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Cleveland-Cliffs' (CLF) Q4 Earnings Top, Sales Miss Estimates

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Cleveland-Cliffs Inc. CLF delivered fourth-quarter 2019 net earnings of $63.2 million or 23 cents, down from $609.5 million or $1.98 per share in the prior-year quarter.

Barring one-time items, adjusted earnings came in at 25 cents per share, which beat the Zacks Consensus Estimate of 24 cents.

Revenues fell 23.3% year over year to $534.1 million. Also, the figure trailed the Zacks Consensus Estimate of $559 million.

2019 Highlights

In 2019, net income amounted to $292.8 million or $1.03 per share, down from $1,128.1 million or $3.71 a year ago.

Revenues moved down 14.7% year over year to $1,989.9 million.

Cleveland-Cliffs Inc. Price, Consensus and EPS Surprise


Cleveland-Cliffs Inc. Price, Consensus and EPS Surprise

Cleveland-Cliffs Inc. price-consensus-eps-surprise-chart | Cleveland-Cliffs Inc. Quote


Operational Highlights

Mining and pelletizing pellet sales volume was around 5.8 million long tons in the fourth quarter, down 10% year over year. The decline was caused by lower customer demand, partly offset by inter-company sales to the Toledo HBI facility.

Realized revenues per long ton declined 8.7% year over year to $90.8. The results were affected by an unfavorable true-up of earlier sold volumes caused by lower HRC prices and pellet premiums as well as unfavorable customer mix.

Cash cost of goods sold rate per long ton fell 2.8% year over year to $63.62 due to lower royalties and employee-related expenses.

Financial Position

As of Dec 31 ,2019, Cleveland-Cliffs had cash and cash equivalents of $352.6 million, down from $823.2 million as of Dec 31, 2018. Long-term debt was $2,113.8 million at the end of 2019, up 1% year over year.

Net cash from operating activities was $562.5 million for 2019, up 17.6% year over year.


The company expects average iron ore prices, steel prices and pellet premiums to be $90 per metric ton, $650 per short ton and $50 per metric ton, respectively, for 2020. Based on these assumptions, it expects to generate net income of around $300-$325 million and adjusted EBITDA of $550-$575 million for 2020 on a standalone basis.

Price Performance

Cleveland-Cliffs’ shares have lost 37.9% in the past year compared with the industry’s 5.8% decline.

Zacks Rank & Key Picks

Cleveland-Cliffs currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp DQ, Sibanye Gold Limited and Impala Platinum Holdings Limited IMPUY, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected long-term earnings growth rate of 29%. The company’s shares have gained 114.8% in the past year.

Sibanye has an expected long-term earnings growth rate of 20.4%. Its shares have returned 197.2% in the past year.    

Impala Platinum has an expected long-term earnings growth rate of 26.5%. The company’s shares have surged 200.8% in the past year.

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