non-current liabilities | 278.4 | 137.5 | |||||
TOTAL LIABILITIES | 7,372.5 | 3,145.9 | |||||
Commitments and contingencies (See Note 18) | |||||||
Equity: | |||||||
Common shares - par value $0.125 per share | |||||||
Authorized - 600,000,000 shares (2019 - 600,000,000 shares); | |||||||
Issued - 428,645,866 shares (2019 - 301,886,794 shares); | |||||||
Outstanding - 399,159,988 shares (2019 - 270,084,005 shares) | 53.6 | 37.7 | |||||
Capital in excess of par value of shares | 4,443.6 | 3,872.1 | |||||
Retained deficit | (3,042.5 | ) | (2,842.4 | ) | |||
Cost of 29,485,878 common shares in treasury (2019 - 31,802,789 shares) | (355.9 | ) | (390.7 | ) | |||
Accumulated other comprehensive loss | (305.9 | ) | (318.8 | ) | |||
Total Cliffs shareholders' equity | 792.9 | 357.9 | |||||
Noncontrolling interest | 325.3 | — | |||||
TOTAL EQUITY | 1,118.2 | 357.9 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 8,490.7 | $ | 3,503.8 |
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | $ | 1,092.7 | $ | 743.2 | $ | 1,417.2 | $ | 900.2 | |||||||
Realization of deferred revenue | — | — | 34.6 | — | |||||||||||
Operating costs: | |||||||||||||||
Cost of goods sold | (1,207.5 | ) | (480.2 | ) | (1,563.5 | ) | (606.3 | ) | |||||||
Selling, general and administrative expenses | (62.1 | ) | (29.4 | ) | (89.6 | ) | (56.7 | ) | |||||||
Acquisition-related costs | (18.4 | ) | — | (60.9 | ) | — | |||||||||
Miscellaneous – net | (13.1 | ) | (6.8 | ) | (25.0 | ) | (11.2 | ) | |||||||
Total operating costs | (1,301.1 | ) | (516.4 | ) | (1,739.0 | ) | (674.2 | ) | |||||||
Operating income (loss) | (208.4 | ) | 226.8 | (287.2 | ) | 226.0 | |||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (68.7 | ) | (26.1 | ) | (99.7 | ) | (51.2 | ) | |||||||
Gain (loss) on extinguishment of debt | 129.4 | (17.9 | ) | 132.6 | (18.2 | ) | |||||||||
Other non-operating income | 15.2 | 0.6 | 21.2 | 1.0 | |||||||||||
Total other income (expense) | 75.9 | (43.4 | ) | 54.1 | (68.4 | ) | |||||||||
Income (loss) from continuing operations before income taxes | (132.5 | ) | 183.4 | (233.1 | ) | 157.6 | |||||||||
Income tax benefit (expense) | 24.7 | (22.0 | ) | 76.1 | (18.3 | ) | |||||||||
Income (loss) from continuing operations | (107.8 | ) | 161.4 | (157.0 | ) | 139.3 | |||||||||
Income (loss) from discontinued operations, net of tax | (0.3 | ) | (0.6 | ) | 0.3 | (0.6 | ) | ||||||||
Net income (loss) | (108.1 | ) | 160.8 | (156.7 | ) | 138.7 | |||||||||
Income attributable to noncontrolling interest | (15.8 | ) | — | (19.3 | ) | — | |||||||||
Net income (loss) attributable to Cliffs shareholders | $ | (123.9 | ) | $ | 160.8 | $ | (176.0 | ) | $ | 138.7 | |||||
Earnings (loss) per common share attributable to Cliffs shareholders - basic | |||||||||||||||
Continuing operations | $ | (0.31 | ) | $ | 0.59 | $ | (0.51 | ) | $ | 0.49 | |||||
Discontinued operations | — | — | — | — | |||||||||||
$ | (0.31 | ) | $ | 0.59 | $ | (0.51 | ) | $ | 0.49 | ||||||
Earnings (loss) per common share attributable to Cliffs shareholders - diluted | |||||||||||||||
Continuing operations | $ | (0.31 | ) | $ | 0.57 | $ | (0.51 | ) | $ | 0.47 | |||||
Discontinued operations | — | — | — | — | |||||||||||
$ | (0.31 | ) | $ | 0.57 | $ | (0.51 | ) | $ | 0.47 | ||||||
Average number of shares (in thousands) | |||||||||||||||
Basic | 399,088 | 275,769 | 348,302 | 282,647 | |||||||||||
Diluted | 399,088 | 285,479 | 348,302 | 293,580 |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 110 | $ | 112 | |||||||
Accounts receivable, net | 1,659 | 1,169 | |||||||||
Inventories | 3,932 | 3,828 | |||||||||
Other current assets | 160 | 189 | |||||||||
Total current assets | 5,861 | 5,298 | |||||||||
Non-current assets: | |||||||||||
Property, plant and equipment, net | 9,014 | 8,743 | |||||||||
Goodwill | 994 | 1,406 | |||||||||
Deferred income taxes | 562 | 537 | |||||||||
Other non-current assets | 784 | 787 | |||||||||
TOTAL ASSETS | $ | 17,215 | $ | 16,771 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,743 | $ | 1,575 | |||||||
Accrued employment costs | 465 | 460 | |||||||||
Pension and OPEB liabilities, current | 151 | 151 | |||||||||
Other current liabilities | 574 | 743 | |||||||||
Total current liabilities | 2,933 | 2,929 | |||||||||
Non-current liabilities: | |||||||||||
Long-term debt | 5,734 | 5,390 | |||||||||
Pension and OPEB liabilities, non-current | 3,916 | 4,113 | |||||||||
Other non-current liabilities | 1,175 | 1,260 | |||||||||
TOTAL LIABILITIES | 13,758 | 13,692 | |||||||||
Commitments and contingencies (See Note 18) | 0 | 0 | |||||||||
Series B Participating Redeemable Preferred Stock - 0 par value | |||||||||||
Authorized, Issued and Outstanding - 583,273 shares | 738 | 738 | |||||||||
Equity: | |||||||||||
Common shares - par value $0.125 per share | |||||||||||
Authorized - 600,000,000 shares (2020 - 600,000,000 shares); | |||||||||||
Issued - 506,832,537 shares (2020 - 506,832,537 shares); | |||||||||||
Outstanding - 499,214,434 shares (2020 - 477,517,372 shares) | 63 | 63 | |||||||||
Capital in excess of par value of shares | 5,487 | 5,431 | |||||||||
Retained deficit | (2,948) | (2,989) | |||||||||
Cost of 7,618,103 common shares in treasury (2020 - 29,315,165 shares) | (93) | (354) | |||||||||
Accumulated other comprehensive loss | (120) | (133) | |||||||||
Total Cliffs shareholders' equity | 2,389 | 2,018 | |||||||||
Noncontrolling interest | 330 | 323 | |||||||||
TOTAL EQUITY | 2,719 | 2,341 | |||||||||
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY | $ | 17,215 | $ | 16,771 |
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenues | $ | 4,049 | $ | 359 | |||||||||||||||||||
Operating costs: | |||||||||||||||||||||||
Cost of goods sold | (3,761) | (356) | |||||||||||||||||||||
Selling, general and administrative expenses | (95) | (28) | |||||||||||||||||||||
Acquisition-related costs | (13) | (42) | |||||||||||||||||||||
Miscellaneous – net | (3) | (12) | |||||||||||||||||||||
Total operating costs | (3,872) | (438) | |||||||||||||||||||||
Operating income (loss) | 177 | (79) | |||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense, net | (92) | (31) | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | (66) | 3 | |||||||||||||||||||||
Net periodic benefit credits other than service cost component | 47 | 6 | |||||||||||||||||||||
Total other expense | (111) | (22) | |||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 66 | (101) | |||||||||||||||||||||
Income tax benefit (expense) | (9) | 51 | |||||||||||||||||||||
Income (loss) from continuing operations | 57 | (50) | |||||||||||||||||||||
Income from discontinued operations, net of tax | 0 | 1 | |||||||||||||||||||||
Net income (loss) | 57 | (49) | |||||||||||||||||||||
Income attributable to noncontrolling interest | (16) | (3) | |||||||||||||||||||||
Net income (loss) attributable to Cliffs shareholders | $ | 41 | $ | (52) | |||||||||||||||||||
Earnings (loss) per common share attributable to Cliffs shareholders - basic | |||||||||||||||||||||||
Continuing operations | $ | 0.08 | $ | (0.18) | |||||||||||||||||||
Discontinued operations | 0 | 0 | |||||||||||||||||||||
$ | 0.08 | $ | (0.18) | ||||||||||||||||||||
Earnings (loss) per common share attributable to Cliffs shareholders - diluted | |||||||||||||||||||||||
Continuing operations | $ | 0.07 | $ | (0.18) | |||||||||||||||||||
Discontinued operations | 0 | 0 | |||||||||||||||||||||
$ | 0.07 | $ | (0.18) |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (108.1 | ) | $ | 160.8 | $ | (156.7 | ) | $ | 138.7 | |||||
Other comprehensive income (loss): | |||||||||||||||
Changes in pension and OPEB, net of tax | 6.0 | 5.8 | 11.6 | 11.5 | |||||||||||
Changes in foreign currency translation | 0.7 | — | (0.2 | ) | — | ||||||||||
Changes in derivative financial instruments, net of tax | 4.5 | (2.1 | ) | 1.5 | 0.6 | ||||||||||
Total other comprehensive income | 11.2 | 3.7 | 12.9 | 12.1 | |||||||||||
Comprehensive income (loss) | (96.9 | ) | 164.5 | (143.8 | ) | 150.8 | |||||||||
Comprehensive income attributable to noncontrolling interests | (15.8 | ) | — | (19.3 | ) | — | |||||||||
Comprehensive income (loss) attributable to Cliffs shareholders | $ | (112.7 | ) | $ | 164.5 | $ | (163.1 | ) | $ | 150.8 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Net income (loss) | $ | 57 | $ | (49) | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Changes in pension and OPEB, net of tax | 7 | 6 | |||||||||||||||||||||
Changes in foreign currency translation | (1) | (1) | |||||||||||||||||||||
Changes in derivative financial instruments, net of tax | 7 | (3) | |||||||||||||||||||||
Total other comprehensive income | 13 | 2 | |||||||||||||||||||||
Comprehensive income (loss) | 70 | (47) | |||||||||||||||||||||
Comprehensive income attributable to noncontrolling interests | (16) | (3) | |||||||||||||||||||||
Comprehensive income (loss) attributable to Cliffs shareholders | $ | 54 | $ | (50) |
(In Millions) | |||||||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | (156.7 | ) | $ | 138.7 | ||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | |||||||
Depreciation, depletion and amortization | 111.5 | 40.9 | |||||
Amortization of inventory step-up | 59.4 | — | |||||
Deferred income taxes | (72.5 | ) | 18.2 | ||||
Loss (gain) on extinguishment of debt | (132.6 | ) | 18.2 | ||||
Loss (gain) on derivatives | 8.0 | (27.2 | ) | ||||
Other | (28.0 | ) | 28.4 | ||||
Changes in operating assets and liabilities, net of business combination: | |||||||
Receivables and other assets | 365.7 | 145.4 | |||||
Inventories | (126.1 | ) | (148.7 | ) | |||
Payables, accrued expenses and other liabilities | (327.9 | ) | (62.8 | ) | |||
Net cash provided (used) by operating activities | (299.2 | ) | 151.1 | ||||
INVESTING ACTIVITIES | |||||||
Purchase of property, plant and equipment | (282.9 | ) | (300.9 | ) | |||
Acquisition of AK Steel, net of cash acquired | (869.3 | ) | — | ||||
Other investing activities | (0.2 | ) | 8.5 | ||||
Net cash used by investing activities | (1,152.4 | ) | (292.4 | ) | |||
FINANCING ACTIVITIES | |||||||
Repurchase of common shares | — | (252.9 | ) | ||||
Proceeds from issuance of debt | 1,762.9 | 720.9 | |||||
Debt issuance costs | (57.9 | ) | (6.8 | ) | |||
Repurchase of debt | (999.5 | ) | (729.3 | ) | |||
Borrowings under credit facilities | 800.0 | — | |||||
Repayments under credit facilities | (250.0 | ) | — | ||||
Dividends paid | (40.8 | ) | (28.9 | ) | |||
Other financing activities | (43.6 | ) | (10.9 | ) | |||
Net cash provided (used) by financing activities | 1,171.1 | (307.9 | ) | ||||
Decrease in cash and cash equivalents, including cash classified within other current assets related to discontinued operations | (280.5 | ) | (449.2 | ) | |||
Less: decrease in cash and cash equivalents from discontinued operations, classified within other current assets | (1.6 | ) | (3.2 | ) | |||
Net decrease in cash and cash equivalents | (278.9 | ) | (446.0 | ) | |||
Cash and cash equivalents at beginning of period | 352.6 | 823.2 | |||||
Cash and cash equivalents at end of period | $ | 73.7 | $ | 377.2 |
(In Millions) | |||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | 57 | $ | (49) | |||||||
Adjustments to reconcile net income (loss) to net cash used by operating activities: | |||||||||||
Depreciation, depletion and amortization | 217 | 35 | |||||||||
Amortization of inventory step-up | 81 | 23 | |||||||||
Changes in deferred revenue | (3) | (48) | |||||||||
Deferred income taxes | 10 | (48) | |||||||||
Loss (gain) on extinguishment of debt | 66 | (3) | |||||||||
Other | (2) | 51 | |||||||||
Changes in operating assets and liabilities, net of business combination: | |||||||||||
Receivables and other assets | (480) | 254 | |||||||||
Inventories | (172) | (267) | |||||||||
Pension and OPEB payments and contributions | (175) | (13) | |||||||||
Payables, accrued expenses and other liabilities | 22 | (99) | |||||||||
Net cash used by operating activities | (379) | (164) | |||||||||
INVESTING ACTIVITIES | |||||||||||
Purchase of property, plant and equipment | (136) | (138) | |||||||||
Acquisition of AK Steel, net of cash acquired | 0 | (869) | |||||||||
Other investing activities | 1 | 0 | |||||||||
Net cash used by investing activities | (135) | (1,007) | |||||||||
FINANCING ACTIVITIES | |||||||||||
Proceeds from issuance of common shares | 322 | 0 | |||||||||
Proceeds from issuance of debt | 1,000 | 716 | |||||||||
Debt issuance costs | (16) | (44) | |||||||||
Repayments of debt | (902) | (430) | |||||||||
Borrowings under credit facilities | 1,158 | 800 | |||||||||
Repayments under credit facilities | (1,010) | 0 | |||||||||
Other financing activities | (40) | (37) | |||||||||
Net cash provided by financing activities | 512 | 1,005 | |||||||||
Net decrease in cash and cash equivalents | (2) | (166) | |||||||||
Cash and cash equivalents at beginning of period | 112 | 353 | |||||||||
Cash and cash equivalents at end of period | $ | 110 | $ | 187 |
(In Millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Deficit | Common Shares in Treasury | AOCI | 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 | 0 | 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 | ||||||||||||||||||||||||||||||||
(In Millions) | (In Millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Deficit | Common Shares in Treasury | AOCI | Non-controlling Interests | Total | Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Deficit | Common Shares in Treasury | AOCI | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 | 270.1 | $ | 37.7 | $ | 3,872.1 | $ | (2,842.4 | ) | $ | (390.7 | ) | $ | (318.8 | ) | $ | — | $ | 357.9 | December 31, 2019 | 271 | $ | 37 | $ | 3,873 | $ | (2,842) | $ | (391) | $ | (319) | $ | 0 | $ | 358 | |||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (52.1 | ) | — | 1.7 | 3.5 | (46.9 | ) | Comprehensive income (loss) | — | — | — | (52) | — | 2 | 3 | (47) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | 1.7 | — | (23.6 | ) | — | 25.7 | — | — | 2.1 | Stock and other incentive plans | 1 | — | (24) | — | 26 | — | — | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of AK Steel | 126.8 | 15.9 | 601.7 | — | — | — | 329.8 | 947.4 | Acquisition of AK Steel | 127 | 16 | 602 | — | — | — | 330 | 948 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common share dividends ($0.06 per share) | — | — | — | (24.0 | ) | — | — | — | (24.0 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock dividends ($0.06 per share) | Common stock dividends ($0.06 per share) | — | — | — | (24) | — | — | — | (24) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (5.5 | ) | (5.5 | ) | Net distributions to noncontrolling interests | — | — | — | — | — | — | (6) | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2020 | 398.6 | $ | 53.6 | $ | 4,450.2 | $ | (2,918.5 | ) | $ | (365.0 | ) | $ | (317.1 | ) | $ | 327.8 | $ | 1,231.0 | March 31, 2020 | 399 | $ | 53 | $ | 4,451 | $ | (2,918) | $ | (365) | $ | (317) | $ | 327 | $ | 1,231 | |||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (123.9 | ) | — | 11.2 | 15.8 | (96.9 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock and other incentive plans | 0.6 | — | (6.6 | ) | — | 9.1 | — | — | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common share dividends | — | — | — | (0.1 | ) | — | — | — | (0.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (18.3 | ) | (18.3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | 399.2 | $ | 53.6 | $ | 4,443.6 | $ | (3,042.5 | ) | $ | (355.9 | ) | $ | (305.9 | ) | $ | 325.3 | $ | 1,118.2 |
(In Millions) | ||||||||||||||||||||||||||
Number of Common Shares Outstanding | Par Value of Common Shares Issued | Capital in Excess of Par Value of Shares | Retained Deficit | Common Shares in Treasury | AOCI | Total | ||||||||||||||||||||
December 31, 2018 | 292.6 | $ | 37.7 | $ | 3,916.7 | $ | (3,060.2 | ) | $ | (186.1 | ) | $ | (283.9 | ) | $ | 424.2 | ||||||||||
Comprehensive income (loss) | — | — | — | (22.1 | ) | — | 8.4 | (13.7 | ) | |||||||||||||||||
Stock and other incentive plans | 1.7 | — | (56.5 | ) | — | 46.5 | — | (10.0 | ) | |||||||||||||||||
Common share repurchases | (11.5 | ) | — | — | — | (124.3 | ) | — | (124.3 | ) | ||||||||||||||||
Common share dividends ($0.05 per share) | — | — | — | (14.5 | ) | — | — | (14.5 | ) | |||||||||||||||||
March 31, 2019 | 282.8 | $ | 37.7 | $ | 3,860.2 | $ | (3,096.8 | ) | $ | (263.9 | ) | $ | (275.5 | ) | $ | 261.7 | ||||||||||
Comprehensive income | — | — | — | 160.8 | — | 3.7 | 164.5 | |||||||||||||||||||
Stock and other incentive plans | 0.1 | — | 3.4 | — | 1.2 | — | 4.6 | |||||||||||||||||||
Common share repurchases | (12.9 | ) | — | — | — | (128.6 | ) | — | (128.6 | ) | ||||||||||||||||
Common share dividends ($0.06 per share) | — | — | — | (16.6 | ) | — | — | (16.6 | ) | |||||||||||||||||
June 30, 2019 | 270.0 | $ | 37.7 | $ | 3,863.6 | $ | (2,952.6 | ) | $ | (391.3 | ) | $ | (271.8 | ) | $ | 285.6 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Steel and Manufacturing: | |||||||||||||||
Automotive | $ | 363.8 | $ | — | $ | 484.0 | $ | — | |||||||
Infrastructure and manufacturing | 203.4 | — | 247.4 | — | |||||||||||
Distributors and converters | 147.9 | — | 201.2 | — | |||||||||||
Total Steel and Manufacturing | 715.1 | — | 932.6 | — | |||||||||||
Mining and Pelletizing: | |||||||||||||||
Steel producers1 | 377.6 | 743.2 | 519.2 | 900.2 | |||||||||||
Total revenues | $ | 1,092.7 | $ | 743.2 | $ | 1,451.8 | $ | 900.2 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Steel and Manufacturing: | |||||||||||||||
Carbon steel | $ | 431.8 | $ | — | $ | 570.4 | $ | — | |||||||
Stainless and electrical steel | 222.5 | — | 281.9 | — | |||||||||||
Tubular products, components and other | 60.8 | — | 80.3 | — | |||||||||||
Total Steel and Manufacturing | 715.1 | — | 932.6 | — | |||||||||||
Mining and Pelletizing: | |||||||||||||||
Iron ore1 | 349.7 | 697.4 | 481.0 | 842.8 | |||||||||||
Freight | 27.9 | 45.8 | 38.2 | 57.4 | |||||||||||
Total Mining and Pelletizing | 377.6 | 743.2 | 519.2 | 900.2 | |||||||||||
Total revenues | $ | 1,092.7 | $ | 743.2 | $ | 1,451.8 | $ | 900.2 |
(In Millions) | |||||||
2020 | 2019 | ||||||
Allowance for credit losses as of January 1 | $ | — | $ | — | |||
Increase in allowance | 4.3 | — | |||||
Allowance for credit losses as of June 30 | $ | 4.3 | $ | — |
(In Millions) | |||||||||||
2021 | 2020 | ||||||||||
Allowance for credit losses as of January 1 | $ | (5) | $ | 0 | |||||||
Increase in allowance | (1) | (1) | |||||||||
Allowance for credit losses as of March 31 | $ | (6) | $ | (1) |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Product inventories | |||||||
Finished and semi-finished goods | $ | 1,026.4 | $ | 114.1 | |||
Work-in-process | 89.5 | 68.7 | |||||
Raw materials | 438.0 | 9.4 | |||||
Total product inventories | 1,553.9 | 192.2 | |||||
Manufacturing supplies and critical spares | 379.7 | 125.2 | |||||
Inventories | $ | 1,933.6 | $ | 317.4 |
(In Millions) | |||||||||||||||
Deferred Revenue (Current) | Deferred Revenue (Long-Term) | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Opening balance as of January 1 | $ | 22.1 | $ | 21.0 | $ | 25.7 | $ | 38.5 | |||||||
Net decrease | (17.2 | ) | (5.5 | ) | (25.7 | ) | (4.2 | ) | |||||||
Closing balance as of June 30 | $ | 4.9 | $ | 15.5 | $ | — | $ | 34.3 |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Accrued employment costs | $ | 153.8 | $ | 61.7 | |||
Accrued interest | 71.5 | 29.0 | |||||
Accrued dividends | 1.1 | 17.8 | |||||
Other | 61.9 | 17.8 | |||||
Accrued liabilities | $ | 288.3 | $ | 126.3 |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Product inventories | |||||||||||
Finished and semi-finished goods | $ | 2,296 | $ | 2,125 | |||||||
Raw materials | 1,372 | 1,431 | |||||||||
Total product inventories | 3,668 | 3,556 | |||||||||
Manufacturing supplies and critical spares | 264 | 272 | |||||||||
Inventories | $ | 3,932 | $ | 3,828 |
(In Millions) | |||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Capital additions | $ | 162 | $ | 158 | |||||||
Less: | |||||||||||
Non-cash accruals | 23 | (10) | |||||||||
Right-of-use assets - finance leases | 3 | 30 | |||||||||
Cash paid for capital expenditures including deposits | $ | 136 | $ | 138 |
(In Millions) | |||||||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Capital additions | $ | 230.7 | $ | 320.9 | |||
Less: | |||||||
Non-cash accruals | (91.6 | ) | 3.6 | ||||
Right-of-use assets - finance leases | 39.4 | 24.8 | |||||
Grants | — | (8.4 | ) | ||||
Cash paid for capital expenditures including deposits | $ | 282.9 | $ | 300.9 |
(In Millions) | |||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Taxes paid on income | $ | 3 | $ | 0 | |||||||
Income tax refunds | (14) | (60) | |||||||||
Interest paid on debt obligations net of capitalized interest1 | 75 | 30 | |||||||||
1 Capitalized interest was $1 million and $10 million for the three months ended March 31, 2021 and 2020, respectively. |
(In Millions) | |||||||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Taxes paid on income | $ | 0.2 | $ | 0.1 | |||
Income tax refunds | (60.4 | ) | (117.9 | ) | |||
Interest paid on debt obligations net of capitalized interest1 | 63.0 | 53.2 |
(In Millions) | |||||||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Fair value of common shares issued for consideration for business combination | $ | 617.6 | $ | — | |||
Fair value of equity awards assumed from AK Steel acquisition | 3.9 | — |
(In Millions) | |||||
Fair value of Cliffs common shares issued | $ | 990 | |||
Fair value of Series B Participating Redeemable Preferred Stock issued | 738 | ||||
Fair value of settlement of a pre-existing relationship | 237 | ||||
Cash consideration (subject to customary working capital adjustments) | 635 | ||||
Total purchase consideration | $ | 2,600 |
(In Millions) | |||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ | 617.6 | |
Fair value of replacement equity awards | 3.9 | ||
Fair value of AK Steel debt | 913.6 | ||
Total purchase consideration | $ | 1,535.1 |
(In Millions, Except Per Share Amounts) | |||
Number of shares of AK Steel common stock issued and outstanding | 316.9 | ||
Exchange ratio | 0.400 | ||
Shares of Cliffs common shares issued to AK Steel stockholders | 126.8 | ||
Price per share of Cliffs common shares | $ | 4.87 | |
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ | 617.6 |
Number of Cliffs common shares issued | 78,186,671 | ||||
Closing price of Cliffs common share as of December 9, 2020 | $ | 12.66 | |||
Fair value of Cliffs common shares issued (in millions) | $ | 990 |
(In Millions) | |||
Credit Facility | $ | 590.0 | |
7.50% Senior Secured Notes due July 2023 | 323.6 | ||
Fair value of debt included in consideration | $ | 913.6 |
Number of Cliffs Series B Participating Redeemable Preferred Stock issued | 583,273 | ||||
Redemption price per share as of December 9, 2020 | $ | 1,266 | |||
Fair value of Cliffs Series B Participating Redeemable Preferred Stock issued (in millions) | $ | 738 |
(In Millions) | |||||
Cash consideration pursuant to the AM USA Transaction Agreement | $ | 505 | |||
Cash consideration for purchase of the remaining JV partner's interest of Kote and Tek | 182 | ||||
Estimated total cash consideration receivable | (52) | ||||
Total estimated cash consideration | $ | 635 |
(In Millions) | |||||
Accounts receivable | $ | 97 | |||
Freestanding derivative asset from customer supply agreement | 140 | ||||
Total fair value of settlement of a pre-existing relationship | $ | 237 |
(In Millions) | |||||||||||
Initial Allocation of Consideration | Measurement Period Adjustments | June 30, 2020 | |||||||||
Cash and cash equivalents | $ | 37.7 | $ | 2.0 | $ | 39.7 | |||||
Accounts receivable | 666.0 | (3.2 | ) | 662.8 | |||||||
Inventories | 1,562.8 | (37.8 | ) | 1,525.0 | |||||||
Other current assets | 67.5 | (14.5 | ) | 53.0 | |||||||
Property, plant and equipment | 2,184.4 | 2.9 | 2,187.3 | ||||||||
Intangible assets | 163.0 | (15.0 | ) | 148.0 | |||||||
Right of use asset, operating leases | 225.9 | (16.3 | ) | 209.6 | |||||||
Other non-current assets | 85.9 | 25.9 | 111.8 | ||||||||
Accounts payable | (636.3 | ) | (2.9 | ) | (639.2 | ) | |||||
Accrued liabilities | (222.5 | ) | (2.1 | ) | (224.6 | ) | |||||
Other current liabilities | (181.8 | ) | 7.0 | (174.8 | ) | ||||||
Long-term debt | (1,179.4 | ) | — | (1,179.4 | ) | ||||||
Deferred income taxes | (19.7 | ) | (1.7 | ) | (21.4 | ) | |||||
Operating lease liability, non-current | (188.1 | ) | — | (188.1 | ) | ||||||
Intangible liabilities | (140.0 | ) | 65.0 | (75.0 | ) | ||||||
Pension and OPEB liabilities | (873.0 | ) | — | (873.0 | ) | ||||||
Asset retirement obligations | (13.9 | ) | — | (13.9 | ) | ||||||
Other non-current liabilities | (144.2 | ) | (5.7 | ) | (149.9 | ) | |||||
Net identifiable assets acquired | 1,394.3 | 3.6 | 1,397.9 | ||||||||
Goodwill | 141.2 | (4.0 | ) | 137.2 | |||||||
Total net assets acquired | $ | 1,535.5 | $ | (0.4 | ) | $ | 1,535.1 |
(In Millions) | |||||||||||||||||
Initial Allocation of Consideration | Measurement Period Adjustments | Updated Allocation | |||||||||||||||
Cash and cash equivalents | $ | 35 | $ | 0 | $ | 35 | |||||||||||
Accounts receivable, net | 349 | 0 | 349 | ||||||||||||||
Inventories | 2,115 | 14 | 2,129 | ||||||||||||||
Other current assets | 34 | (5) | 29 | ||||||||||||||
Property, plant and equipment | 4,017 | 366 | 4,383 | ||||||||||||||
Other non-current assets | 158 | 8 | 166 | ||||||||||||||
Accounts payable | (758) | 2 | (756) | ||||||||||||||
Accrued employment costs | (271) | (3) | (274) | ||||||||||||||
Pension and OPEB liabilities, current | (109) | 0 | (109) | ||||||||||||||
Other current liabilities | (398) | (2) | (400) | ||||||||||||||
Pension and OPEB liabilities, non-current | (3,195) | 0 | (3,195) | ||||||||||||||
Other non-current liabilities | (598) | 35 | (563) | ||||||||||||||
Noncontrolling interest | (13) | 1 | (12) | ||||||||||||||
Net identifiable assets acquired | 1,366 | 416 | 1,782 | ||||||||||||||
Goodwill | 1,230 | (412) | 818 | ||||||||||||||
Total net assets acquired | $ | 2,596 | $ | 4 | $ | 2,600 |
(In Millions) | |||||
Fair value of AK Steel debt | $ | 914 | |||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock1 | 618 | ||||
Other1 | 3 | ||||
Total purchase consideration | $ | 1,535 | |||
1 Included as non-cash investing activities in Statements of Unaudited Condensed Consolidated Cash Flows for the three months ended March 31, 2020. |
(In Millions, Except Per Share Amounts) | |||||
Number of shares of AK Steel common stock issued and outstanding | 317 | ||||
Exchange ratio | 0.400 | ||||
Number of Cliffs common shares issued to AK Steel stockholders | 127 | ||||
Price per share of Cliffs common shares | $ | 4.87 | |||
Fair value of Cliffs common shares issued for AK Steel outstanding common stock | $ | 618 |
(In Millions) | |||||
Credit Facility | $ | 590 | |||
7.50% Senior Secured Notes due July 2023 | 324 | ||||
Fair value of debt included in consideration | $ | 914 |
(In Millions) | |||||||||||||||||
Initial Allocation of Consideration | Measurement Period Adjustments | Final Allocation of Consideration as of March 31, 2021 | |||||||||||||||
Cash and cash equivalents | $ | 38 | $ | 1 | $ | 39 | |||||||||||
Accounts receivable, net | 666 | (2) | 664 | ||||||||||||||
Inventories | 1,563 | (243) | 1,320 | ||||||||||||||
Other current assets | 68 | (16) | 52 | ||||||||||||||
Property, plant and equipment | 2,184 | 90 | 2,274 | ||||||||||||||
Deferred income taxes | 0 | 69 | 69 | ||||||||||||||
Other non-current assets | 475 | (4) | 471 | ||||||||||||||
Accounts payable | (636) | (8) | (644) | ||||||||||||||
Accrued employment costs | (94) | 1 | (93) | ||||||||||||||
Pension and OPEB liabilities, current | (75) | (3) | (78) | ||||||||||||||
Other current liabilities | (236) | 9 | (227) | ||||||||||||||
Long-term debt | (1,179) | 0 | (1,179) | ||||||||||||||
Pension and OPEB liabilities, non-current | (873) | 2 | (871) | ||||||||||||||
Other non-current liabilities | (507) | 72 | (435) | ||||||||||||||
Noncontrolling interest | 0 | (1) | (1) | ||||||||||||||
Net identifiable assets acquired | 1,394 | (33) | 1,361 | ||||||||||||||
Goodwill | 141 | 33 | 174 | ||||||||||||||
Total net assets acquired | $ | 1,535 | $ | 0 | $ | 1,535 |
(In Millions) | Weighted Average Life (In Years) | ||||||||||
Intangible assets: | |||||||||||
Customer relationships | $ | 77 | 18 | ||||||||
Developed technology | 60 | 17 | |||||||||
Trade names and trademarks | 11 | 10 | |||||||||
Total identifiable intangible assets | $ | 148 | 17 | ||||||||
Intangible liabilities: | |||||||||||
Above-market supply contracts | $ | (71) | 12 |
(In Millions) | Weighted Average Life (In Years) | ||||
Intangible assets: | |||||
Customer relationships | $ | 77.0 | 18 | ||
Developed technology | 60.0 | 17 | |||
Trade names and trademarks | 11.0 | 10 | |||
Total identifiable intangible assets | $ | 148.0 | 17 | ||
Intangible liabilities: | |||||
Above-market supply contracts | $ | (75.0 | ) | 12 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | $ | 979.1 | $ | 2,233.8 | $ | 2,427.7 | $ | 4,021.1 | |||||||
Net income (loss) attributable to Cliffs shareholders | (125.3 | ) | 184.9 | (163.7 | ) | 128.3 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2020 | |||||||||||||||||||||||
Revenues | $ | 1,526 | |||||||||||||||||||||
Net loss attributable to Cliffs shareholders | (17) |
1.The elimination of intercompany revenues between Cliffs and AK Steel of $68 million for the three months ended March 31, 2020. 2.The 2020 pro forma net income was adjusted to exclude $23 million of non-recurring inventory acquisition accounting adjustments incurred during the three months ended March 31, 2020. 3.The elimination of nonrecurring transaction costs incurred by Cliffs and AK Steel in connection with the AK Steel Merger of $27 million for the three months ended March 31, 2020. 4.Total other pro forma adjustments included income of $13 million for the three months ended March 31, 2020, primarily due to reduced interest and amortization expense, offset partially by additional depreciation expense. 5.The income tax impact of pro forma transaction adjustments that affect Net loss attributable to Cliffs shareholders at a statutory rate of 24.3% resulted in an income tax expense of $12 million for the three months ended March 31, 2020. |
(In Millions) | |||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Steelmaking: | |||||||||||
Automotive | $ | 1,287 | $ | 102 | |||||||
Infrastructure and manufacturing | 954 | 39 | |||||||||
Distributors and converters | 1,248 | 52 | |||||||||
Steel producers | 430 | 144 | |||||||||
Total Steelmaking | 3,919 | 337 | |||||||||
Other Businesses: | |||||||||||
Automotive | 105 | 16 | |||||||||
Infrastructure and manufacturing | 10 | 4 | |||||||||
Distributors and converters | 15 | 2 | |||||||||
Total Other Businesses | 130 | 22 | |||||||||
Total revenues | $ | 4,049 | $ | 359 | |||||||
(Dollars In Millions, Sales Volumes in Thousands) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenue | Volume1 | Revenue | Volume1 | ||||||||||||||||||||
Steelmaking: | |||||||||||||||||||||||
Hot-rolled steel | $ | 895 | 1,182 | $ | 19 | 31 | |||||||||||||||||
Cold-rolled steel | 632 | 748 | 28 | 40 | |||||||||||||||||||
Coated steel | 1,308 | 1,369 | 90 | 99 | |||||||||||||||||||
Stainless and electrical steel | 363 | 167 | 56 | 27 | |||||||||||||||||||
Plate steel | 244 | 275 | 0 | 0 | |||||||||||||||||||
Other steel products | 289 | 403 | 0 | 0 | |||||||||||||||||||
Iron products | 70 | 600 | 142 | 1,351 | |||||||||||||||||||
Other | 118 | N/A | 2 | N/A | |||||||||||||||||||
Total steelmaking | 3,919 | 337 | |||||||||||||||||||||
Other Businesses: | |||||||||||||||||||||||
Other | 130 | N/A | 22 | N/A | |||||||||||||||||||
Total revenues | $ | 4,049 | $ | 359 | |||||||||||||||||||
1 All steel product volumes are stated in net tons. Iron product volumes are stated in long tons. |
(In Millions, Except Sales Tons) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Sales volume (in thousands): | |||||||||||||||
Steel and Manufacturing (net tons) | 619 | — | 818 | — | |||||||||||
Mining and Pelletizing sales (long tons) | 4,759 | 6,227 | 6,893 | 7,777 | |||||||||||
Less: Intercompany sales (long tons) | (1,041 | ) | (38 | ) | (1,824 | ) | (38 | ) | |||||||
Mining and Pelletizing consolidated sales (long tons) | 3,718 | 6,189 | 5,069 | 7,739 | |||||||||||
Revenues: | |||||||||||||||
Steel and Manufacturing net sales to external customers | $ | 715.1 | $ | — | $ | 932.6 | $ | — | |||||||
Mining and Pelletizing net sales1 | 489.0 | 747.2 | 718.4 | 904.2 | |||||||||||
Less: Intercompany sales | (111.4 | ) | (4.0 | ) | (199.2 | ) | (4.0 | ) | |||||||
Mining and Pelletizing net sales to external customers | 377.6 | 743.2 | 519.2 | 900.2 | |||||||||||
Total revenues | $ | 1,092.7 | $ | 743.2 | $ | 1,451.8 | $ | 900.2 | |||||||
Adjusted EBITDA: | |||||||||||||||
Steel and Manufacturing | $ | (104.0 | ) | $ | (1.1 | ) | $ | (115.1 | ) | $ | (1.9 | ) | |||
Mining and Pelletizing | 82.4 | 280.5 | 164.2 | 328.0 | |||||||||||
Corporate and eliminations | (60.4 | ) | (31.0 | ) | (108.4 | ) | (56.5 | ) | |||||||
Total Adjusted EBITDA | $ | (82.0 | ) | $ | 248.4 | $ | (59.3 | ) | $ | 269.6 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Steelmaking | $ | 3,919 | $ | 337 | |||||||||||||||||||
Other Businesses | 130 | 22 | |||||||||||||||||||||
Total revenues | $ | 4,049 | $ | 359 | |||||||||||||||||||
Adjusted EBITDA: | |||||||||||||||||||||||
Steelmaking | $ | 537 | $ | 44 | |||||||||||||||||||
Other Businesses | 11 | 2 | |||||||||||||||||||||
Corporate and eliminations | (35) | (23) | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 513 | $ | 23 | |||||||||||||||||||
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (108.1 | ) | $ | 160.8 | $ | (156.7 | ) | $ | 138.7 | |||||
Less: | |||||||||||||||
Interest expense, net | (68.6 | ) | (26.3 | ) | (99.7 | ) | (51.4 | ) | |||||||
Income tax benefit (expense) | 24.7 | (22.0 | ) | 76.1 | (18.3 | ) | |||||||||
Depreciation, depletion and amortization | (77.1 | ) | (21.0 | ) | (111.5 | ) | (40.9 | ) | |||||||
Total EBITDA | $ | 12.9 | $ | 230.1 | $ | (21.6 | ) | $ | 249.3 | ||||||
Less: | |||||||||||||||
EBITDA of noncontrolling interests1 | $ | 20.5 | $ | — | $ | 25.1 | $ | — | |||||||
Gain (loss) on extinguishment of debt | 129.4 | (17.9 | ) | 132.6 | (18.2 | ) | |||||||||
Severance costs | (16.6 | ) | — | (35.9 | ) | (1.7 | ) | ||||||||
Acquisition-related costs excluding severance costs | (1.8 | ) | — | (25.0 | ) | — | |||||||||
Amortization of inventory step-up | (36.2 | ) | — | (59.4 | ) | — | |||||||||
Impact of discontinued operations | (0.4 | ) | (0.4 | ) | 0.3 | (0.4 | ) | ||||||||
Total Adjusted EBITDA | $ | (82.0 | ) | $ | 248.4 | $ | (59.3 | ) | $ | 269.6 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Net income (loss) | $ | 57 | $ | (49) | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Interest expense, net | (92) | (31) | |||||||||||||||||||||
Income tax benefit (expense) | (9) | 51 | |||||||||||||||||||||
Depreciation, depletion and amortization | (217) | (35) | |||||||||||||||||||||
375 | (34) | ||||||||||||||||||||||
Less: | |||||||||||||||||||||||
EBITDA of noncontrolling interests1 | 22 | 4 | |||||||||||||||||||||
Gain (loss) on extinguishment of debt | (66) | 3 | |||||||||||||||||||||
Severance costs | (11) | (19) | |||||||||||||||||||||
Acquisition-related costs excluding severance costs | (2) | (23) | |||||||||||||||||||||
Amortization of inventory step-up | (81) | (23) | |||||||||||||||||||||
Impact of discontinued operations | 0 | 1 | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 513 | $ | 23 | |||||||||||||||||||
1 EBITDA of noncontrolling interests includes $16 million and $3 million for income and $6 million and $1 million for depreciation, depletion and amortization for the three months ended March 31, 2021 and 2020, respectively. |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Assets: | |||||||
Steel and Manufacturing | $ | 6,201.6 | $ | 913.6 | |||
Mining and Pelletizing | 1,685.1 | 1,643.1 | |||||
Total segment assets | 7,886.7 | 2,556.7 | |||||
Corporate and Other (including discontinued operations) | 604.0 | 947.1 | |||||
Total assets | $ | 8,490.7 | $ | 3,503.8 |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Assets: | |||||||||||
Steelmaking | $ | 16,271 | $ | 15,849 | |||||||
Other Businesses | 295 | 239 | |||||||||
Total segment assets | 16,566 | 16,088 | |||||||||
Corporate | 649 | 683 | |||||||||
Total assets | $ | 17,215 | $ | 16,771 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Capital additions1: | |||||||||||||||||||||||
Steelmaking | $ | 133 | $ | 154 | |||||||||||||||||||
Other Businesses | 11 | 3 | |||||||||||||||||||||
Corporate | 18 | 1 | |||||||||||||||||||||
Total capital additions | $ | 162 | $ | 158 | |||||||||||||||||||
1 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for additional information. |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Capital additions1: | |||||||||||||||
Steel and Manufacturing | $ | 55.6 | $ | 155.1 | $ | 178.8 | $ | 237.5 | |||||||
Mining and Pelletizing | 17.4 | 35.6 | 51.6 | 82.4 | |||||||||||
Corporate and Other | — | 0.9 | 0.3 | 1.0 | |||||||||||
Total capital additions | $ | 73.0 | $ | 191.6 | $ | 230.7 | $ | 320.9 |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Land, land improvements and mineral rights | $ | 653.2 | $ | 582.2 | |||
Buildings | 454.4 | 157.8 | |||||
Steel and Manufacturing equipment | 2,147.9 | 42.0 | |||||
Mining and Pelletizing equipment | 1,448.6 | 1,413.6 | |||||
Other | 123.4 | 101.5 | |||||
Construction-in-progress | 1,058.3 | 730.3 | |||||
Total property, plant and equipment1 | 5,885.8 | 3,027.4 | |||||
Allowance for depreciation and depletion | (1,337.9 | ) | (1,098.4 | ) | |||
Property, plant and equipment, net | $ | 4,547.9 | $ | 1,929.0 |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Land, land improvements and mineral rights | $ | 1,241 | $ | 1,213 | |||||||
Buildings | 1,004 | 703 | |||||||||
Equipment | 7,877 | 6,786 | |||||||||
Other | 173 | 151 | |||||||||
Construction in progress | 407 | 1,364 | |||||||||
Total property, plant and equipment1 | 10,702 | 10,217 | |||||||||
Allowance for depreciation and depletion | (1,688) | (1,474) | |||||||||
Property, plant and equipment, net | $ | 9,014 | $ | 8,743 | |||||||
1 Includes right-of-use assets related to finance leases of $365 million and $361 million as of March 31, 2021 and December 31, 2020, respectively. |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Steelmaking | $ | 820 | $ | 1,232 | |||||||
Other Businesses | 174 | 174 | |||||||||
Total goodwill | $ | 994 | $ | 1,406 |
(In Millions) | |||||||||||||
Classification1 | Gross Amount | Accumulated Amortization | Net Amount | ||||||||||
As of June 30, 2020 | |||||||||||||
Intangible assets: | |||||||||||||
Customer relationships | Intangible assets, net | $ | 77.0 | $ | (1.5 | ) | $ | 75.5 | |||||
Developed technology | Intangible assets, net | 60.0 | (1.2 | ) | 58.8 | ||||||||
Trade names and trademarks | Intangible assets, net | 11.0 | (0.4 | ) | 10.6 | ||||||||
Mining permits | Intangible assets, net | 72.2 | (24.5 | ) | 47.7 | ||||||||
Total intangible assets | $ | 220.2 | $ | (27.6 | ) | $ | 192.6 | ||||||
Intangible liabilities: | |||||||||||||
Above-market supply contracts | Intangible liabilities, net | $ | (75.0 | ) | $ | 2.7 | $ | (72.3 | ) | ||||
As of December 31, 2019 | |||||||||||||
Intangible assets: | |||||||||||||
Mining permits | Intangible assets, net | $ | 72.2 | $ | (24.1 | ) | $ | 48.1 |
(In Millions) | ||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||||||||||||||||
Intangible assets1: | ||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | 77 | $ | (5) | $ | 72 | $ | 77 | $ | (3) | $ | 74 | ||||||||||||||||||||||||||
Developed technology | 60 | (4) | 56 | 60 | (3) | 57 | ||||||||||||||||||||||||||||||||
Trade names and trademarks | 11 | (1) | 10 | 11 | (1) | 10 | ||||||||||||||||||||||||||||||||
Mining permits | 72 | (25) | 47 | 72 | (25) | 47 | ||||||||||||||||||||||||||||||||
Total intangible assets | $ | 220 | $ | (35) | $ | 185 | $ | 220 | $ | (32) | $ | 188 | ||||||||||||||||||||||||||
Intangible liabilities2: | ||||||||||||||||||||||||||||||||||||||
Above-market supply contracts | $ | (71) | $ | 8 | $ | (63) | $ | (71) | $ | 7 | $ | (64) | ||||||||||||||||||||||||||
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) | ||||
Years ending December 31, | ||||
2020 (remaining period of the year) | $ | 5.0 | ||
2021 | 10.0 | |||
2022 | 10.0 | |||
2023 | 10.0 | |||
2024 | 10.0 | |||
2025 | 10.0 |
(In Millions) | ||||
Years ending December 31, | ||||
2020 (remaining period of the year) | $ | 4.1 | ||
2021 | 8.2 | |||
2022 | 8.2 | |||
2023 | 8.2 | |||
2024 | 8.2 | |||
2025 | 8.2 |
(In Millions) | ||||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Premiums (Discounts) | Total Debt | ||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||
4.875% 2024 Senior Secured Notes | Cliffs | 5.00% | $ | 394.5 | $ | (4.0 | ) | $ | (1.6 | ) | $ | 388.9 | ||||||||
9.875% 2025 Senior Secured Notes | Cliffs | 10.57% | 955.2 | (8.7 | ) | (26.7 | ) | 919.8 | ||||||||||||
6.75% 2026 Senior Secured Notes | Cliffs | 6.99% | 845.0 | (22.6 | ) | (9.4 | ) | 813.0 | ||||||||||||
Senior Unsecured Notes: | ||||||||||||||||||||
7.625% 2021 AK Senior Notes | AK Steel | 7.33% | 33.5 | — | 0.1 | 33.6 | ||||||||||||||
7.50% 2023 AK Senior Notes | AK Steel | 6.17% | 12.8 | — | 0.5 | 13.3 | ||||||||||||||
6.375% 2025 Senior Notes | Cliffs | 8.11% | 64.3 | (0.2 | ) | (4.8 | ) | 59.3 | ||||||||||||
6.375% 2025 AK Senior Notes | AK Steel | 8.11% | 38.4 | — | (2.9 | ) | 35.5 | |||||||||||||
1.50% 2025 Convertible Senior Notes | Cliffs | 6.26% | 296.3 | (3.9 | ) | (55.6 | ) | 236.8 | ||||||||||||
5.75% 2025 Senior Notes | Cliffs | 6.01% | 396.2 | (2.8 | ) | (4.3 | ) | 389.1 | ||||||||||||
7.00% 2027 Senior Notes | Cliffs | 9.24% | 88.0 | (0.3 | ) | (9.8 | ) | 77.9 | ||||||||||||
7.00% 2027 AK Senior Notes | AK Steel | 9.24% | 56.3 | — | (6.2 | ) | 50.1 | |||||||||||||
5.875% 2027 Senior Notes | Cliffs | 6.49% | 555.5 | (4.5 | ) | (19.0 | ) | 532.0 | ||||||||||||
6.25% 2040 Senior Notes | Cliffs | 6.34% | 262.7 | (1.9 | ) | (2.8 | ) | 258.0 | ||||||||||||
IRBs due 2024 to 2028 | AK Steel | Various | 92.0 | — | 2.3 | 94.3 | ||||||||||||||
ABL Facility | Cliffs2 | 2.79% | 2,000.0 | — | — | 550.0 | ||||||||||||||
Total long-term debt | $ | 4,451.6 |
(In Millions) | ||||||||||||||||||||||||||||||||||||||
March 31, 2021 | ||||||||||||||||||||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | Total Principal Amount | Unamortized Debt Issuance Costs | Unamortized Premiums (Discounts) | Total Debt | ||||||||||||||||||||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||||||||||||||||||||
9.875% 2025 Senior Secured Notes | Cliffs | 10.57% | $ | 633 | $ | (5) | $ | (16) | $ | 612 | ||||||||||||||||||||||||||||
6.75% 2026 Senior Secured Notes | Cliffs | 6.99% | 845 | (19) | (8) | 818 | ||||||||||||||||||||||||||||||||
Senior Unsecured Notes: | ||||||||||||||||||||||||||||||||||||||
1.50% 2025 Convertible Senior Notes | Cliffs | 6.26% | 296 | (3) | (47) | 246 | ||||||||||||||||||||||||||||||||
5.75% 2025 Senior Notes | Cliffs | 6.01% | 396 | (2) | (4) | 390 | ||||||||||||||||||||||||||||||||
7.00% 2027 Senior Notes | Cliffs | 9.24% | 73 | 0 | (7) | 66 | ||||||||||||||||||||||||||||||||
7.00% 2027 AK Senior Notes | AK Steel | 9.24% | 56 | 0 | (6) | 50 | ||||||||||||||||||||||||||||||||
5.875% 2027 Senior Notes | Cliffs | 6.49% | 556 | (4) | (17) | 535 | ||||||||||||||||||||||||||||||||
4.625% 2029 Senior Notes | Cliffs | 4.63% | 500 | (9) | 0 | 491 | ||||||||||||||||||||||||||||||||
4.875% 2031 Senior Notes | Cliffs | 4.88% | 500 | (9) | 0 | 491 | ||||||||||||||||||||||||||||||||
6.25% 2040 Senior Notes | Cliffs | 6.34% | 263 | (2) | (3) | 258 | ||||||||||||||||||||||||||||||||
IRBs due 2024 to 2028 | AK Steel | Various | 92 | 0 | 2 | 94 | ||||||||||||||||||||||||||||||||
EDC Revolving Facilities3 | * | Various | 80 | — | — | 53 | ||||||||||||||||||||||||||||||||
ABL Facility3 | Cliffs2 | 2.14% | 3,500 | — | — | 1,630 | ||||||||||||||||||||||||||||||||
Total long-term debt | $ | 5,734 | ||||||||||||||||||||||||||||||||||||
* Our subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc., are the borrowers under the EDC Revolving Facilities. | ||||||||||||||||||||||||||||||||||||||
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 The total principal amounts for the indicated credit facilities are stated at their respective maximum borrowing capacities. |
(In Millions) | ||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | Total Principal Amount | Debt Issuance Costs | Unamortized Discounts | Total Debt | ||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||
4.875% 2024 Senior Notes | Cliffs | 5.00% | $ | 400.0 | $ | (4.6 | ) | $ | (1.8 | ) | $ | 393.6 | ||||||||
Senior Unsecured Notes: | ||||||||||||||||||||
1.50% 2025 Convertible Senior Notes | Cliffs | 6.26% | 316.3 | (4.6 | ) | (65.0 | ) | 246.7 | ||||||||||||
5.75% 2025 Senior Notes | Cliffs | 6.01% | 473.3 | (3.6 | ) | (5.5 | ) | 464.2 | ||||||||||||
5.875% 2027 Senior Notes | Cliffs | 6.49% | 750.0 | (6.3 | ) | (27.3 | ) | 716.4 | ||||||||||||
6.25% 2040 Senior Notes | Cliffs | 6.34% | 298.4 | (2.2 | ) | (3.3 | ) | 292.9 | ||||||||||||
Former ABL Facility | Cliffs2 | N/A | 450.0 | N/A | N/A | — | ||||||||||||||
Total long-term debt | $ | 2,113.8 |
(In Millions) | ||||||||||||||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||||||||
Debt Instrument | Issuer1 | Annual Effective Interest Rate | Total Principal Amount | Unamortized Debt Issuance Costs | Unamortized Premiums (Discounts) | Total Debt | ||||||||||||||||||||||||||||||||
Senior Secured Notes: | ||||||||||||||||||||||||||||||||||||||
4.875% 2024 Senior Notes | Cliffs | 5.00% | $ | 395 | $ | (3) | $ | (1) | $ | 391 | ||||||||||||||||||||||||||||
9.875% 2025 Senior Secured Notes | Cliffs | 10.57% | 955 | (8) | (25) | 922 | ||||||||||||||||||||||||||||||||
6.75% 2026 Senior Secured Notes | Cliffs | 6.99% | 845 | (20) | (9) | 816 | ||||||||||||||||||||||||||||||||
Senior Unsecured Notes: | ||||||||||||||||||||||||||||||||||||||
7.625% 2021 AK Senior Notes | AK Steel | 7.33% | 34 | 0 | 0 | 34 | ||||||||||||||||||||||||||||||||
7.50% 2023 AK Senior Notes | AK Steel | 6.17% | 13 | 0 | 0 | 13 | ||||||||||||||||||||||||||||||||
6.375% 2025 Senior Notes | Cliffs | 8.11% | 64 | 0 | (4) | 60 | ||||||||||||||||||||||||||||||||
6.375% 2025 AK Senior Notes | AK Steel | 8.11% | 29 | 0 | (2) | 27 | ||||||||||||||||||||||||||||||||
1.50% 2025 Convertible Senior Notes | Cliffs | 6.26% | 296 | (4) | (49) | 243 | ||||||||||||||||||||||||||||||||
5.75% 2025 Senior Notes | Cliffs | 6.01% | 396 | (3) | (4) | 389 | ||||||||||||||||||||||||||||||||
7.00% 2027 Senior Notes | Cliffs | 9.24% | 73 | 0 | (8) | 65 | ||||||||||||||||||||||||||||||||
7.00% 2027 AK Senior Notes | AK Steel | 9.24% | 56 | 0 | (6) | 50 | ||||||||||||||||||||||||||||||||
5.875% 2027 Senior Notes | Cliffs | 6.49% | 556 | (4) | (18) | 534 | ||||||||||||||||||||||||||||||||
6.25% 2040 Senior Notes | Cliffs | 6.34% | 263 | (2) | (3) | 258 | ||||||||||||||||||||||||||||||||
IRBs due 2024 to 2028 | AK Steel | Various | 92 | 0 | 2 | 94 | ||||||||||||||||||||||||||||||||
EDC Revolving Facility3 | * | 3.25% | 40 | — | — | 18 | ||||||||||||||||||||||||||||||||
ABL Facility3 | Cliffs2 | 2.15% | 3,500 | — | — | 1,510 | ||||||||||||||||||||||||||||||||
Total debt | 5,424 | |||||||||||||||||||||||||||||||||||||
Less: current debt | 34 | |||||||||||||||||||||||||||||||||||||
Total long-term debt | $ | 5,390 | ||||||||||||||||||||||||||||||||||||
* Our subsidiaries, Fleetwood Metal Industries Inc. and The Electromac Group Inc., are the borrowers under the EDC Revolving Facility. | ||||||||||||||||||||||||||||||||||||||
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 The total principal amounts for the indicated credit facilities are stated at their respective maximum borrowing capacities. |
Redemption Period | Redemption Price1 | Restricted Amount | |||||||||||||||
Prior to March 1, 2024 - using the proceeds of equity issuance | 104.625 | % | Up to 35% of original aggregate principal | ||||||||||||||
Prior to March 1, 20242 | 100.000 | ||||||||||||||||
Beginning March 1, 2024 | 102.313 | ||||||||||||||||
Beginning March 1, 2025 | 101.156 | ||||||||||||||||
Beginning on March 1, 2026 and thereafter | 100.000 | ||||||||||||||||
1 Plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. | |||||||||||||||||
2 Plus a "make-whole" premium. |
Redemption Period | Redemption Price1 | Restricted Amount | ||||||||||||||||||||
Prior to March 1, 2026 - using the proceeds of equity issuance | 104.875 | % | Up to 35% of original aggregate principal | |||||||||||||||||||
Prior to March 1, 2026 2 | 100.000 | |||||||||||||||||||||
Beginning March 1, 2026 | 102.438 | |||||||||||||||||||||
Beginning March 1, 2027 | 101.625 | |||||||||||||||||||||
Beginning March 1, 2028 | 100.813 | |||||||||||||||||||||
Beginning on March 1, 2029 and thereafter | 100.000 | |||||||||||||||||||||
2 Plus a "make-whole" premium. |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||||||||
Debt Instrument | Debt Extinguished | (Loss) on Extinguishment | |||||||||||||||||||||
9.875% 2025 Senior Secured Notes | $ | 322 | $ | (42) | |||||||||||||||||||
4.875% 2024 Senior Secured Notes | 395 | (14) | |||||||||||||||||||||
7.625% 2021 AK Senior Notes | 34 | 0 | |||||||||||||||||||||
7.50% 2023 AK Senior Notes | 13 | 0 | |||||||||||||||||||||
6.375% 2025 Senior Notes | 64 | (7) | |||||||||||||||||||||
6.375% 2025 AK Senior Notes | 29 | (3) | |||||||||||||||||||||
$ | 857 | $ | (66) |
(In Millions) | ||||||||||||||||
Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | |||||||||||||||
Debt Instrument | Debt Extinguished | Gain on Extinguishment | Debt Extinguished | Gain on Extinguishment | ||||||||||||
7.625% 2021 AK Senior Notes | $ | — | $ | — | $ | 372.7 | $ | 0.4 | ||||||||
7.50% 2023 AK Senior Notes | — | — | 367.2 | 2.8 | ||||||||||||
4.875% 2024 Senior Secured Notes | 5.5 | 0.5 | 5.5 | 0.5 | ||||||||||||
6.375% 2025 Senior Notes | 167.5 | 21.3 | 167.5 | 21.3 | ||||||||||||
1.50% 2025 Convertible Senior Notes | 20.0 | 1.3 | 20.0 | 1.3 | ||||||||||||
5.75% 2025 Senior Notes | 77.1 | 16.3 | 77.1 | 16.3 | ||||||||||||
7.00% 2027 Senior Notes | 247.3 | 28.4 | 247.3 | 28.4 | ||||||||||||
5.875% 2027 Senior Notes | 194.5 | 48.7 | 194.5 | 48.7 | ||||||||||||
6.25% 2040 Senior Notes | 35.7 | 12.9 | 35.7 | 12.9 | ||||||||||||
$ | 747.6 | $ | 129.4 | $ | 1,487.5 | $ | 132.6 |
(In Millions) | ||||||||||||||||
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||||||||||
Debt Instrument | Debt Extinguished | (Loss) on Extinguishment | Debt Extinguished | (Loss) on Extinguishment | ||||||||||||
4.875% 2021 Senior Notes | $ | 114.0 | $ | (5.0 | ) | $ | 124.0 | $ | (5.3 | ) | ||||||
5.75% 2025 Senior Notes | 600.0 | (12.9 | ) | 600.0 | (12.9 | ) | ||||||||||
$ | 714.0 | $ | (17.9 | ) | $ | 724.0 | $ | (18.2 | ) |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, 2020 | |||||||||||||||||||||||
Debt Instrument | Debt Extinguished | Gain on Extinguishment | |||||||||||||||||||||
7.625% 2021 AK Senior Notes | $ | 373 | $ | 0 | |||||||||||||||||||
7.50% 2023 AK Senior Notes | 367 | 3 | |||||||||||||||||||||
$ | 740 | $ | 3 |
(In Millions) | ||||
June 30, 2020 | ||||
Available borrowing base on ABL Facility1 | $ | 1,652.1 | ||
Borrowings | (550.0 | ) | ||
Letter of credit obligations2 | (198.5 | ) | ||
Borrowing capacity available | $ | 903.6 |
(In Millions) | ||||||||
March 31, 2021 | ||||||||
Available borrowing base on ABL Facility1 | $ | 3,500 | ||||||
Borrowings | (1,630) | |||||||
Letter of credit obligations2 | (272) | |||||||
Borrowing capacity available | $ | 1,598 | ||||||
1 As of March 31, 2021, the ABL Facility has a maximum borrowing base of $3.5 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. | ||||||||
2 We issued standby letters of credit with certain financial institutions in order to support business obligations including, but not limited to, workers' compensation, employee severance, insurance, operating agreements, IRBs and environmental obligations. |
(In Millions) | ||||||||
Maturities of Debt | ||||||||
2021 (remaining period of year) | $ | 0 | ||||||
2022 | 0 | |||||||
2023 | 53 | |||||||
2024 | 62 | |||||||
2025 | 2,955 | |||||||
Thereafter | 2,823 | |||||||
Total maturities of debt | $ | 5,893 |
(In Millions) | ||||
Maturities of Debt | ||||
2020 (remaining period of year) | $ | — | ||
2021 | 33.5 | |||
2022 | — | |||
2023 | 12.8 | |||
2024 | 456.5 | |||
Thereafter | 4,137.9 | |||
Total maturities of debt | $ | 4,640.7 |
(In Millions) | |||||||||||||||
June 30, 2020 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents - Money market funds | $ | 21.8 | $ | — | $ | — | $ | 21.8 | |||||||
Other current assets: | |||||||||||||||
Commodity contracts | — | 5.4 | — | 5.4 | |||||||||||
Customer supply agreement | — | — | 27.3 | 27.3 | |||||||||||
Provisional pricing arrangement | — | — | 8.0 | 8.0 | |||||||||||
Other non-current assets: | |||||||||||||||
Commodity contracts | — | 0.7 | — | 0.7 | |||||||||||
Total | $ | 21.8 | $ | 6.1 | $ | 35.3 | $ | 63.2 | |||||||
Liabilities: | |||||||||||||||
Other current liabilities: | |||||||||||||||
Commodity contracts | $ | — | $ | (17.2 | ) | $ | — | $ | (17.2 | ) | |||||
Foreign exchange contracts | — | (1.0 | ) | — | (1.0 | ) | |||||||||
Other non-current liabilities: | |||||||||||||||
Commodity contracts | — | (1.1 | ) | — | (1.1 | ) | |||||||||
Foreign exchange contracts | — | (0.4 | ) | — | (0.4 | ) | |||||||||
Total | $ | — | $ | (19.7 | ) | $ | — | $ | (19.7 | ) |
(In Millions) | |||||||||||||||
December 31, 2019 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents - Commercial paper | $ | — | $ | 187.6 | $ | — | $ | 187.6 | |||||||
Other current assets: | |||||||||||||||
Customer supply agreement | — | — | 44.5 | 44.5 | |||||||||||
Provisional pricing arrangement | — | — | 1.3 | 1.3 | |||||||||||
Total | $ | — | $ | 187.6 | $ | 45.8 | $ | 233.4 | |||||||
Liabilities: | |||||||||||||||
Other current liabilities: | |||||||||||||||
Commodity contracts | $ | — | $ | (3.2 | ) | $ | — | $ | (3.2 | ) | |||||
Provisional pricing arrangement | — | — | (1.1 | ) | (1.1 | ) | |||||||||
Total | $ | — | $ | (3.2 | ) | $ | (1.1 | ) | $ | (4.3 | ) |
Qualitative/Quantitative Information About Level 3 Fair Value Measurements | |||||||||||||
Fair Value at June 30, 2020 (In Millions) | Balance Sheet Location | Valuation Technique | Unobservable Input | Range or Point Estimate (Weighted Average) | |||||||||
Customer supply agreement | $ | 27.3 | Other current assets | Market Approach | Management's estimate of hot-rolled coil steel price per net ton | $562 - $639 $(564) | |||||||
Provisional pricing arrangements | $ | 8.0 | Other current assets | Market Approach | Management's estimate of Platts 62% price per dry metric ton | $94 | |||||||
Atlantic Basin Pellet Premium | $32 |
(In Millions) | |||||||||||||||
Level 3 Assets | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Beginning balance | $ | 19.6 | $ | 106.7 | $ | 45.8 | $ | 91.4 | |||||||
Total gains included in earnings | 40.0 | 74.3 | 13.8 | 89.6 | |||||||||||
Settlements | (24.3 | ) | (62.9 | ) | (24.3 | ) | (62.9 | ) | |||||||
Ending balance | $ | 35.3 | $ | 118.1 | $ | 35.3 | $ | 118.1 | |||||||
Total gains for the period included in earnings attributable to the change in unrealized gains on assets still held at the reporting date | $ | 33.6 | $ | 73.0 | $ | 13.6 | $ | 88.3 |
(In Millions) | |||||||||||||||
Level 3 Liabilities | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Beginning balance | $ | — | $ | (9.8 | ) | $ | (1.1 | ) | $ | — | |||||
Total gains (losses) included in earnings | — | 4.5 | (0.6 | ) | (5.3 | ) | |||||||||
Settlements | — | 5.3 | 1.7 | 5.3 | |||||||||||
Ending balance | $ | — | $ | — | $ | — | $ | — |
(In Millions) | |||||||||||||||||
June 30, 2020 | December 31, 2019 | ||||||||||||||||
Classification | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt: | |||||||||||||||||
Senior Notes | Level 1 | $ | 3,807.3 | $ | 3,681.8 | $ | 2,113.8 | $ | 2,237.0 | ||||||||
IRBs due 2024 to 2028 | Level 1 | 94.3 | 86.0 | — | — | ||||||||||||
ABL Facility - outstanding balance | Level 2 | 550.0 | 550.0 | — | — | ||||||||||||
Total long-term debt | $ | 4,451.6 | $ | 4,317.8 | $ | 2,113.8 | $ | 2,237.0 |
(In Millions) | |||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||
Classification | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Senior Notes | Level 1 | $ | 3,957 | $ | 4,674 | $ | 3,802 | $ | 4,446 | ||||||||||||||||||||
IRBs due 2024 to 2028 | Level 1 | 94 | 94 | 94 | 91 | ||||||||||||||||||||||||
EDC Revolving Facilities - outstanding balance | Level 2 | 53 | 53 | 18 | 18 | ||||||||||||||||||||||||
ABL Facility - outstanding balance | Level 2 | 1,630 | 1,630 | 1,510 | 1,510 | ||||||||||||||||||||||||
Total long-term debt | $ | 5,734 | $ | 6,451 | $ | 5,424 | $ | 6,065 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Service cost | $ | 5.3 | $ | 4.2 | $ | 10.6 | $ | 8.3 | |||||||
Interest cost | 14.9 | 8.6 | 23.1 | 17.3 | |||||||||||
Expected return on plan assets | (36.7 | ) | (13.7 | ) | (55.2 | ) | (27.3 | ) | |||||||
Amortization: | |||||||||||||||
Prior service costs | 0.3 | 0.3 | 0.5 | 0.6 | |||||||||||
Net actuarial loss | 6.6 | 5.9 | 13.3 | 11.8 | |||||||||||
Net periodic benefit cost (credit) | $ | (9.6 | ) | $ | 5.3 | $ | (7.7 | ) | $ | 10.7 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Service cost | $ | 14 | $ | 5 | |||||||||||||||||||
Interest cost | 26 | 8 | |||||||||||||||||||||
Expected return on plan assets | (90) | (18) | |||||||||||||||||||||
Amortization: | |||||||||||||||||||||||
Net actuarial loss | 8 | 7 | |||||||||||||||||||||
Net periodic benefit cost (credit) | $ | (42) | $ | 2 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Service cost | $ | 13 | $ | 1 | |||||||||||||||||||
Interest cost | 18 | 2 | |||||||||||||||||||||
Expected return on plan assets | (10) | (5) | |||||||||||||||||||||
Amortization: | |||||||||||||||||||||||
Prior service credits | 0 | (1) | |||||||||||||||||||||
Net actuarial loss | 1 | 1 | |||||||||||||||||||||
Net periodic benefit cost (credit) | $ | 22 | $ | (2) |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Service cost | $ | 1.4 | $ | 0.4 | $ | 1.9 | $ | 0.8 | |||||||
Interest cost | 4.3 | 2.4 | 6.5 | 4.7 | |||||||||||
Expected return on plan assets | (4.6 | ) | (4.2 | ) | (9.1 | ) | (8.4 | ) | |||||||
Amortization: | |||||||||||||||
Prior service credits | (0.5 | ) | (0.5 | ) | (1.0 | ) | (1.0 | ) | |||||||
Net actuarial loss | 0.7 | 1.2 | 1.4 | 2.5 | |||||||||||
Net periodic benefit cost (credit) | $ | 1.3 | $ | (0.7 | ) | $ | (0.3 | ) | $ | (1.4 | ) |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Asset retirement obligations1 | $ | 183.3 | $ | 165.3 | |||
Less current portion | 2.2 | 2.1 | |||||
Long-term asset retirement obligations | $ | 181.1 | $ | 163.2 |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Asset retirement obligations1 | $ | 310 | $ | 342 | |||||||
Less: current portion | 12 | 7 | |||||||||
Long-term asset retirement obligations | $ | 298 | $ | 335 | |||||||
1 Includes $158 million and $190 million related to our active operations as of March 31, 2021 and December 31, 2020, respectively. |
(In Millions) | |||||||
2020 | 2019 | ||||||
Asset retirement obligation as of January 1 | $ | 165.3 | $ | 172.4 | |||
Increase from AK Steel acquisition | 13.9 | — | |||||
Accretion expense | 4.9 | 5.1 | |||||
Remediation payments | (0.8 | ) | (0.4 | ) | |||
Asset retirement obligation as of June 30 | $ | 183.3 | $ | 177.1 |
(In Millions) | |||||||||||
2021 | 2020 | ||||||||||
Asset retirement obligation as of January 1 | $ | 342 | $ | 165 | |||||||
Increase (decrease) from Acquisitions | (34) | 14 | |||||||||
Accretion expense | 3 | 2 | |||||||||
Remediation payments | (1) | 0 | |||||||||
Asset retirement obligation as of March 31 | $ | 310 | $ | 181 |
Derivatives designated as hedging instruments under Topic 815: | Derivatives not designated as hedging instruments under Topic 815: | |||||||||||||||
Derivative Asset (Liability) | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | ||||||||||||
Other current assets: | ||||||||||||||||
Customer supply agreement | $ | — | $ | — | $ | 27.3 | $ | 44.5 | ||||||||
Provisional pricing arrangements | — | — | 8.0 | 1.3 | ||||||||||||
Commodity contracts | 1.6 | — | 3.8 | — | ||||||||||||
Other non-current assets: | ||||||||||||||||
Commodity contracts | 0.6 | — | 0.1 | — | ||||||||||||
Other current liabilities: | ||||||||||||||||
Provisional pricing arrangements | — | — | — | (1.1 | ) | |||||||||||
Commodity contracts | (14.2 | ) | (3.2 | ) | (3.0 | ) | — | |||||||||
Foreign exchange contracts | (1.0 | ) | — | — | — | |||||||||||
Other non-current liabilities: | ||||||||||||||||
Commodity contracts | (0.9 | ) | — | (0.2 | ) | — | ||||||||||
Foreign exchange contracts | (0.4 | ) | — | — | — |
(In Millions) | |||||||||||
June 30, 2020 | December 31, 2019 | ||||||||||
Unit of Measure | Maturity Dates | Notional Amount | Notional Amount | ||||||||
Commodity contracts: | |||||||||||
Natural gas | MMBtu | July 2020 - December 2021 | 39.2 | 20.1 | |||||||
Diesel | Gallons | — | — | 0.8 | |||||||
Zinc | Pounds | July 2020 - December 2021 | 18.2 | — | |||||||
Electricity | Megawatt hours | July 2020 - December 2021 | 1.5 | — | |||||||
Foreign exchange contracts: | |||||||||||
Canadian dollars | CAD | July 2020 - December 2021 | C$ | 48.7 | C$ | — |
(In Millions) | ||||
Hedge: | Estimated Gains (Losses) | |||
Natural gas | $ | (4.6 | ) | |
Zinc | 0.6 | |||
Electricity | (1.0 | ) |
(In Millions) | |||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Customer supply agreements | Revenues | $ | 31.2 | $ | 57.5 | $ | 5.6 | $ | 74.6 | ||||||||||
Provisional pricing arrangements | Revenues | 8.8 | 17.3 | 7.6 | 5.7 | ||||||||||||||
Foreign exchange contracts | Other non-operating income | 0.1 | — | — | — | ||||||||||||||
Commodity contracts | Cost of goods sold | 1.2 | — | (4.7 | ) | — | |||||||||||||
Total | $ | 41.3 | $ | 74.8 | $ | 8.5 | $ | 80.3 |
Declaration Date | Record Date | Payment Date | Dividend Declared per Common Share1 | |||||
2/18/2020 | 4/3/2020 | 4/15/2020 | $ | 0.06 | ||||
12/2/2019 | 1/3/2020 | 1/15/2020 | 0.06 | |||||
9/3/2019 | 10/4/2019 | 10/15/2019 | 0.10 | |||||
5/31/2019 | 7/5/2019 | 7/15/2019 | 0.06 | |||||
2/19/2019 | 4/5/2019 | 4/15/2019 | 0.05 | |||||
10/18/2018 | 1/4/2019 | 1/15/2019 | 0.05 |
Declaration Date | Record Date | Payment Date | Dividend Declared per Common Share | |||||||||||||||||
2/18/2020 | 4/3/2020 | 4/15/2020 | $ | 0.06 | ||||||||||||||||
12/2/2019 | 1/3/2020 | 1/15/2020 | 0.06 |
(In Millions) | |||||||||||||||
Postretirement Benefit Liability, net of tax | Foreign Currency Translation | Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||
December 31, 2019 | $ | (315.7 | ) | $ | — | $ | (3.1 | ) | $ | (318.8 | ) | ||||
Other comprehensive loss before reclassifications | — | (0.9 | ) | (5.2 | ) | (6.1 | ) | ||||||||
Net loss reclassified from accumulated other comprehensive loss | 5.6 | — | 2.2 | 7.8 | |||||||||||
March 31, 2020 | $ | (310.1 | ) | $ | (0.9 | ) | $ | (6.1 | ) | $ | (317.1 | ) | |||
Other comprehensive income before reclassifications | 0.4 | 0.7 | 1.4 | 2.5 | |||||||||||
Net loss reclassified from accumulated other comprehensive loss | 5.6 | — | 3.1 | 8.7 | |||||||||||
June 30, 2020 | $ | (304.1 | ) | $ | (0.2 | ) | $ | (1.6 | ) | $ | (305.9 | ) |
(In Millions) | |||||||||||||||||||||||
Postretirement Benefit Liability, net of tax | Foreign Currency Translation | Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||||||||||
December 31, 2020 | $ | (135) | $ | 3 | $ | (1) | $ | (133) | |||||||||||||||
Other comprehensive income (loss) before reclassifications | 0 | (1) | 8 | 7 | |||||||||||||||||||
Net (gain) loss reclassified from accumulated other comprehensive loss | 7 | 0 | (1) | 6 | |||||||||||||||||||
March 31, 2021 | $ | (128) | $ | 2 | $ | 6 | $ | (120) | |||||||||||||||
(In Millions) | |||||||||||
Postretirement Benefit Liability, net of tax | Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | |||||||||
December 31, 2018 | $ | (281.1 | ) | $ | (2.8 | ) | $ | (283.9 | ) | ||
Other comprehensive income before reclassifications | 0.2 | 2.5 | 2.7 | ||||||||
Net loss reclassified from accumulated other comprehensive loss | 5.5 | 0.2 | 5.7 | ||||||||
March 31, 2019 | $ | (275.4 | ) | $ | (0.1 | ) | $ | (275.5 | ) | ||
Other comprehensive income (loss) before reclassifications | 0.3 | (2.3 | ) | (2.0 | ) | ||||||
Net loss reclassified from accumulated other comprehensive loss | 5.5 | 0.2 | 5.7 | ||||||||
June 30, 2019 | $ | (269.6 | ) | $ | (2.2 | ) | $ | (271.8 | ) |
(In Millions) | |||||||||||||||||||||||
Postretirement Benefit Liability, net of tax | Foreign Currency Translation | Derivative Financial Instruments, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||||||||||
December 31, 2019 | $ | (316) | $ | 0 | $ | (3) | $ | (319) | |||||||||||||||
Other comprehensive loss before reclassifications | 0 | (1) | (5) | (6) | |||||||||||||||||||
Net loss reclassified from accumulated other comprehensive loss | 6 | 0 | 2 | 8 | |||||||||||||||||||
March 31, 2020 | $ | (310) | $ | (1) | $ | (6) | $ | (317) | |||||||||||||||
(In Millions) | ||||||||||||||||||
Details about Accumulated Other Comprehensive Loss Components | Amount of (Gain)/Loss Reclassified into Income, Net of Tax | Affected Line Item in the Statement of Unaudited Condensed Consolidated Operations | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Amortization of pension and OPEB liability: | ||||||||||||||||||
Prior service credits | $ | (0.2 | ) | $ | (0.2 | ) | $ | (0.5 | ) | $ | (0.4 | ) | Other non-operating income | |||||
Net actuarial loss | 7.3 | 7.1 | 14.7 | 14.3 | Other non-operating income | |||||||||||||
$ | 7.1 | $ | 6.9 | 14.2 | 13.9 | Total before taxes | ||||||||||||
(1.5 | ) | (1.4 | ) | (3.0 | ) | (2.9 | ) | Income tax benefit (expense) | ||||||||||
$ | 5.6 | $ | 5.5 | $ | 11.2 | $ | 11.0 | Net of taxes | ||||||||||
Unrealized loss on derivative financial instruments: | ||||||||||||||||||
Commodity contracts | $ | 3.9 | $ | 0.2 | $ | 6.7 | $ | 0.5 | Cost of goods sold | |||||||||
(0.8 | ) | — | (1.4 | ) | (0.1 | ) | Income tax benefit (expense) | |||||||||||
$ | 3.1 | $ | 0.2 | $ | 5.3 | $ | 0.4 | Net of taxes | ||||||||||
Total reclassifications for the period, net of tax | $ | 8.7 | $ | 5.7 | $ | 16.5 | $ | 11.4 |
(In Millions) | ||||||||||||||||||||||||||||||||
Details about Accumulated Other Comprehensive Loss Components | Amount of (Gain)/Loss Reclassified into Income, Net of Tax | Affected Line Item in the Statement of Unaudited Condensed Consolidated Operations | ||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||
Amortization of pension and OPEB liability: | ||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 9 | $ | 7 | Other non-operating income | |||||||||||||||||||||||||||
Income tax benefit | (2) | (1) | Income tax benefit (expense) | |||||||||||||||||||||||||||||
Net of taxes | $ | 7 | $ | 6 | ||||||||||||||||||||||||||||
Changes in derivative financial instruments: | ||||||||||||||||||||||||||||||||
Commodity contracts | $ | (1) | $ | 3 | Cost of goods sold | |||||||||||||||||||||||||||
Income tax benefit | 0 | (1) | Income tax benefit (expense) | |||||||||||||||||||||||||||||
Net of taxes | $ | (1) | $ | 2 | ||||||||||||||||||||||||||||
Total reclassifications for the period, net of tax | $ | 6 | $ | 8 |
Mine | Cleveland-Cliffs Inc. | ArcelorMittal USA | U.S. Steel | |||
Hibbing | 23.0% | 62.3% | 14.7% |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenue from related parties | $ | 77 | $ | 11 | |||||||||||||||||||
Revenues | $ | 4,049 | $ | 359 | |||||||||||||||||||
Related party revenues as a percent of Revenues | 2 | % | 3 | % | |||||||||||||||||||
Purchases from related parties | $ | 27 | $ | 3 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue from related parties | $ | 281.8 | $ | 452.4 | $ | 292.6 | $ | 499.3 | |||||||
Revenues1 | $ | 1,092.7 | $ | 743.2 | $ | 1,451.8 | $ | 900.2 | |||||||
Related party revenues as a percent of Revenues1 | 25.8 | % | 60.9 | % | 20.2 | % | 55.5 | % | |||||||
Purchases from related parties | $ | 9.7 | $ | — | $ | 12.2 | $ | — |
(In Millions) | ||||||||
Balance Sheet Location | June 30, 2020 | December 31, 2019 | ||||||
Accounts receivable, net | $ | 91.6 | $ | 31.1 | ||||
Other current assets | 35.3 | 44.5 | ||||||
Accounts payable | (2.4 | ) | — | |||||
Other current liabilities | (2.0 | ) | (2.0 | ) |
(In Millions) | ||||||||||||||
Balance Sheet Location of Assets (Liabilities) | March 31, 2021 | December 31, 2020 | ||||||||||||
Accounts receivable, net | $ | 30 | $ | 2 | ||||||||||
Accounts payable | (9) | (6) | ||||||||||||
(In Millions) | |||
June 30, 2020 | |||
Cash and cash equivalents | $ | 1.0 | |
Inventories | 21.2 | ||
Property, plant and equipment, net | 309.2 | ||
Accounts payable | (5.6 | ) | |
Other assets (liabilities), net | (1.2 | ) | |
Noncontrolling interests | (324.6 | ) |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Cash and cash equivalents | $ | 4 | $ | 5 | |||||||
Inventories | 22 | 21 | |||||||||
Property, plant and equipment, net | 304 | 308 | |||||||||
Accounts payable | (12) | (15) | |||||||||
Other assets (liabilities), net | 1 | (10) | |||||||||
Noncontrolling interests | (319) | (309) |
(In Millions, Except Per Share Amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Income (loss) from continuing operations | $ | (107.8 | ) | $ | 161.4 | $ | (157.0 | ) | $ | 139.3 | |||||
Income from continuing operations attributable to noncontrolling interest | (15.8 | ) | — | (19.3 | ) | — | |||||||||
Net income (loss) from continuing operations attributable to Cliffs shareholders | (123.6 | ) | 161.4 | (176.3 | ) | 139.3 | |||||||||
Income (loss) from discontinued operations, net of tax | (0.3 | ) | (0.6 | ) | 0.3 | (0.6 | ) | ||||||||
Net income (loss) attributable to Cliffs shareholders | $ | (123.9 | ) | $ | 160.8 | $ | (176.0 | ) | $ | 138.7 | |||||
Weighted average number of shares: | |||||||||||||||
Basic | 399.1 | 275.8 | 348.3 | 282.6 | |||||||||||
Convertible senior notes | — | 6.7 | — | 6.9 | |||||||||||
Employee stock plans | — | 3.0 | — | 4.1 | |||||||||||
Diluted | 399.1 | 285.5 | 348.3 | 293.6 | |||||||||||
Earnings (loss) per common share attributable to Cliffs shareholders - basic: | |||||||||||||||
Continuing operations | $ | (0.31 | ) | $ | 0.59 | $ | (0.51 | ) | $ | 0.49 | |||||
Discontinued operations | — | — | — | — | |||||||||||
$ | (0.31 | ) | $ | 0.59 | $ | (0.51 | ) | $ | 0.49 | ||||||
Earnings (loss) per common share attributable to Cliffs shareholders - diluted: | |||||||||||||||
Continuing operations | $ | (0.31 | ) | $ | 0.57 | $ | (0.51 | ) | $ | 0.47 | |||||
Discontinued operations | — | — | — | — | |||||||||||
$ | (0.31 | ) | $ | 0.57 | $ | (0.51 | ) | $ | 0.47 |
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Income (loss) from continuing operations | $ | 57 | $ | (50) | |||||||||||||||||||
Income from continuing operations attributable to noncontrolling interest | (16) | (3) | |||||||||||||||||||||
Net income (loss) from continuing operations attributable to Cliffs shareholders | 41 | (53) | |||||||||||||||||||||
Income from discontinued operations, net of tax | 0 | 1 | |||||||||||||||||||||
Net income (loss) attributable to Cliffs shareholders | $ | 41 | $ | (52) | |||||||||||||||||||
Weighted average number of shares: | |||||||||||||||||||||||
Basic | 490 | 298 | |||||||||||||||||||||
Redeemable preferred shares | 58 | 0 | |||||||||||||||||||||
Convertible senior notes | 19 | 0 | |||||||||||||||||||||
Employee stock plans | 4 | 0 | |||||||||||||||||||||
Diluted | 571 | 298 | |||||||||||||||||||||
Earnings (loss) per common share attributable to Cliffs shareholders - basic1: | |||||||||||||||||||||||
Continuing operations | $ | 0.08 | $ | (0.18) | |||||||||||||||||||
Discontinued operations | 0 | 0 | |||||||||||||||||||||
$ | 0.08 | $ | (0.18) | ||||||||||||||||||||
Earnings (loss) per common share attributable to Cliffs shareholders - diluted: | |||||||||||||||||||||||
Continuing operations | $ | 0.07 | $ | (0.18) | |||||||||||||||||||
Discontinued operations | 0 | 0 | |||||||||||||||||||||
$ | 0.07 | $ | (0.18) | ||||||||||||||||||||
1 For the three months ended March 31, 2021, basic earnings per share is calculated by dividing Net income (loss) attributable to Cliffs shareholders, less $4 million 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) | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Shares related to employee stock plans | 1.8 | — | 1.8 | — |
(In Millions) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
Environmental obligations | $ | 41.4 | $ | 2.0 | |||
Less current portion | 6.5 | 0.3 | |||||
Long-term environmental obligations | $ | 34.9 | $ | 1.7 |
(In Millions) | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Environmental obligations | $ | 134 | $ | 135 | |||||||
Less: current portion | 20 | 18 | |||||||||
Long-term environmental obligations | $ | 114 | $ | 117 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenue | % | Revenue | % | ||||||||||||||||||||
Automotive | $ | 1,392 | 34 | % | $ | 118 | 33 | % | |||||||||||||||
Infrastructure and Manufacturing | 964 | 24 | % | 43 | 12 | % | |||||||||||||||||
Distributors and Converters | 1,263 | 31 | % | 54 | 15 | % | |||||||||||||||||
Steel Producers | 430 | 11 | % | 144 | 40 | % | |||||||||||||||||
Total revenues | $ | 4,049 | $ | 359 | |||||||||||||||||||
(In Millions, Except Sales Tons) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Sales volume (in thousands): | |||||||||||||||
Steel and Manufacturing (net tons) | 619 | — | 818 | — | |||||||||||
Mining and Pelletizing sales (long tons) | 4,759 | 6,227 | 6,893 | 7,777 | |||||||||||
Less: Intercompany sales (long tons) | (1,041 | ) | (38 | ) | (1,824 | ) | (38 | ) | |||||||
Mining and Pelletizing consolidated sales (long tons) | 3,718 | 6,189 | 5,069 | 7,739 | |||||||||||
Revenues: | |||||||||||||||
Steel and Manufacturing net sales to external customers | $ | 715.1 | $ | — | $ | 932.6 | $ | — | |||||||
Mining and Pelletizing net sales1 | 489.0 | 747.2 | 718.4 | 904.2 | |||||||||||
Less: Intercompany sales | (111.4 | ) | (4.0 | ) | (199.2 | ) | (4.0 | ) | |||||||
Mining and Pelletizing net sales to external customers | 377.6 | 743.2 | 519.2 | 900.2 | |||||||||||
— | |||||||||||||||
Total revenues | $ | 1,092.7 | $ | 743.2 | $ | 1,451.8 | $ | 900.2 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | Variance Favorable/ (Unfavorable) | 2020 | 2019 | Variance Favorable/ (Unfavorable) | ||||||||||||||||||
Cost of goods sold | $ | (1,207.5 | ) | $ | (480.2 | ) | $ | (727.3 | ) | $ | (1,563.5 | ) | $ | (606.3 | ) | $ | (957.2 | ) | |||||
Selling, general and administrative expenses | (62.1 | ) | (29.4 | ) | (32.7 | ) | (89.6 | ) | (56.7 | ) | (32.9 | ) | |||||||||||
Acquisition-related costs | (18.4 | ) | — | (18.4 | ) | (60.9 | ) | — | (60.9 | ) | |||||||||||||
Miscellaneous – net: | |||||||||||||||||||||||
Empire idle costs | (3.7 | ) | (5.3 | ) | 1.6 | (7.0 | ) | (9.3 | ) | 2.3 | |||||||||||||
HBI production plant startup costs | (7.1 | ) | (1.1 | ) | (6.0 | ) | (15.0 | ) | (1.9 | ) | (13.1 | ) | |||||||||||
Other | (2.3 | ) | (0.4 | ) | (1.9 | ) | (3.0 | ) | — | (3.0 | ) | ||||||||||||
Total Miscellaneous – net | (13.1 | ) | (6.8 | ) | (6.3 | ) | (25.0 | ) | (11.2 | ) | (13.8 | ) | |||||||||||
Total operating costs | $ | (1,301.1 | ) | $ | (516.4 | ) | $ | (784.7 | ) | $ | (1,739.0 | ) | $ | (674.2 | ) | $ | (1,064.8 | ) |
(In Millions) | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | Variance Favorable/ (Unfavorable) | 2020 | 2019 | Variance Favorable/ (Unfavorable) | ||||||||||||||||||
Interest expense, net | $ | (68.7 | ) | $ | (26.1 | ) | $ | (42.6 | ) | $ | (99.7 | ) | $ | (51.2 | ) | $ | (48.5 | ) | |||||
Other non-operating income (expense): | |||||||||||||||||||||||
Gain (loss) on extinguishment of debt | 129.4 | (17.9 | ) | 147.3 | 132.6 | (18.2 | ) | 150.8 | |||||||||||||||
Net periodic benefit credits (costs) other than service costs component | 15.1 | (0.1 | ) | 15.2 | 20.6 | (0.2 | ) | 20.8 | |||||||||||||||
Other | 0.1 | 0.7 | (0.6 | ) | 0.6 | 1.2 | (0.6 | ) | |||||||||||||||
Total other income (expense) | $ | 75.9 | $ | (43.4 | ) | $ | 119.3 | $ | 54.1 | $ | (68.4 | ) | $ | 122.5 |
(In Millions, Except Percentages) | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | Variance | 2020 | 2019 | Variance | ||||||||||||||||||
Income tax benefit (expense) | $ | 24.7 | $ | (22.0 | ) | $ | 46.7 | $ | 76.1 | $ | (18.3 | ) | $ | 94.4 | |||||||||
Effective tax rate | 18.6 | % | 12.0 | % | 6.6 | % | 32.6 | % | 11.6 | % | 21.0 | % |
(In Millions) | |||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||
Income tax benefit (expense) | $ | (9) | $ | 51 | |||||||||||||||||||||||||
Effective tax rate | 14 | % | 51 | % |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | (108.1 | ) | $ | 160.8 | $ | (156.7 | ) | $ | 138.7 | |||||
Less: | |||||||||||||||
Interest expense, net | (68.6 | ) | (26.3 | ) | (99.7 | ) | (51.4 | ) | |||||||
Income tax benefit (expense) | 24.7 | (22.0 | ) | 76.1 | (18.3 | ) | |||||||||
Depreciation, depletion and amortization | (77.1 | ) | (21.0 | ) | (111.5 | ) | (40.9 | ) | |||||||
EBITDA | $ | 12.9 | $ | 230.1 | $ | (21.6 | ) | $ | 249.3 | ||||||
Less: | |||||||||||||||
EBITDA of noncontrolling interests1 | $ | 20.5 | $ | — | $ | 25.1 | $ | — | |||||||
Gain (loss) on extinguishment of debt | 129.4 | (17.9 | ) | 132.6 | (18.2 | ) | |||||||||
Severance costs | (16.6 | ) | — | (35.9 | ) | (1.7 | ) | ||||||||
Acquisition-related costs excluding severance costs | (1.8 | ) | — | (25.0 | ) | — | |||||||||
Amortization of inventory step-up | (36.2 | ) | — | (59.4 | ) | — | |||||||||
Impact of discontinued operations | (0.4 | ) | (0.4 | ) | 0.3 | (0.4 | ) | ||||||||
Adjusted EBITDA | $ | (82.0 | ) | $ | 248.4 | $ | (59.3 | ) | $ | 269.6 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Net income (loss) | $ | 57 | $ | (49) | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Interest expense, net | (92) | (31) | |||||||||||||||||||||
Income tax benefit (expense) | (9) | 51 | |||||||||||||||||||||
Depreciation, depletion and amortization | (217) | (35) | |||||||||||||||||||||
Total EBITDA | $ | 375 | $ | (34) | |||||||||||||||||||
Less: | |||||||||||||||||||||||
EBITDA of noncontrolling interests1 | $ | 22 | $ | 4 | |||||||||||||||||||
Gain (loss) on extinguishment of debt | (66) | 3 | |||||||||||||||||||||
Severance costs | (11) | (19) | |||||||||||||||||||||
Acquisition-related costs excluding severance costs | (2) | (23) | |||||||||||||||||||||
Amortization of inventory step-up | (81) | (23) | |||||||||||||||||||||
Impact of discontinued operations | — | 1 | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 513 | $ | 23 | |||||||||||||||||||
1 EBITDA of noncontrolling interests includes $16 million and $3 million for income and $6 million and $1 million for depreciation, depletion and amortization for the three months ended March 31, 2021 and 2020, respectively. |
(In Millions) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Adjusted EBITDA: | |||||||||||||||||||||||
Steelmaking | $ | 537 | $ | 44 | |||||||||||||||||||
Other Businesses | 11 | 2 | |||||||||||||||||||||
Corporate and eliminations | (35) | (23) | |||||||||||||||||||||
Total Adjusted EBITDA | $ | 513 | $ | 23 |
(In Millions) | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Adjusted EBITDA: | |||||||||||||||||||||||
Steel and Manufacturing | $ | (104.0 | ) | $ | (1.1 | ) | $ | (102.9 | ) | $ | (115.1 | ) | $ | (1.9 | ) | $ | (113.2 | ) | |||||
Mining and Pelletizing | 82.4 | 280.5 | (198.1 | ) | 164.2 | 328.0 | (163.8 | ) | |||||||||||||||
Corporate and eliminations | (60.4 | ) | (31.0 | ) | (29.4 | ) | (108.4 | ) | (56.5 | ) | (51.9 | ) | |||||||||||
Total Adjusted EBITDA | $ | (82.0 | ) | $ | 248.4 | $ | (330.4 | ) | $ | (59.3 | ) | $ | 269.6 | $ | (328.9 | ) |
Three Months Ended | Six Months Ended | ||||||
June 30, 2020 | June 30, 2020 | ||||||
Volumes - In Thousands of Net Tons | |||||||
Flat-rolled steel shipments | 619 | 818 | |||||
Operating Results - In Millions | |||||||
Revenues | $ | 715.1 | $ | 932.6 | |||
Cost of goods sold | $ | (859.9 | ) | $ | (1,106.5 | ) | |
Adjusted EBITDA1 | $ | (104.0 | ) | $ | (115.1 | ) | |
Selling Price - Per Net Ton | |||||||
Average net selling price per net ton of flat-rolled steel | $ | 1,056 | $ | 1,042 | |||
Revenues Attributable to International Customers | |||||||
Revenues to customers outside the United States (In Millions) | $ | 52.0 | $ | 70.9 | |||
Revenues to customers outside the United States as a percent of total revenues | 7.3 | % | 7.6 | % |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Operating Results - In Millions | |||||||||||
Revenues | $ | 3,919 | $ | 337 | |||||||
Cost of goods sold | $ | (3,644) | $ | (335) | |||||||
Selling Price - Per Ton | |||||||||||
Average net selling price per net ton of steel products | $ | 900 | $ | 980 |
Three Months Ended | Six Months Ended | |||||
Market | June 30, 2020 | June 30, 2020 | ||||
Automotive | 51 | % | 52 | % | ||
Infrastructure and Manufacturing | 28 | % | 26 | % | ||
Distributors and Converters | 21 | % | 22 | % |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | |||||||||||||||
2020 | 2019 | Change | Percent change | ||||||||||||
Volumes - In Thousands of Long Tons1,2 | |||||||||||||||
Sales tons | 4,759 | 6,227 | (1,468 | ) | (23.6 | )% | |||||||||
Production tons | 2,038 | 5,177 | (3,139 | ) | (60.6 | )% | |||||||||
Operating Results - In Millions2 | |||||||||||||||
Revenues | $ | 489.0 | $ | 747.2 | $ | (258.2 | ) | (34.6 | )% | ||||||
Cost of goods sold | $ | (427.2 | ) | $ | (482.6 | ) | $ | 55.4 | (11.5 | )% | |||||
Adjusted EBITDA | $ | 82.4 | $ | 280.5 | $ | (198.1 | ) | (70.6 | )% |
(Dollars In Millions, Sales Volumes In Thousands) | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Revenue | Volume1 | Revenue | Volume1 | ||||||||||||||||||||
Hot-rolled steel | $ | 895 | 1,182 | $ | 19 | 31 | |||||||||||||||||
Cold-rolled steel | 632 | 748 | 28 | 40 | |||||||||||||||||||
Coated steel | 1,308 | 1,369 | 90 | 99 | |||||||||||||||||||
Stainless and electrical steel | 363 | 167 | 56 | 27 | |||||||||||||||||||
Plate Steel | 244 | 275 | — | — | |||||||||||||||||||
Other steel products | 289 | 403 | — | — | |||||||||||||||||||
Iron products | 70 | 600 | 142 | 1,351 | |||||||||||||||||||
Other | 118 | N/A | 2 | N/A | |||||||||||||||||||
Total | $ | 3,919 | $ | 337 | |||||||||||||||||||
1 All steel product volumes are stated in net tons. Iron product volumes are stated in long tons. |
Three Months Ended June 30, | |||||||||||||||
Per Ton Information | 2020 | 2019 | Change | Percent change | |||||||||||
Realized product revenue rate1 | $ | 94.73 | $ | 112.64 | $ | (17.91 | ) | (15.9 | )% | ||||||
Cash cost of goods sold rate1,2 | $ | 77.71 | $ | 67.00 | $ | 10.71 | 16.0 | % | |||||||
Depreciation, depletion & amortization | 4.03 | 3.15 | 0.88 | 27.9 | % | ||||||||||
Total cost of goods sold | $ | 81.74 | $ | 70.15 | $ | 11.59 | 16.5 | % |
(In Millions) | |||||||||||||||
Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | Change | Percent change | ||||||||||||
Volumes - In Thousands of Long Tons1,2 | |||||||||||||||
Sales tons | 6,893 | 7,777 | (884 | ) | (11.4 | )% | |||||||||
Production tons | 6,870 | 9,578 | (2,708 | ) | (28.3 | )% | |||||||||
Operating Results - In Millions2 | |||||||||||||||
Revenues | $ | 718.4 | $ | 904.2 | $ | (185.8 | ) | (20.5 | )% | ||||||
Cost of goods sold | $ | (594.5 | ) | $ | (608.7 | ) | $ | 14.2 | (2.3 | )% | |||||
Adjusted EBITDA | $ | 164.2 | $ | 328.0 | $ | (163.8 | ) | (49.9 | )% |
Six Months Ended June 30, | |||||||||||||||
Per Ton Information | 2020 | 2019 | Change | Percent change | |||||||||||
Realized product revenue rate1,3 | $ | 96.21 | $ | 108.89 | $ | (12.68 | ) | (11.6 | )% | ||||||
Cash cost of goods sold rate1,2 | $ | 72.74 | $ | 65.99 | $ | 6.75 | 10.2 | % | |||||||
Depreciation, depletion & amortization | 5.50 | 4.90 | 0.60 | 12.2 | % | ||||||||||
Total cost of goods sold | $ | 78.24 | $ | 70.89 | $ | 7.35 | 10.4 | % |
(In Millions) | |||
June 30, 2020 | |||
Cash and cash equivalents | $ | 73.7 | |
Cash and cash equivalents from discontinued operations, included within Other current assets | 5.3 | ||
Less: Cash and cash equivalents from variable interest entities | (1.0 | ) | |
Total cash and cash equivalents | $ | 78.0 | |
Available borrowing base on ABL Facility1 | $ | 1,652.1 | |
Borrowings | (550.0 | ) | |
Letter of credit obligations | (198.5 | ) | |
Borrowing capacity available | $ | 903.6 |
(In Millions) | |||||
March 31, 2021 | |||||
Cash and cash equivalents | $ | 110 | |||
Less: Cash and cash equivalents from VIE's | (4) | ||||
Total cash and cash equivalents | $ | 106 | |||
Available borrowing base on ABL Facility1 | $ | 3,500 | |||
Borrowings | (1,630) | ||||
Letter of credit obligations | (272) | ||||
Borrowing capacity available | $ | 1,598 | |||
1 As of March 31, 2021, the ABL Facility had a maximum borrowing base of $3.5 billion. The available borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment. | |||||
(In Millions) | (In Millions) | |||||||||||||||||
June 30, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||||||||||
Current assets | $ | 2,464.5 | $ | 891.0 | Current assets | $ | 5,491 | $ | 4,903 | |||||||||
Non-current assets | 5,104.5 | 2,381.8 | Non-current assets | 10,160 | 10,535 | |||||||||||||
Current liabilities | 715.3 | 392.9 | Current liabilities | (2,810) | (2,767) | |||||||||||||
Non-current liabilities | 6,344.6 | 2,791.7 | Non-current liabilities | (10,508) | (10,563) |
(In Millions) | |||
Six Months Ended | |||
June 30, 2020 | |||
Revenues1 | $ | 1,414.2 | |
Cost of goods sold | (1,546.0 | ) | |
Loss from continuing operations | (168.0 | ) | |
Net loss | (167.3 | ) | |
Net loss attributable to Cliffs shareholders | (167.3 | ) |
(In Millions) | |||||
Three Months Ended | |||||
March 31, 2021 | |||||
Revenues | $ | 3,979 | |||
Cost of goods sold | (3,724) | ||||
Income from continuing operations | 32 | ||||
Net income | 33 | ||||
Net income attributable to Cliffs shareholders | 34 |
(In Millions) | (In Millions) | |||||||||||||||||
June 30, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||||||||||
Balances with non-Guarantor subsidiaries: | Balances with non-Guarantor subsidiaries: | |||||||||||||||||
Accounts receivable, net | $ | 6.6 | $ | — | Accounts receivable, net | $ | 29 | $ | 69 | |||||||||
Accounts payable | (14.0 | ) | — | Accounts payable | (25) | (17) | ||||||||||||
Balances with other related parties: | Balances with other related parties: | |||||||||||||||||
Accounts receivable, net | $ | 91.6 | $ | 31.1 | Accounts receivable, net | $ | 30 | $ | 2 | |||||||||
Other current assets | 35.3 | 44.5 | ||||||||||||||||
Accounts payable | (2.4 | ) | — | Accounts payable | (9) | (6) | ||||||||||||
Other current liabilities | (2.0 | ) | (2.0 | ) |
Positive or Negative Effect on Pre-tax Income (In Millions) | ||||||||
Commodity Derivative | 10% Increase or Decrease | 25% Increase or Decrease | ||||||
Natural gas | $ | 9.0 | $ | 22.3 | ||||
Electricity | 3.4 | 8.6 | ||||||
Zinc | 1.3 | 3.4 | ||||||
Other | 1.3 | 1.3 |
(In Millions) | ||||||||||||||
Positive or Negative Effect on Pre-tax Income | ||||||||||||||
Commodity Derivative | 10% Increase or Decrease | 25% Increase or Decrease | ||||||||||||
Natural gas | $ | 22 | $ | 54 | ||||||||||
Electricity | 1 | 3 | ||||||||||||
Zinc | 1 | 1 |
(In Millions) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cost of goods sold | $ | 427.2 | $ | 482.6 | $ | 594.5 | $ | 608.7 | |||||||
Less: | |||||||||||||||
Freight | 38.2 | 45.8 | 55.2 | 57.4 | |||||||||||
Depreciation, depletion & amortization | 19.2 | 19.6 | 37.9 | 38.1 | |||||||||||
Cash cost of goods sold | $ | 369.8 | $ | 417.2 | $ | 501.4 | $ | 513.2 |
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 Programs | ||||||||||||||||||||||
January 1 - 31, 2021 | 731,095 | $ | 18.51 | — | $ | — | ||||||||||||||||||||
February 1 - 28, 2021 | 5,521 | 16.83 | — | — | ||||||||||||||||||||||
March 1 - 31, 2021 | 1,891 | 8.68 | — | — | ||||||||||||||||||||||
Total | 738,507 | $ | 18.47 | — | $ | — | ||||||||||||||||||||
1 All shares were delivered to us to satisfy tax withholding obligations due upon the vesting or payment of stock awards. |
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 Programs | ||||||||||
April 1 - 30, 2020 | 2,369 | $ | 3.80 | — | $ | — | ||||||||
May 1 - 31, 2020 | 263,594 | $ | 4.45 | — | $ | — | ||||||||
June 1 - 30, 2020 | 20,662 | $ | 5.78 | — | $ | — | ||||||||
Total | 286,625 | $ | 4.54 | — | ||||||||||
1 All shares were delivered to us to satisfy tax withholding obligations due upon the vesting or payment of stock awards. |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Exhibit | |||||||
Indenture, dated as of | ||||||||
Schedule of the obligated group, including the parent and issuer and the subsidiary guarantors that have guaranteed the obligations under the | ||||||||
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 | ||||||||
Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed and dated by Keith A. Koci as of | ||||||||
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 | ||||||||
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Keith A. Koci, Executive Vice President, Chief Financial Officer of Cleveland-Cliffs Inc., as of | ||||||||
Mine Safety Disclosures (filed herewith). | ||||||||
101 | The following financial information from Cleveland-Cliffs Inc.'s Quarterly Report on Form 10-Q for the | |||||||
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: | Vice President, Corporate Controller & Chief Accounting Officer | ||||||||||||||||||||||
Date: | April 28, 2021 | ||||||||||||||||||||||