Cleveland-Cliffs (CLF) Earnings & Sales Top Estimates In Q1

Cleveland-Cliffs Inc. (NYSE:CLF) recorded net loss of $22.1 million or 8 cents per share in first-quarter 2019, lower than a loss of $84.3 million or 29 cents in the prior-year quarter. The bottom line was also narrower than the Zacks Consensus Estimate of a loss of 14 cents.

Revenues fell 12.8% year over year to $157 million. However, the figure topped the Zacks Consensus Estimate of $116.6 million.

Mining and Pelletizing

Pellet sales volume was 1.6 million long tons in the first quarter, flat year over year.

Realized revenues per ton declined 11% year over year to $93.81. The downside was mainly due to favorable HRC price-related revaluation benefits a year ago, which did not recur in 2019. However, the decline was partly offset by higher iron ore prices.

Per the company, the revenue rate was lower than the full year projected range owing to unfavorable customer mix. This was mainly due to higher rail shipments during the annual Soo Locks closure.

Cash cost of goods sold and operating expense per long ton rose 8.6% year over year to $61.94. The increase was due to higher transportation, maintenance, stripping costs as well as higher costs associated with improved profitability view, including higher royalties and employee profit sharing.

Financial Position

At the end of the first quarter, Cleveland-Cliffs had cash and cash equivalents of $430.2 million, down 43.2% year over year. Long-term debt was $2,087 million, down 9.6% year over year.

Net cash used in operating activities was $111.2 million in the quarter, lower than $142.9 million a year ago.

Outlook

The company has reaffirmed its full-year sales and production volume at roughly 20 million long tons. Mining and Pelletizing cash cost of goods sold is expected in the band of $62-$67 per long ton. Total capital expenditure for 2019 is forecast to be around $555 million. Notably, the company expects cash tax refunds worth $117 million in second-quarter 2019.

Price Performance

Cleveland-Cliffs’ shares have rallied 33.4% in the past year compared with the industry’s 1% rise.

Zacks Rank & Key Picks

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

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. (NYSE:SAND) , Flexible Solutions International Inc. (NYSE:FSI) and W. R. Grace & Co. (NYSE:GRA) .

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 16% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 90% in the past year.

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2. Its shares have gained around 9% in the past year.

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