Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING (Notes)

v3.20.2
SEGMENT REPORTING (Notes)
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
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, now included as part of our Steel and Manufacturing segment, is expected to be completed 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 intersegment transactions were eliminated in consolidation.
We 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.
Our results by segment are as follows:
 
(In Millions, Except Sales Tons)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Sales volume (in thousands):
 
 
 
 
 
 
 
Steel and Manufacturing (net tons)
619

 
—

 
818

 
—


 
 
 
 
 
 
 
Mining and Pelletizing sales (long tons)
4,759

 
6,227

 
6,893

 
7,777

Less: Intercompany sales (long tons)
(1,041
)
 
(38
)
 
(1,824
)
 
(38
)
Mining and Pelletizing consolidated sales (long tons)
3,718

 
6,189

 
5,069

 
7,739


 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Steel and Manufacturing net sales to external customers
$
715.1

 
$
—

 
$
932.6

 
$
—


 
 
 
 
 
 
 
Mining and Pelletizing net sales1
489.0

 
747.2

 
718.4

 
904.2

Less: Intercompany sales
(111.4
)
 
(4.0
)
 
(199.2
)
 
(4.0
)
Mining and Pelletizing net sales to external customers
377.6

 
743.2

 
519.2

 
900.2


 
 
 
 
 
 
 
Total revenues
$
1,092.7

 
$
743.2

 
$
1,451.8

 
$
900.2

 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
Steel and Manufacturing
$
(104.0
)
 
$
(1.1
)
 
$
(115.1
)
 
$
(1.9
)
Mining and Pelletizing
82.4

 
280.5

 
164.2

 
328.0

Corporate and eliminations
(60.4
)
 
(31.0
)
 
(108.4
)
 
(56.5
)
Total Adjusted EBITDA
$
(82.0
)
 
$
248.4

 
$
(59.3
)
 
$
269.6

1 Includes Realization of deferred revenue of $34.6 million for the six months ended June 30, 2020.

The following table provides a reconciliation of our consolidated Net income (loss) to total Adjusted EBITDA:
 
(In Millions)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Net income (loss)
$
(108.1
)
 
$
160.8

 
$
(156.7
)
 
$
138.7

Less:


 


 

 

Interest expense, net
(68.6
)
 
(26.3
)
 
(99.7
)
 
(51.4
)
Income tax benefit (expense)
24.7

 
(22.0
)
 
76.1

 
(18.3
)
Depreciation, depletion and amortization
(77.1
)
 
(21.0
)
 
(111.5
)
 
(40.9
)
Total EBITDA
$
12.9

 
$
230.1

 
$
(21.6
)
 
$
249.3

Less:
 
 
 
 
 
 
 
EBITDA of noncontrolling interests1
$
20.5

 
$
—

 
$
25.1

 
$
—

Gain (loss) on extinguishment of debt
129.4

 
(17.9
)
 
132.6

 
(18.2
)
Severance costs
(16.6
)
 
—

 
(35.9
)
 
(1.7
)
Acquisition-related costs excluding severance costs
(1.8
)
 
—

 
(25.0
)
 
—

Amortization of inventory step-up
(36.2
)
 
—

 
(59.4
)
 
—

Impact of discontinued operations
(0.4
)
 
(0.4
)
 
0.3

 
(0.4
)
Total Adjusted EBITDA
$
(82.0
)
 
$
248.4

 
$
(59.3
)
 
$
269.6

1 EBITDA of noncontrolling interests includes $15.8 million and $19.3 million for income and $4.7 million and $5.8 million of depreciation, depletion and amortization for the three and six months ended June 30, 2020, respectively.
The following summarizes our assets by segment:
 
(In Millions)
 
June 30,
2020
 
December 31,
2019
Assets:
 
 
 
Steel and Manufacturing
$
6,201.6

 
$
913.6

Mining and Pelletizing
1,685.1

 
1,643.1

Total segment assets
7,886.7

 
2,556.7

Corporate and Other (including discontinued operations)
604.0

 
947.1

Total assets
$
8,490.7

 
$
3,503.8


The following table summarizes our capital additions by segment:
 
(In Millions)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Capital additions1:
 
 
 
 
 
 
 
Steel and Manufacturing
$
55.6

 
$
155.1

 
$
178.8

 
$
237.5

Mining and Pelletizing
17.4

 
35.6

 
51.6

 
82.4

Corporate and Other
—

 
0.9

 
0.3

 
1.0

Total capital additions
$
73.0

 
$
191.6

 
$
230.7

 
$
320.9

1 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for additional information.