Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING

v3.20.1
SEGMENT REPORTING
 3 Months Ended
Mar. 31, 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 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. 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. Although we planned for our HBI production plant in Toledo, Ohio, now included as part of our Steel and Manufacturing segment, to be ready for production before the end of the second quarter of 2020, construction is temporarily on hold due to the economic impact of the COVID-19 pandemic. 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
March 31,
 
2020
 
2019
Sales volume (in thousands):
 
 
 
Steel and Manufacturing consolidated sales (net tons)
199

 
—

 
 
 
 
Mining and Pelletizing sales (long tons)
2,134

 
1,550

Less: Intercompany sales (long tons)
(783
)
 
—

Mining and Pelletizing consolidated sales (long tons)
1,351

 
1,550

 
 
 
 
Revenues:
 
 
 
Steel and Manufacturing consolidated revenues
$
217.5

 
$
—

 
 
 
 
Mining and Pelletizing1
229.4

 
157.0

Less: Intercompany revenues
(87.8
)
 
—

Mining and Pelletizing consolidated revenues
141.6

 
157.0

 
 
 
 
Revenues
$
359.1

 
$
157.0

 
 
 
 
Adjusted EBITDA:
 
 
 
Steel and Manufacturing
$
(11.1
)
 
$
(0.8
)
Mining and Pelletizing
81.8

 
47.5

Corporate and eliminations
(48.0
)
 
(25.5
)
Total Adjusted EBITDA
$
22.7

 
$
21.2

1 Includes Realization of deferred revenue of $34.6 million for the three months ended March 31, 2020.

The following table provides a reconciliation of our consolidated Net loss to Total Adjusted EBITDA:
 
(In Millions)
 
Three Months Ended
March 31,
 
2020
 
2019
Net loss
$
(48.6
)
 
$
(22.1
)
Less:
 
 
 
Interest expense, net
(31.1
)
 
(25.1
)
Income tax benefit
51.4

 
3.7

Depreciation, depletion and amortization
(34.4
)
 
(19.9
)
Total EBITDA
$
(34.5
)
 
$
19.2

Less:
 
 
 
EBITDA of noncontrolling interests1
$
4.6

 
$
—

Severance costs
(19.3
)
 
(1.7
)
Acquisition costs
(23.2
)
 
—

Amortization of inventory step-up
(23.2
)
 
—

Gain (loss) on extinguishment of debt
3.2

 
(0.3
)
Impact of discontinued operations
0.7

 
—

Total Adjusted EBITDA
$
22.7

 
$
21.2

1 Includes $3.5 million of income attributable to noncontrolling interests and $1.1 million of depreciation, depletion and amortization for the three months ended March 31, 2020.
The following summarizes our assets by segment:
 
(In Millions)
 
March 31,
2020
 
December 31,
2019
Assets:
 
 
 
Steel and Manufacturing
$
6,442.4

 
$
913.6

Mining and Pelletizing
1,752.4

 
1,643.1

Total segment assets
8,194.8

 
2,556.7

Corporate and Other (including discontinued operations)
717.5

 
947.1

Total assets
$
8,912.3

 
$
3,503.8


The following table summarizes our capital additions by segment:
 
(In Millions)
 
Three Months Ended
March 31,
 
2020
 
2019
Capital additions1:
 
 
 
Steel and Manufacturing
$
122.9

 
$
82.4

Mining and Pelletizing
34.2

 
46.8

Corporate and Other (including discontinued operations)
0.6

 
0.1

Total capital additions
$
157.7

 
$
129.3

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