Cleveland-Cliffs Inc (CLF, Financial) released its 8-K filing on November 4, 2024, detailing its financial performance for the third quarter ended September 30, 2024. The company reported revenues of $4.6 billion, falling short of the analyst estimate of $4.77 billion. The GAAP net loss was $230 million, translating to a loss of $0.52 per diluted share, compared to the estimated loss of $0.12 per share. The adjusted net loss stood at $156 million, or $0.33 per diluted share.
Company Overview
Cleveland-Cliffs Inc is a leading flat-rolled steel producer and manufacturer of iron ore pellets in North America. The company operates through its Steelmaking segment, which is vertically integrated from mined raw materials to primary steelmaking and downstream finishing. It serves a diverse range of markets, with a significant focus on the automotive industry in North America. The majority of its revenue is generated in the United States.
Performance and Challenges
The third-quarter results reflect the challenges Cleveland-Cliffs Inc faced due to weaker demand and pricing pressures, particularly from the automotive sector. The company reported steel shipments of 3.8 million net tons, with a significant portion of sales directed towards the automotive market. However, the underperformance of two major automotive clients impacted the company's margins, leading to the temporary idling of the Cleveland #6 blast furnace.
“In Q3, weaker demand and pricing drove tighter margins, and ultimately led us to temporarily idle our Cleveland #6 blast furnace,” stated Lourenco Goncalves, Chairman, President, and CEO of Cleveland-Cliffs Inc.
Financial Achievements and Industry Context
Despite the challenges, Cleveland-Cliffs Inc achieved its lowest unit cost since 2021, surpassing its cost reduction targets. The company's liquidity position remained strong at $3.8 billion as of September 30, 2024. The acquisition of Stelco, completed on November 1, 2024, is expected to enhance the company's resilience, given Stelco's minimal exposure to the automotive sector and its efficient, low-cost assets.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenues | $4.6 billion | $5.6 billion |
| Net Loss | $230 million | $275 million (profit) |
| Adjusted EBITDA | $124 million | Not provided |
Analysis and Outlook
The third-quarter performance underscores the cyclical nature of the steel industry and the challenges posed by reliance on the automotive sector. The acquisition of Stelco is a strategic move to diversify Cleveland-Cliffs Inc's portfolio and reduce dependency on the automotive market. The company has also set a lower capital budget for 2025, focusing on strategic projects expected to boost annual EBITDA by over $600 million.
Looking ahead, Cleveland-Cliffs Inc anticipates a rebound in steel demand in early 2025, supported by economic and political factors. The integration of Stelco's assets and continued cost reductions position the company to capitalize on future market opportunities and reduce acquisition debt through healthy free cash flow.
Explore the complete 8-K earnings release (here) from Cleveland-Cliffs Inc for further details.
