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Cliffs Natural Resources Inc.’s (CLF - Free Report) net loss for third-quarter 2016 was $27.8 million, as against net income of $6 million. The net loss in the reported quarter included an $18 million loss on extinguishment/restructuring of debt, mainly attributable to the full redemption of the senior notes due Jan 2018.
Cliffs recorded net loss (attributable to Cliffs shareholders) of 12 cents per share in the reported quarter, versus net loss (attributable to Cliffs shareholders) of 10 cents per share logged in the year-ago quarter.
Adjusted loss came in at 2 cents per share, missing the Zacks Consensus Estimate of earnings of 19 cents.
Sales for the quarter came in at $553.3 million, declining 6.7% from $593.2 million in the prior-year quarter. Sales also missed the Zacks Consensus Estimate of $587 million.
U.S. Iron Ore: U.S. Iron Ore pellet sales volume was 5.3 million long tons in the third quarter, compared with 5.6 million tons in the year-ago quarter. The decline was mainly due to termination of a customer contract in fourth-quarter 2015 that was reinstated in Jun 2016 for fewer nominated tons.
Revenues per ton dipped 3.9% year over year to $73.50. Cash production cost per ton rose 14% year over year to $55.69 in the reported quarter due to the additional costs related to the restart of the United Taconite mine and timing of maintenance activity at the Tilden mine.
Asia Pacific Iron Ore: Sales volumes in the segment slipped 4% year over year to 2.8 million metric tons. The decrease was attributed to the timing of shipments associated with unfavorable weather conditions at the port at the end of September.
Revenues per ton were $42.87, up around 9.9% from $39 in the prior-year quarter. Cash production cost per ton was $26.10, down 3% from the year-ago quarter. The decrease was due to reduced logistics costs and decreased site administrative expenses.
Cliffs had $132.2 million of cash and cash equivalents as of Sep 30, 2016, compared with $270.2 million as of Sep 30, 2015. Long-term debt was at $2,195.9 million as of Sep 30, 2016, compared with $2721.6 million as of Sep 30, 2015. The year-over-year debt reduction is attributable to the exchange offers completed in first-quarter 2016 and the redemption of the 2018 Notes in third-quarter 2016. The company had no borrowings on its asset-based lending facility at the end of the reported quarter.
Capital expenditure was $26 million for the third quarter, representing a year-over-year increase of 8.3%. Depreciation, depletion and amortization were $27 million in the quarter.
Outlook
For 2016, Cliffs expects its selling, general and administrative (SG&A) expenses to be $104 million, a $4 million increase from the previous expectation, mainly due to the un-forecasted $4 million USW labor contract signing bonus. Depreciation, depletion and amortization are expected to be about $120 million.
The company's interest expense for 2016 is anticipated to be roughly $200 million. Of the $200 million expectation, about $170 million is considered cash and $30 million is considered non-cash.
Cliffs reiterated its 2016 capital expenditures guidance of $75 million.
U.S. Iron Ore Outlook
For 2016, Cliffs reaffirmed its sales volume expectation of 18 million long tons. Further, the company maintained its 2016 production volume guidance of 16.5 million long tons.
Asia Pacific Iron Ore Outlook
For 2016, Cliffs reaffirmed its sales and production volume expectation of roughly 11.5 million tons for the Asia Pacific Iron Ore operation.
Newmont has an expected earnings growth rate of 82.8% for the current year.
New Gold has an expected earnings growth rate of 416.7% for the current year.
Pershing Gold has an expected earnings growth rate of 26.3% for the current year.
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Cliffs Natural (CLF) Misses Q3 Earnings & Sales Estimates
Cliffs Natural Resources Inc.’s (CLF - Free Report) net loss for third-quarter 2016 was $27.8 million, as against net income of $6 million. The net loss in the reported quarter included an $18 million loss on extinguishment/restructuring of debt, mainly attributable to the full redemption of the senior notes due Jan 2018.
Cliffs recorded net loss (attributable to Cliffs shareholders) of 12 cents per share in the reported quarter, versus net loss (attributable to Cliffs shareholders) of 10 cents per share logged in the year-ago quarter.
Adjusted loss came in at 2 cents per share, missing the Zacks Consensus Estimate of earnings of 19 cents.
Sales for the quarter came in at $553.3 million, declining 6.7% from $593.2 million in the prior-year quarter. Sales also missed the Zacks Consensus Estimate of $587 million.
Segment Performance
U.S. Iron Ore: U.S. Iron Ore pellet sales volume was 5.3 million long tons in the third quarter, compared with 5.6 million tons in the year-ago quarter. The decline was mainly due to termination of a customer contract in fourth-quarter 2015 that was reinstated in Jun 2016 for fewer nominated tons.
Revenues per ton dipped 3.9% year over year to $73.50. Cash production cost per ton rose 14% year over year to $55.69 in the reported quarter due to the additional costs related to the restart of the United Taconite mine and timing of maintenance activity at the Tilden mine.
Asia Pacific Iron Ore: Sales volumes in the segment slipped 4% year over year to 2.8 million metric tons. The decrease was attributed to the timing of shipments associated with unfavorable weather conditions at the port at the end of September.
Revenues per ton were $42.87, up around 9.9% from $39 in the prior-year quarter. Cash production cost per ton was $26.10, down 3% from the year-ago quarter. The decrease was due to reduced logistics costs and decreased site administrative expenses.
CLIFFS NATURAL Price, Consensus and EPS Surprise
CLIFFS NATURAL Price, Consensus and EPS Surprise | CLIFFS NATURAL Quote
Financial Position
Cliffs had $132.2 million of cash and cash equivalents as of Sep 30, 2016, compared with $270.2 million as of Sep 30, 2015. Long-term debt was at $2,195.9 million as of Sep 30, 2016, compared with $2721.6 million as of Sep 30, 2015. The year-over-year debt reduction is attributable to the exchange offers completed in first-quarter 2016 and the redemption of the 2018 Notes in third-quarter 2016. The company had no borrowings on its asset-based lending facility at the end of the reported quarter.
Capital expenditure was $26 million for the third quarter, representing a year-over-year increase of 8.3%. Depreciation, depletion and amortization were $27 million in the quarter.
Outlook
For 2016, Cliffs expects its selling, general and administrative (SG&A) expenses to be $104 million, a $4 million increase from the previous expectation, mainly due to the un-forecasted $4 million USW labor contract signing bonus. Depreciation, depletion and amortization are expected to be about $120 million.
The company's interest expense for 2016 is anticipated to be roughly $200 million. Of the $200 million expectation, about $170 million is considered cash and $30 million is considered non-cash.
Cliffs reiterated its 2016 capital expenditures guidance of $75 million.
U.S. Iron Ore Outlook
For 2016, Cliffs reaffirmed its sales volume expectation of 18 million long tons. Further, the company maintained its 2016 production volume guidance of 16.5 million long tons.
Asia Pacific Iron Ore Outlook
For 2016, Cliffs reaffirmed its sales and production volume expectation of roughly 11.5 million tons for the Asia Pacific Iron Ore operation.
Zacks Rank
Cliffs currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the mining space include Newmont Mining Corporation (NEM - Free Report) , New Gold Inc. (NGD - Free Report) and Pershing Gold Corporation all carrying a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Newmont has an expected earnings growth rate of 82.8% for the current year.
New Gold has an expected earnings growth rate of 416.7% for the current year.
Pershing Gold has an expected earnings growth rate of 26.3% for the current year.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>