Cliffs Natural Resources Inc. (NYSE:CLF) Q4 2018 Earnings Conference Call Transcript

Feb 08, 2019 • 09:00 am ET


Cliffs Natural Resources Inc. (NYSE:CLF) Q4 2018 Earnings Conference Call Transcript


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Good morning, ladies and gentlemen. My name is Denise and I am your conference facilitator today. I would like to welcome everyone to the Cleveland-Cliffs 2018 Fourth Quarter and Full Year Ending Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

The Company reminds you that certain comments made on today's call will include predictive statements that are intended to be made as forward-looking within the Safe Harbor protections of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially. Important factors that could cause results to differ materially are set forth in reports on Forms 10-K and 10-Q and news releases filed within the SEC which are available on the Company's website.

Today's conference call is also available and being broadcast at At the conclusion of the call, it will be archived on the website and available for replay. The Company will also discuss results excluding certain special items. Reconciliation for Regulation G purposes can be found in the earnings release which was published this morning.

At this time, I'd like to introduce Tim Flanagan, Executive Vice President and Chief Financial Officer. Please go ahead.

Timothy K. Flanagan

Thanks, Denise and thanks to everyone joining us this morning. I'll kick off the call with a financial review over the fourth quarter and full year 2018 and an overview of some important outlook items for 2019. Before getting into the results, I wanted to make sure the audience was aware of the changes that we have made to the names of our business units. In order to better represent what we do now at Cliffs and reflecting the strategic transformation of our Company, the US Iron Ore segment will be referred to as Mining and Pelletizing. And our HBI business will officially fall into the new Metallic segment.

Until we actually produce and sell HBI, the Metallics segment will be a minor component of earnings consisting of insurance and other administrative costs. Now, for our financial results. We concluded in 2018 with a fourth quarter adjusted EBITDA of $188 million. This equated to adjusted EBITDA of $766 million for the full year, our highest market in four years. Our 2018 EBITDA represented a 67% increase from the prior year and more than triple what we reported two years ago. Our Mining and Pelletizing segment's quarterly adjusted EBITDA of $217 million was driven by 6.5 million long tons of shipments putting us at 20.6 million long tons of sales for the full year, a 10% increase from 2017. Shipments fell slightly short of our previous yearly guidance of 21 million long tons due to shipping constraints arising from unusually strong gale-force winds on the Great Lakes in October and early November bringing the activity of loading and unloading vessels to a