Cleveland – (BUSINESS WIRE) – Cleveland-Cliffs Inc. (NYSE:CLF) today released results for the second quarter ended June 30, 2022.
Consolidated revenue for the second quarter of 2022 was $6.3 billion compared to $5.0 billion in the second quarter last year.
In the second quarter of 2022, the company recorded a net income of $601 million, or $1.13 per diluted share, attributable to Cliffs shareholders. This includes the following lump sum payments totaling $95 million or $0.18 per diluted share:
In the second quarter of last year, the company posted a net income of $795 million, or $1.33 per diluted share.
For the six months ended June 30, 2022, the company posted $12.3 billion in revenue and $1.4 billion in net income, or $2.64 per diluted share. In the first six months of 2021, the company posted $9.1 billion in revenue and $852 million in net income, or $1.42 per diluted share.
Adjusted EBITDA1 for the second quarter of 2022 was $1.1 billion compared to $1.4 billion for the second quarter of 2021. In the first six months of 2022, the company reported Adjusted EBITDA1 of $2.6 billion, compared to $1.9 billion in the same period of 2021.
(A) Starting in 2022 the Company has allocated Corporate SG&A to its operating segments. (A) Starting in 2022 the Company has allocated Corporate SG&A to its operating segments. (A) Starting in 2022, the Company allocates corporate selling and administrative expenses to its operating segments. (A) 从2022 年开始，公司已将企业SG&A 分配到其运营部门。 (A) 从2022 年开始，公司已将企业SG&A 分配到其运营部门。 (A) Starting in 2022, the company has transferred corporate general and administrative expenses to its operating divisions. Previous periods have been adjusted to reflect this change. The knockout row now only includes cross-department sales.
Lourenço Gonçalves, Chairman, President and CEO of Cliffs, said: “Our second quarter results demonstrate the continuation of our strategy. Free cash flow has more than doubled since the first quarter and we have been able to achieve from the start of the transition while delivering a solid return on equity through share repurchases. As we enter the second half of the year, we expect this healthy level of free cash flow to continue. In addition, we expect the average selling price of these fixed contracts to rise significantly after the reset on October 1st.”
Mr. Goncalves continued: “Our leadership in the automotive industry sets us apart from all other steel companies in the US. The state of the steel market over the past year and a half was largely determined by the construction industry, as well as the automotive industry. lags far behind. – Primarily due to non-steel supply chain issues. However, the gap between consumers and cars, SUVs and trucks has grown to enormous proportions in more than two years as demand for cars outstrips production. As our automotive customers continue to address supply issues Circuit problems, pent-up demand for electric vehicles, passenger car manufacturing catch up with demand, Cleveland Cliffs will be the main beneficiary of all US steel companies. steelmakers need to become clear.”
Net steel sales in the second quarter of 2022 of 3.6 mt include 33% coated, 28% hot-rolled, 16% cold-rolled, 7% heavy plate, 5% stainless and electrical and 11% other steels, including slabs and rails.
Steel revenue of $6.2 billion includes $1.8 billion or 30% from sales in the distributors and refiners market, $1.6 billion or 27% from direct sales in automotive market, $1.6 billion, or 26% of sales in core businesses and manufacturing markets, and $1.1. billion, or 17 percent of sales to steelmakers.
Steelmaking cost includes $242 million in excess/non-recurring costs. Much of this is due to the expansion of the downtime at Blast Furnace #5 in Cleveland, which includes additional repairs to the local sewage treatment plant and power plant. The company also posted consistent year-on-year cost increases, including spending on natural gas, electricity, scrap metal and alloys.
In the second quarter of 2022, Cliffs completed a $307 million open market buyback of various outstanding Senior Notes for a total principal of $307 million at an average price of 92% of the average par value. Cliffs also completed the redemption of its 9.875% secured notes maturing in 2025, repaying the entire outstanding principal of $607 million in full.
In addition, Cliffs repurchased 7.5 million shares in the second quarter of 2022 at an average price of $20.92 per share. As of June 30, 2022, the company had approximately 517 million shares outstanding.
Based on the current 2022 futures curve, which assumes an average HRC index price of $850/nett through the end of the year, the company expects its 2022 average realized price to be around $1,410/nett. expects a significant increase in the number of fixed price contracts, which will restart on October 1, 2022.
Cleveland-Cliffs Inc. will host a teleconference on July 22, 2022 at 10:00 AM ET. The call will be broadcast live and hosted on the Cliffs website at www.clevelandcliffs.com.
Cleveland-Cliffs is the largest flat steel manufacturer in North America. The Cliffs Company, founded in 1847, is the mine operator and the largest producer of iron ore pellets in North America. The company is vertically integrated from raw materials, direct reduction and scrap to primary steel production and subsequent finishing, stamping, tooling and pipes. We are the largest steel supplier to the North American automotive industry and serve many other markets with our extensive line of flat steel products. Cleveland-Cliffs, headquartered in Cleveland, Ohio, has approximately 27,000 employees based in the US and Canada.
This press release contains statements that are “forward-looking statements” within the meaning of the federal securities laws. All statements other than historical facts, including, but not limited to, statements about our current expectations, estimates and forecasts regarding our industry or business, are forward-looking statements. Investors are cautioned that any forward-looking statements are subject to risks and uncertainties that could cause actual results and future trends to differ materially from those expressed or implied by such forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements. Risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include: continued volatility in market prices for steel, iron ore and scrap metal, which directly or indirectly affect the prices of the products we sell to our customers; The uncertainty associated with the highly competitive and cyclical steel industry, as well as our reliance on steel demand from the automotive industry, which is experiencing weight loss trends and supply chain disruptions such as semiconductor shortages, could lead to lower steel production in consumption; potential weaknesses and uncertainties in the global economic environment, overcapacity in the world’s steel production, oversupply of iron ore, overall steel imports and declining market demand, including due to the protracted COVID-19 pandemic, conflict or otherwise; Due to the ongoing COVID-19 pandemic or otherwise, one or more of our key customers (including automotive customers, key suppliers or contractors) will experience severe financial difficulties, bankruptcy, temporary or permanent closures, or operational problems. May lead to a decrease in demand for our products, an increase in the difficulty of collecting receivables, claims from customers and / or suppliers due to force majeure or other reasons for the failure to fulfill their contractual obligations to us; business disruptions related to the ongoing COVID-19 pandemic, including an increased risk that the majority of our employees or contractors on site may fall ill or be unable to perform their daily work functions; with the US Government on the Trade Expansion Act of 1962 (as amended by the Trade Act of 1974), the US-Mexico-Canada Agreement and Risks. related to actions taken pursuant to Section 232 of other trade agreements, tariffs, treaties or policies, and the uncertainty of obtaining and maintaining effective anti-dumping and countervailing duties to offset the detrimental effects of unfair trade imports; regulations, including possible environmental regulations related to climate change and carbon emissions, and associated costs and liabilities, including failure to obtain or comply with required operational and environmental permits, approvals, modifications or other approvals, or from any governmental or regulatory body, and the associated costs of implementing improvements to comply with regulatory changes, including potential financial guarantee requirements; the potential impact of our activities on the environment or exposure to hazardous substances; our ability to maintain adequate liquidity, our level of debt and the availability of capital may limit the financial flexibility and cash flow that we need to finance working capital, planned capital expenditures, acquisitions and other general corporate goals or the ongoing needs of our business; our current anticipated timing or inability to reduce debt at all or return equity to shareholders; adverse changes in credit ratings, interest rates, foreign exchange rates, and tax laws, as well as business and commercial disputes, environmental issues, government investigations, occupational injury or personal injury claims, property damage, labor and employment, outcomes, and costs of litigation, claims, arbitration or governmental proceedings relating to matters or litigation relating to property, operations and other matters, uncertainties regarding the cost or availability of critical manufacturing equipment and spare parts, disruptions in the supply chain or energy (including electricity, natural gas and diesel) or critical raw materials. Changes in cost, quality or availability and supply (including iron ore, industrial gases, graphite electrodes, scrap metal, chromium, zinc, coke) and metallurgical coal, as well as delivery of products to our customers, internally between our enterprises Supplier-related problems or disruptions who redirect production resources or products or transport raw materials to us; associated with natural or man-made disasters, severe weather conditions, unexpected geological conditions, failure of critical equipment, outbreaks of infectious diseases, failure of tailings facilities and other unforeseen events of uncertainty; failures or failures of our information technology systems, including those related to cybersecurity; liabilities and expenses associated with any business decision to temporarily or indefinitely shut down or permanently close operating facilities or mines that could adversely affect the carrying value of assets and result in impairment fees or liabilities to close and restore, and the uncertainty associated with resumption of operation of any previously idle operating facilities or mines; our ability to realize the expected synergies and benefits from our recent acquisitions and to successfully integrate the acquired business into our existing business, including the uncertainties associated with maintaining relationships with customers, suppliers and employees, and our known and unknown responsibilities in connection with the acquisition; our level of self-insurance and our ability to obtain adequate third party liability insurance to adequately cover potential adverse events and business risks; the challenges of maintaining our social license to work with stakeholders, including the impact of our local impact on our reputation for operating in carbon-intensive, greenhouse gas-emitting industries and our ability to develop consistent operations and safety performance; we successfully identify and refine any strategic investment or development project, achieve planned performance or levels cost-effectively, enable us to diversify our product portfolio and add new customers; a reduction in our actual economic mineral reserves or current estimates of mineral reserves, and any defects in title or any other leases, licenses, easements or other ownership interests in any loss of mining property, the availability of workers to fill critical job positions, and potential labor shortages due to the ongoing COVID-19 pandemic and our ability to attract, hire, develop and retain key personnel; we maintain satisfactory labor relations with trade unions and employees, the possibility of redeeming relations; unexpected or higher costs associated with pension and OPEB obligations due to changes in the value of plan assets or increases in contributions required for unsecured obligations; the amount and timing of the repurchase of our general reserves, our commitment to finances Significant deficiencies or significant deficiencies in internal control may be recorded.
For additional factors affecting Cliffs, see Part I – Item 1A. Risk factors in our Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the SEC.
In addition to US GAAP consolidated financial statements, the Company also presents EBITDA and Adjusted EBITDA on a consolidated basis. EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management in evaluating operating performance. These measures should not be presented in isolation from, instead of, or instead of, financial information prepared and presented in accordance with US GAAP. The presentation of these measures may differ from non-GAAP financial measures used by other companies. The table below reconciles these consolidated measures to their most comparable GAAP measures.
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