Cleveland-Cliffs Inc. CLF slipped to a net loss of $108.1 million or 31 cents per share in second-quarter 2020 from a profit of $160.8 million or 57 cents per share in the prior-year quarter. The loss per share for the reported quarter was narrower than the Zacks Consensus Estimate of a loss of 51 cents.
Revenues rose 47% year over year to $1,092.7 million. Moreover, the figure surpassed the Zacks Consensus Estimate of $1,067.3 million.
Operational Highlights
Mining and pelletizing pellet production and sales volume were around 2 million long tons and 4.8 million long tons in the second quarter, down 60.6% and 23.6% year over year, respectively.
Realized revenues per long ton fell 15.9% year over year to $94.73.
Cash cost of goods sold rate per long ton was up 16% year over year to $77.71.
ClevelandCliffs Inc. Price, Consensus and EPS Surprise
Financial Position
As of Jun 30, 2020, Cleveland-Cliffs had cash and cash equivalents of $73.7 million, down from $377.2 million as of Jun 30, 2019. Long-term debt was $4,451.6 million at the end of the second quarter, up 111.5% year over year.
Net cash used in operating activities was $299.2 million for the six months ended Jun 30, 2020.
Outlook
Cleveland-Cliffs stated that it anticipates idle costs during the third quarter to be less than $50 million and minimal in the fourth quarter, which will lead to a substantial improvement in unit cost performance.
Moreover, the company expects to see positive free cash flow in the second half of 2020, which includes the capital spending necessary to complete the Toledo HBI project. Notably, the company expects capital expenditure for the remainder of 2020 to be $250 million, which includes $110 million in remaining HBI spend and $25 million in capitalized interest.
The company also expects to generate more than $100 million in cash from the release of working capital during the second half of 2020.
Price Performance
Cleveland-Cliffs’ shares have lost 46.8% in the past year against the industry’s 12.2% growth.
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Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the basic materials space are Royal Gold, Inc. RGLD, Equinox Gold Corp. EQX and B2Gold Corp BTG.
Royal Goldhas a projected earnings growth rate of 62.1% for the current year. The company’s shares have gained 19.3% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The stock has gained around 94% in a year. It currently has a Zacks Rank of 2.
B2Gold has an expected earnings growth rate of 257.1% for 2020. The company’s shares have rallied 108.5% in the past year. It is presently a Zacks #2 Ranked player.
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