Cleveland-Cliffs (CLF) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues were $4.6 billion with 3.8 million tons shipped, but weak steel demand and pricing, especially in automotive, led to a net loss of $230 million.

• Adjusted EBITDA for Q3 2024 was $124 million, with Stelco's pro forma contribution estimated at $64 million and a 13% margin.

• The $3.2 billion Stelco acquisition closed November 1, 2024, expanding the North American footprint, doubling spot market exposure, and expected to generate $120 million in annual cost synergies.

• Strategic growth projects at Middletown, Butler, and Weirton are progressing, with phase I DOE funding received and equipment ordered.

• Returned $733 million to shareholders through repurchase of 37.9 million shares in the first nine months of 2024.

Financial highlights

• Q3 2024 Adjusted EBITDA was $124 million on $4.6 billion revenue and 3.8 million tons shipped; Stelco contributed $480 million revenue and $64 million Adjusted EBITDA.

• Average selling price per ton was $1,045, down from $1,125 in Q2 2024 and $1,203 in Q3 2023.

• SG&A expenses were $112 million in Q3 2024; capital spending was $151 million, both below four-year averages.

• Gross margin for Q3 2024 was negative 3%, compared to 9% in Q3 2023.

• Liquidity stood at $3.8 billion as of September 30, 2024.

Outlook and guidance

• Q4 average selling prices expected to be similar or slightly lower than Q3, with shipment levels maintained by Stelco's contribution.

• 2025 capital spend guided to $600 million ex-Stelco, with Stelco sustaining capex at ~$100 million annually.

• Management expects demand recovery in 2025 as interest rates fall, government infrastructure spending increases, and election uncertainty resolves.

• Lower coal costs anticipated to provide a $70 million benefit in 2025.

• Future free cash flow will prioritize debt repayment following the Stelco acquisition.