With larger footprint, Cliffs sets new financial records

Cliffs produces DR-Grade pellets at Northshore Mining in Silver Bay to feed its Toledo mill.

Cleveland-Cliffs Inc. (NYSE: CLF) reported second-quarter 2021 consolidated revenues of $5.0 billion compared with revenues of $1.1 billion during Q2 of 2020 before the merger with ArcelorMittal USA. Results exceeded guidance, and steel shipments grew when compared with the first quarter, the company said.

Net income was $795 million, or $1.33 per diluted share. That included charges totaling $77 million, or $0.13 per diluted share, related to the revaluation of inventory following the acquisition of substantially all ArcelorMittal USA operations, charges of $22 million, or $0.04 per diluted share, for debt extinguishment costs, and charges of $18 million, or $0.03 per diluted share, for acquisition-related loss on equity method investment.

In the prior-year second quarter, the company recorded a net loss of $108 million,  $0.31 per diluted share.

For the first six months of 2021, Cliffs recorded revenues of $9.1 billion and net income of $852 million, or $1.48 per diluted share. One year ago, the company recorded revenues of $1.5 billion and a net loss of $157 million, or a loss of $0.51 per diluted share.

Second-quarter 2021 adjusted EBITDA was $1.4 billion, compared to an adjusted EBITDA  loss of $82 million in the second quarter of 2020.

“In the second quarter of 2021 we achieved all-time quarterly records in revenue, net income and adjusted EBITDA. The numbers unequivocally confirm our efficiency in operating the new footprint, resulting from the integration of the two major steel companies acquired in 2020 as a single and indivisible mining and steel company,” Cliffs' Chairman, President, and CEO Lourenco Goncalves said in the quarterly report.

“They also demonstrate our flawless execution in ramping up our state-of-the-art direct reduction plant in Toledo to the current level of production above nominal capacity.

“This quarter was also a clear illustration of our raw material cost and quality advantage over others in the industry, particularly the ones fully dependent on scarce prime scrap and dirty pig iron imported from polluting countries. The decision we made four years ago to invest $1 billion in our Direct Reduction plant has been proven to be not only right, but also perfectly timed. Our internal use of HBI has minimized our reliance on prime scrap in our BOFs and EAFs, as well as enhanced productivity and reduced emissions in our blast furnaces as demonstrated by our actual CO2 emissions figures,” he added. “Prime scrap is scarce.”

Goncalves said steel demand remains excellent and is translating into substantially higher contract prices later this year and into 2022. 

“Ultimately, we are set for a monumental debt reduction during the back half of this year, and the achievement of zero net debt in 2022," he said.

As of July 19, the company had total liquidity of approximately $2.1 billion.