Cliffs Natural Resources (CLF) Tops Q4 EPS Views

Cliffs Natural Resources (NYSE: CLF) reported Q4 EPS of $1.00, $0.85 better than the analyst estimate of $0.15. Revenue for the quarter came in at $1.3 billion versus the consensus estimate of $1.23 billion.

Lourenco Goncalves, Cliffs' Chairman, President and Chief Executive Officer, said, "The execution of our strategy is starting to show results. We have demonstrated our discipline and commitment to fix Cliffs by exiting unprofitable operations, divesting non-core mines, reducing a significant amount of debt and focusing on cost reductions at all levels of the business." Mr. Goncalves added, "The new Cliffs is a differentiated mining company, fully committed to satisfying the requirements of our domestic customers in the United States and a lot less dependent on the iron ore trade with China. While other mining companies will continue to suffer the consequences of an oversupplied seaborne iron ore market, Cliffs is focused on its core business in the United States."

On January 27, 2015, Cliffs announced that Bloom Lake General Partner Limited and certain of its affiliates, including Cliffs Quebec Iron Mining ULC (collectively, "Bloom Lake Group") commenced restructuring proceedings in Montreal, Quebec, under the Companies' Creditors Arrangement Act (Canada) ("CCAA"). The initial CCAA order will address the Bloom Lake Group's immediate liquidity issues and permit the Bloom Lake Group to preserve and protect its assets for the benefit of all stakeholders while restructuring and sale options are explored.

Cliffs' fourth quarter 2014 SG&A expenses were $42 million and included $3 million in severance-related costs. Excluding these costs, fourth-quarter 2014 SG&A expenses were $39 million, a 30 percent decrease when compared to a fourth-quarter 2013 expense of $56 million, which also excludes $8 million of severance-related costs.

During the fourth quarter of 2014, miscellaneous-net expense was $68 million and included a previously-announced $96 million charge related to an arbitration claim decided against certain Bloom Lake entities which are subject to the CCAA. These charges were partially offset by a favorable impact of $22 million related to foreign currency exchange re-measurements.

During the fourth quarter, Cliffs recorded impairment charges attributable to Cliffs' shareholders of $1.2 billion, including approximately $940 million related to Eastern Canadian Iron Ore and driven by the previously-announced exit of these operations. The impairment charges also included approximately $250 million related to Asia Pacific Iron Ore, which was driven by reduced benchmark price assumptions over the remaining life of mine. These charges resulted in tax benefits totaling approximately $180 million.

As previously announced, during the fourth quarter the Company completed the sale of its Cliffs Logan County Coal assets for $174 million in cash and the assumption of certain liabilities, of which $155 million has been collected. The Company recorded a loss on the sale of these assets of $420 million. Fourth-quarter 2014 results included an income tax benefit of $306 million. The tax benefit includes the benefits related to impairment charges, as well as a $190 million U.S. benefit on the recognition of a loss on a financial guaranty and the sale of Cliffs Logan County Coal.

For earnings history and earnings-related data on Cliffs Natural Resources (CLF) click here.

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