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Key Highlights from Cleveland-Cliffs’s 1Q18 Results

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Apr. 26 2018, Updated 9:02 a.m. ET

Revenue summary

Cleveland-Cliffs (CLF) reported first-quarter revenues of $239 million, a decline of 48% year-over-year (or YoY). This decline was largely expected due to the change in the sales recognition method by the company as well as lower carryover tons from the previous quarter. The analysts were, however, expecting lower revenues of just $181.4 million. Higher-than-expected realized prices and the earlier-than-expected start to the shipping season led to the better-than-expected top-line expectations.

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Reduction in EBITDA

Cleveland-Cliffs’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for 1Q18 came in at $12.0 million as compared to $92.2 million in the same period last year. EBITDA during the current quarter was affected by the closure of its Asia-Pacific iron ore (or APIO) unit, which generated -$40 million in EBITDA. The EBITDA generation in its US iron ore (or USIO) unit, on the other hand, remained strong with 20% YoY growth to $77 million.

The company reported a net loss of $84 million in 1Q18, which included a $71 million loss related to APIO, which included $47 million in unusual charges related to the closure of the mine.

Cliffs’s peers

US peer (SLX) Steel Dynamics (STLD) released its 1Q18 results on April 19. U.S. Steel (X) and AK Steel (AKS) are slated to release their financial results on April 30. ArcelorMittal’s (MT) 1Q18 earnings are scheduled for May 11. Steel Dynamics’s 1Q18 earnings managed to beat consensus estimates, and the company provided an upbeat outlook for the US steel industry during the earnings release.

In the next part of this series, we’ll take a look at the volumes in the company’s US segment in 1Q18.

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