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SEGMENT REPORTING | 9 Months Ended
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Sep. 30, 2019
Segment Reporting [Abstract] |
Segment Reporting Disclosure | NOTE 3 - SEGMENT REPORTING In alignment with our strategic goals, our Company’s continuing operations are organized and managed in two operating segments according to our differentiated products. 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 Metallics segment includes our HBI production plant in Toledo, Ohio, which is currently under construction and expected to be completed during the first half of 2020. During the second quarter of 2019, Northshore mine began supplying DR-grade pellets to our Metallics segment, which will be used as feedstock for the HBI production plant when we begin production in 2020. All intersegment sales were eliminated in consolidation. We evaluate performance based on sales margin, defined as revenues less cost of goods sold identifiable to each segment. Additionally, we evaluate performance on a segment basis, as well as a consolidated basis, based on EBITDA and Adjusted EBITDA. These measures are 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 iron ore industry. In addition, management believes EBITDA and Adjusted EBITDA are useful measures 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. The following tables present a summary of our reportable segments including a reconciliation of segment revenues to total Revenues from product sales and services, segment sales margin to total Sales margin and a reconciliation of Net income to EBITDA and Adjusted EBITDA:
| (In Millions)
| Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
| Mining and Pelletizing |  | Metallics |  | Total |  | Mining and Pelletizing |  | Metallics |  | Total
Operating segment revenues from product sales and services | $ | 590.6 |  |  | $ | — |  |  | $ | 590.6 |  |  | $ | 1,494.8 |  |  | $ | — |  |  | $ | 1,494.8 |
Elimination of intersegment revenues | (35.0 | ) |  | — |  |  | (35.0 | ) |  | (39.0 | ) |  | — |  |  | (39.0 | )
Total revenues from product sales and services | $ | 555.6 |  |  | $ | — |  |  | $ | 555.6 |  |  | $ | 1,455.8 |  |  | $ | — |  |  | $ | 1,455.8 |
Operating segment sales margin | $ | 165.8 |  |  | $ | — |  |  | $ | 165.8 |  |  | $ | 461.3 |  |  | $ | — |  |  | $ | 461.3 |
Elimination of intersegment sales margin | (10.9 | ) |  | — |  |  | (10.9 | ) |  | (12.5 | ) |  | — |  |  | (12.5 | )
Total sales margin | $ | 154.9 |  |  | $ | — |  |  | $ | 154.9 |  |  | $ | 448.8 |  |  | $ | — |  |  | $ | 448.8 |
Revenues from product sales and services of $741.8 million and $1,636.1 million, respectively, and sales margin of $261.6 million and $607.6 million, respectively, related to our Mining and Pelletizing segment accounted for all of our consolidated revenues and sales margin for the three and nine months ended September 30, 2018.
| (In Millions)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Net income | $ | 90.9 |  |  | $ | 437.8 |  |  | $ | 229.6 |  |  | $ | 518.6 |
Less: |  |  |  |  |  |  |
Interest expense, net | (25.4 | ) |  | (29.7 | ) |  | (76.8 | ) |  | (95.5 | )
Income tax expense | (4.8 | ) |  | (0.5 | ) |  | (23.1 | ) |  | (14.4 | )
Depreciation, depletion and amortization | (22.2 | ) |  | (19.2 | ) |  | (63.1 | ) |  | (68.6 | )
EBITDA | $ | 143.3 |  |  | $ | 487.2 |  |  | $ | 392.6 |  |  | $ | 697.1 |
Less: |  |  |  |  |  |  |
Impact of discontinued operations | $ | (0.8 | ) |  | $ | 238.2 |  |  | $ | (1.2 | ) |  | $ | 120.4 |
Gain (loss) on extinguishment of debt | — |  |  | — |  |  | (18.2 | ) |  | 0.2 |
Severance costs | — |  |  | — |  |  | (1.7 | ) |  | — |
Foreign exchange remeasurement | — |  |  | (0.2 | ) |  | — |  |  | (0.7 | )
Impairment of long-lived assets | — |  |  | (1.1 | ) |  | — |  |  | (1.1 | )
Adjusted EBITDA | $ | 144.1 |  |  | $ | 250.3 |  |  | $ | 413.7 |  |  | $ | 578.3 |
EBITDA: |  |  |  |  |  |  |
Mining and Pelletizing | $ | 177.5 |  |  | $ | 273.1 |  |  | $ | 494.9 |  |  | $ | 641.6 |
Metallics | (2.1 | ) |  | (1.0 | ) |  | (4.0 | ) |  | (2.5 | )
Corporate and Other (including discontinued operations) | (32.1 | ) |  | 215.1 |  |  | (98.3 | ) |  | 58.0 |
Total EBITDA | $ | 143.3 |  |  | $ | 487.2 |  |  | $ | 392.6 |  |  | $ | 697.1 |
Adjusted EBITDA: |  |  |  |  |  |  |
Mining and Pelletizing | $ | 182.7 |  |  | $ | 279.5 |  |  | $ | 510.7 |  |  | $ | 657.9 |
Metallics | (2.1 | ) |  | (1.0 | ) |  | (4.0 | ) |  | (2.5 | )
Corporate | (36.5 | ) |  | (28.2 | ) |  | (93.0 | ) |  | (77.1 | )
Total Adjusted EBITDA | $ | 144.1 |  |  | $ | 250.3 |  |  | $ | 413.7 |  |  | $ | 578.3 |
The following table summarizes our depreciation, depletion and amortization and capital additions:
| (In Millions)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Depreciation, depletion and amortization: |  |  |  |  |  |  |
Mining and Pelletizing | $ | 20.8 |  |  | $ | 17.8 |  |  | $ | 58.9 |  |  | $ | 49.2 |
Corporate | 1.4 |  |  | 1.4 |  |  | 4.2 |  |  | 4.2 |
Total depreciation, depletion and amortization | $ | 22.2 |  |  | $ | 19.2 |  |  | $ | 63.1 |  |  | $ | 53.4 |
Capital additions 1: |  |  |  |  |  |  |
Mining and Pelletizing | $ | 22.1 |  |  | $ | 51.8 |  |  | $ | 104.5 |  |  | $ | 97.2 |
Metallics | 160.5 |  |  | 40.6 |  |  | 398.0 |  |  | 143.6 |
Corporate | 2.1 |  |  | 0.2 |  |  | 3.1 |  |  | 1.1 |
Total capital additions | $ | 184.7 |  |  | $ | 92.6 |  |  | $ | 505.6 |  |  | $ | 241.9 |
1 Refer to NOTE 16 - CASH FLOW INFORMATION for additional information.
A summary of assets by segment is as follows:
| (In Millions)
| September 30, 2019 |  | December 31, 2018
Assets: |  |  |
Mining and Pelletizing | $ | 1,793.9 |  |  | $ | 1,694.1 |
Metallics | 708.5 |  |  | 265.9 |
Total segment assets | 2,502.4 |  |  | 1,960.0 |
Corporate and Other (including discontinued operations) | 988.8 |  |  | 1,569.6 |
Total assets | $ | 3,491.2 |  |  | $ | 3,529.6 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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