You know, this is exactly what my wife says about me responding to the bashers here on Yahoo. She even said "it is a waste of time". I agree, Mr. Gonclaves time would be better spent running the company but on the other hand it is a public company and the shareholders deserve some type of representation. I saw CSX CFO on CNBC after earnings, could be a good job for Mr. Tompkins to perform after earnings is released. Never met an attorney that doesn't like to talk. I would get up in front of the cameras and drop the biggest bomb shell I could like, "our earnings were great and as a result we have extra cash. We believe in the strength of the company and is why we are going to pour the $200 million the board approved to buy back stock now".
And once again, my wife said I wasted time writing this post… so I guess I will stop to have a bourbon or two… my time to waste.
I think Mr Gonclaves will get the last laugh. It looks like CLF is going to ship 3 million tons more US pellets than they did in Q1 which should give them a profit of $75 million plus the cash they need to buy back $200 million shares.
It is the short controlled media and analyst that cause the stock price to go down, not bashers on Yahoo finance. The trouble is we rely on CLF to provide the market with accurate information to counter these attacks an that is not being done. All we have is the company's performance, bond purchases and stock buy backs which will win out in the long run.
They don't give a forecast, the 5 year average for June is 5,426,232 tons so they beat by slightly more than 100,000 tons. One point I would make is that CLF has 40% of the US iron ore business where most of their clients are on the Great Lakes. Taking that into consideration, their share of Great Lakes shipments is higher than 40%.
Nick, this is why CLF should be selling at an 18 PE with other value added manufacturers.
came in at 5,534,299 tons. For Q2 that makes 15,404,011 tons. On the conservative side if you take 40% of that number, you come up with 6,161,694 tons that would be what CLF shipped on the Great Lakes. There are some rail and truck shipments that need to be added to that total that will put CLF's Q2 US shipments between 6 and 7 million tons.
You have to learn to ignore the postings that have no foundation and the only conversation they have will be with themselves. When you reply to them, all you do is put their post at the top of page 1. You will never convince them one way or the other, so you would be better off writing several new posting that move their post to page 2.
There is a relationship, for every $10 drop in seaborne, CLF will see a dollar drop in pellet prices, maybe $2. These contracts have lower and higher limits that protect both CLF and the steel mills.
And to his credit, Bob (smickersmack) was the only short that pushed and questioned the facts. All the others made real lame attempts at throwing out baseless comments.
Had to go to another site, debt in 2005 was $25 million. However, current debt is $1.3 billion less than the high and that reduction was done when iron ore prices was declining. Plus their equity position is much better today than it was in 2005. And do you realize how much income CLF is generating through buying back bonds at a 50% discount. Yes, when they buy back $1 billion worth of bonds for $600 million, they generate $400 million in income.
Bob, the fact is CLF always sells their pellets for less than the spot price for pellets in the US. There is a relationship between spot seaborne iron ore and US iron ore pellets, all you do is add $35 onto seaborne prices and you get close to the current US pellet prices. CLF also has a base on the lower range of iron ore pellets at $70 and caps the upper end in the $120 range. That protects CLF on the low end from a collapse in iron ore prices and protects the steel mills against an huge move up. Really, CLF provides US steel companies with an excellent contract that not only gives them the lowest cost, but it provides them a very valuable JIT inventory of ore to save the mills money and insure their supplies arrive on time.
As of June 2015 the US iron ore pellet spot price is $85.02 that CLF can undercut and still maintain $30 a ton margin.
The Chinese investment was for the Valemax ships, absolutely no impact on CLF's core US business.
2005: Cash $216.9 million, Current Assets $733.8 million, Current Liabilities $257.1 million
2015: Cash $355 million, Current Assets $1.524 billion, Current Liabilities $846 million
If you subtract current liabilities from current assets, you can see the company is much healthier today. Yes, long term debt is much higher, but they can manage debt and increase current assets. If debt increases and current assets decrease, then you would have a problem like WLT is experiencing. From 2005 to 2015 CLF never missed an interest payment or failed to pay bonds when they matured.
CLF made a move into DRI several years ago, the problem with the material is that it is very expensive to transport. It is going to take a partnership like CLF and Nucor to work through the logistics or make changes to the pellets to make them less volatile. But the first step is for CLF to insure they have a market for DRI before they move forward and that is where Nucor is key. On the other side, Nucor needs to move to DRI in order to compete with the lower cost iron ore based steel mills and provide the higher quality steel that scrap metal based steel production cannot provide.
CLF will buy back shares and when it gets back to $15, they will have close to $1 billion to pay down debt by $2 billion. The current share price works to CLF's advantage and will be the death of the shorts.