| Segment Reporting Disclosure |
Our Company is a vertically integrated producer of value-added iron ore and steel products. Our operations are organized and managed in two operating segments according to our upstream and downstream operations. Our Steel and Manufacturing segment is a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, and distributors and converters markets. Our Steel and Manufacturing segment includes subsidiaries that provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components, and complex assemblies. Construction of our HBI production plant in Toledo, Ohio, included as part of our Steel and Manufacturing segment, is expected to be completed with production beginning in the fourth quarter of 2020. Our Mining and Pelletizing segment is a major supplier of iron ore pellets to the North American steel industry from our mines and pellet plants located in Michigan and Minnesota. All intercompany transactions were eliminated in consolidation. ÌýÌýÌýÌýWe evaluate performance on a segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure. This measure is used by management, investors, lenders and other external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the steel and iron ore industries. In addition, management believes Adjusted EBITDA is a useful measure to assess the earnings power of the business without the impact of capital structure and can be used to assess our ability to service debt and fund future capital expenditures in the business.
ÌýÌýÌýÌýOur results by segment are as follows:
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(In Millions, Except Sales Tons) |
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
| Sales volume (in thousands): |
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| Steel and Manufacturing (net tons) |
1,117Ìý
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—Ìý |
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1,935 |
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—Ìý |
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| Mining and Pelletizing sales (long tons) |
4,907Ìý
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5,750Ìý |
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11,800 |
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13,527 |
| Less: Intercompany sales (long tons) |
(1,204) |
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(346) |
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(3,028) |
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(384) |
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| Mining and Pelletizing consolidated sales (long tons) |
3,703Ìý
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5,404Ìý |
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8,772Ìý
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13,143Ìý |
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| Revenues: |
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| Steel and Manufacturing net sales to external customers |
$ |
1,261.7Ìý
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$ |
—Ìý |
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$ |
2,194.3Ìý
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$ |
—Ìý |
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Mining and Pelletizing net sales1
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520.3Ìý
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590.6Ìý |
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1,238.7Ìý
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1,494.8Ìý |
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| Less: Intercompany sales |
(136.0) |
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(35.0) |
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(335.2) |
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(39.0) |
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| Mining and Pelletizing net sales to external customers |
384.3Ìý
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555.6Ìý |
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903.5Ìý
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1,455.8Ìý |
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| Total revenues |
$ |
1,646.0Ìý
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$ |
555.6Ìý |
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$ |
3,097.8Ìý
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$ |
1,455.8Ìý |
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| Adjusted EBITDA: |
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| Steel and Manufacturing |
$ |
33.3Ìý
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$ |
(2.1) |
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$ |
(81.8) |
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$ |
(4.0) |
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| Mining and Pelletizing |
145.3Ìý
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182.7Ìý |
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309.5Ìý
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510.7Ìý |
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| Corporate and eliminations |
(52.3) |
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(36.5) |
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(160.7) |
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(93.0) |
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| Total Adjusted EBITDA |
$ |
126.3Ìý
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$ |
144.1Ìý |
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$ |
67.0Ìý
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$ |
413.7Ìý |
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1 Includes Realization of deferred revenue of $34.6 million for the nine months ended SeptemberÌý30, 2020.
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ÌýÌýÌýÌýThe following table provides a reconciliation of our consolidated Net income (loss) to total Adjusted EBITDA:
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(In Millions) |
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
| Net income (loss) |
$ |
1.9Ìý
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$ |
90.9Ìý |
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$ |
(154.8) |
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$ |
229.6Ìý |
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| Less: |
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| Interest expense, net |
(68.2) |
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(25.4) |
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(167.9) |
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(76.8) |
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| Income tax benefit (expense) |
22.4Ìý
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(4.8) |
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98.5Ìý
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(23.1) |
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| Depreciation, depletion and amortization |
(72.4) |
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(22.2) |
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(183.9) |
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(63.1) |
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| Total EBITDA |
$ |
120.1Ìý
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$ |
143.3Ìý |
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$ |
98.5Ìý
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$ |
392.6Ìý |
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| Less: |
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EBITDA of noncontrolling interests1
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$ |
16.2Ìý
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$ |
—Ìý |
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$ |
41.3Ìý
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$ |
—Ìý |
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| Gain (loss) on extinguishment of debt |
—Ìý
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—Ìý |
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132.6Ìý
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(18.2) |
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| Severance costs |
(2.4) |
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—Ìý |
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(38.3) |
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(1.7) |
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| Acquisition-related costs excluding severance costs |
(5.1) |
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—Ìý |
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(30.1) |
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—Ìý |
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| Amortization of inventory step-up |
(14.6) |
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—Ìý |
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(74.0) |
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—Ìý |
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| Impact of discontinued operations |
(0.3) |
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(0.8) |
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—Ìý
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(1.2) |
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| Total Adjusted EBITDA |
$ |
126.3Ìý
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$ |
144.1Ìý |
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$ |
67.0Ìý
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$ |
413.7Ìý |
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1 EBITDA of noncontrolling interests includes $11.9 million and $31.2 million for income and $4.3 million and $10.1 million for depreciation, depletion and amortization for the three and nine months ended SeptemberÌý30, 2020, respectively.
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ÌýÌýÌýÌýThe following summarizes our assets by segment:
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(In Millions) |
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September 30,
2020 |
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December 31,
2019 |
| Assets: |
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| Steel and Manufacturing |
$ |
6,345.7Ìý
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$ |
913.6Ìý |
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| Mining and Pelletizing |
1,643.3Ìý
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1,643.1Ìý |
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| Total segment assets |
7,989.0Ìý
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2,556.7Ìý |
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| Corporate and Other (including discontinued operations) |
491.9Ìý
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947.1Ìý |
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| Total assets |
$ |
8,480.9Ìý
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$ |
3,503.8Ìý |
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ÌýÌýÌýÌýThe following table summarizes our capital additions by segment:
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(In Millions) |
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
Capital additions1:
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| Steel and Manufacturing |
$ |
88.0Ìý
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$ |
160.5Ìý |
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$ |
266.8Ìý
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$ |
398.0Ìý |
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| Mining and Pelletizing |
13.3Ìý
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22.1Ìý |
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64.9Ìý
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104.5Ìý |
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| Corporate and Other |
1.0Ìý
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2.1Ìý |
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1.3Ìý
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3.1Ìý |
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| Total capital additions |
$ |
102.3Ìý
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$ |
184.7Ìý |
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$ |
333.0Ìý
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$ |
505.6Ìý |
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1 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for additional information.
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