Cliffs Natural Resources (CLF) swung to a net profit for the quarter ended Dec. 31, 2016. The company has made a net profit of $79.10 million, or $ 0.34 a share in the quarter, against a net loss of $60.30 million, or $0.39 a share in the last year period.

Revenue during the quarter surged 58.40 percent to $754 million from $476 million in the previous year period. Gross margin for the quarter expanded 1497 basis points over the previous year period to 24.07 percent. Total expenses were 82.53 percent of quarterly revenues, down from 94.85 percent for the same period last year. This has led to an improvement of 1232 basis points in operating margin to 17.47 percent.

Operating income for the quarter was $131.70 million, compared with $24.50 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $173.80 million compared with $75.90 million in the prior year period. At the same time, adjusted EBITDA margin improved 711 basis points in the quarter to 23.05 percent from 15.95 percent in the last year period.

Lourenco Goncalves, chairman, president and chief executive officer, said: “2016 was the year in which we finalized the execution of the operational, commercial and financial actions necessary to ensure Cliffs will have a great future. Among the actions accomplished last year are several new sales agreements entered with clients, including the renewal of our long-term supply contract with our largest customer, and a number of capital markets transactions that were successfully executed to reduce debt and extend our maturity runway." Mr. Goncalves added: "Despite the undeniable fact that the underlying business environment was far from ideal during almost all of 2016, the environmentally compliant and safety oriented performance of the Cliffs teams in the United States and in Australia resulted in a very profitable year with strong cash flow generation." Mr. Goncalves concluded: "We are excited about Cliffs and about our future. A much more favorable business environment in the U.S. and a newly adopted rational behavior in the international iron ore market support the work we have done internally in our company. With a much lower debt profile and extended maturities, and several new and more favorable commercial agreements that we put in place in 2016, we expect Cliffs to deliver strong and sustainable results in 2017."

For fiscal year 2017, Cliffs Natural Resources forecasts net income to be $510 million.

The company has spent $57.90 million cash to meet investing activities during the year as against cash outgo of $103.20 million in the last year.

The company has spent $206.40 million cash to carry out financing activities during the year as against cash inflow of $61 million in the last year period.

Cash and cash equivalents stood at $323.40 million as on Dec. 31, 2016, up 13.39 percent or $38.20 million from $285.20 million on Dec. 31, 2015.

Working capital increases
Cliffs Natural Resources has recorded an increase in the working capital over the last year. It stood at $433.50 million as at Dec. 31, 2016, up 8.10 percent or $32.50 million from $401 million on Dec. 31, 2015. Current ratio was at 2.11 as on Dec. 31, 2016, up from 1.69 on Dec. 31, 2015.

Cash conversion cycle (CCC) has decreased to 14 days for the quarter from 37 days for the last year period. Days sales outstanding went down to 8 days for the quarter compared with 13 days for the same period last year.

Days inventory outstanding has decreased to 14 days for the quarter compared with 35 days for the previous year period. At the same time, days payable outstanding went down to 9 days for the quarter from 11 for the same period last year.