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Discounted Cash Flow (DCF) Analysis Unlevered


Cleveland-Cliffs Inc.

Cleveland-Cliffs Inc. (CLF)

Basic Materials

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 3,890.803,373.322,013.541,554.651,866.202,332.572,186.322,049.231,920.751,800.321,687.44
Revenue (%)
EBITDA 1,430.65-6,629.59-217.46471.21329.01860.72-312.21-292.63-274.28-257.09-240.97
EBITDA (%)
EBIT 837.30-7,133.57-351.36355.86241.30771.61-504.60-472.96-443.31-415.51-389.46
EBIT (%)
Depreciation 593.35503.97133.90115.3687.7189.10192.40180.33169.03158.43148.49
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 335.39271.55358.01405.141,067.84914.60571.94536.08502.47470.96441.43
Total Cash (%)
Account Receivables 270.02122.7940.27128.73106.75226.73132.27123.98116.21108.92102.09
Account Receivables (%)
Inventories 607.35378.82439.96269.73227.12181.01313.30293.66275.24257.99241.81
Inventories (%)
Accounts Payable 345.50165.97106.31107.5899.47186.84143.42134.43126.00118.10110.70
Accounts Payable (%)
Capital Expenditure -861.42-284.03-80.74-69.03-151.72-296.00-217.98-204.31-191.50-179.49-168.24
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 8.26
Diluted Shares Outstanding 304.14
Cost of Debt
Tax Rate -72.78
After-tax Cost of Debt 3.69
Risk-Free Rate
Market Risk Premium
Cost of Equity 16.85
Total Debt 2,092.90
Total Equity 2,512.20
Total Capital 4,605.10
Debt Weighting 45.45
Equity Weighting 54.55
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 3,890.803,373.322,013.541,554.651,866.202,332.572,186.322,049.231,920.751,800.321,687.44
EBITDA 1,430.65-6,629.59-217.46471.21329.01860.72-312.21-292.63-274.28-257.09-240.97
EBIT 837.30-7,133.57-351.36355.86241.30771.61-504.60-472.96-443.31-415.51-389.46
Tax Rate 36.49%1.18%-29.19%-7.54%-220.24%-72.78%-48.68%-48.68%-48.68%-48.68%-48.68%
EBIAT 531.75-7,049.65-453.92382.68772.751,333.22-750.25-703.20-659.11-617.79-579.05
Depreciation 593.35503.97133.90115.3687.7189.10192.40180.33169.03158.43148.49
Accounts Receivable -147.2382.52-88.4521.98-119.9894.458.297.777.296.83
Inventories -228.53-61.13170.2342.6246.11-132.2919.6418.4117.2616.18
Accounts Payable --179.54-59.651.27-8.1187.37-43.42-8.99-8.43-7.90-7.40
Capital Expenditure --577.39-203.29-11.7282.70144.28-78.03-13.67-12.81-12.01-11.25
UFCF 1,125.10-6,926.83-561.58569.35999.641,580.10-717.13-517.59-485.14-454.72-426.21
WACC
PV UFCF -633.96-404.49-335.16-277.71-230.11
SUM PV UFCF -4,062.99

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 13.12
Free cash flow (t + 1) -443.26
Terminal Value -4,860.31
Present Value of Terminal Value -2,624.02

Intrinsic Value

Enterprise Value -6,687.01
Net Debt 1,178.30
Equity Value -7,865.31
Shares Outstanding 304.14
Equity Value Per Share -25.86

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
15.12 (%) -22.48 Sell -22.92 Sell -23.41 Sell -23.99 Sell -24.67 Sell -25.49 Sell -26.48 Sell -27.73 Sell -29.32 Sell
14.62 (%) -22.20 Sell -22.60 Sell -23.05 Sell -23.58 Sell -24.19 Sell -24.93 Sell -25.81 Sell -26.90 Sell -28.27 Sell
14.12 (%) -21.94 Sell -22.31 Sell -22.72 Sell -23.20 Sell -23.76 Sell -24.42 Sell -25.20 Sell -26.17 Sell -27.36 Sell
13.62 (%) -21.70 Sell -22.04 Sell -22.42 Sell -22.86 Sell -23.36 Sell -23.96 Sell -24.66 Sell -25.52 Sell -26.57 Sell
13.12 (%) -21.48 Sell -21.79 Sell -22.14 Sell -22.54 Sell -23.00 Sell -23.54 Sell -24.17 Sell -24.93 Sell -25.86 Sell
12.62 (%) -21.27 Sell -21.55 Sell -21.88 Sell -22.24 Sell -22.67 Sell -23.16 Sell -23.73 Sell -24.41 Sell -25.23 Sell
12.12 (%) -21.07 Sell -21.34 Sell -21.63 Sell -21.97 Sell -22.36 Sell -22.81 Sell -23.33 Sell -23.94 Sell -24.67 Sell
11.62 (%) -20.89 Sell -21.13 Sell -21.41 Sell -21.72 Sell -22.08 Sell -22.49 Sell -22.96 Sell -23.51 Sell -24.17 Sell
11.12 (%) -20.71 Sell -20.94 Sell -21.20 Sell -21.49 Sell -21.82 Sell -22.19 Sell -22.62 Sell -23.12 Sell -23.72 Sell