Cleveland-Cliffs (CLF) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues were $4.6 billion with 3.8 million tons of steel shipments, but the company reported a net loss of $230 million due to weak steel demand and lower pricing, especially in the automotive sector.

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

• Cost discipline led to a $40 per ton reduction in unit costs, achieving the lowest unit cost since 2021 and exceeding previous guidance.

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

• Announced indefinite idle of the Weirton tinplate plant, incurring $212 million in related charges year-to-date.

Financial highlights

• Q3 2024 Adjusted EBITDA was $124 million, down from $614 million in Q3 2023; Stelco contributed $64 million in Q3 2024 with a 13% margin.

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

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

• Cash and cash equivalents at September 30, 2024, were $39 million, with total liquidity of $3.8 billion.

• Net debt increased to $3.77 billion at September 30, 2024, from $3.14 billion at year-end 2023.

Outlook and guidance

• 2025 capital expenditure guidance is $600 million ex-Stelco, with total 2025 CapEx including Stelco around $675–700 million; Stelco sustaining capex expected at ~$100 million annually.

• Management expects steel demand to rebound in early 2025 as interest rates decline, imports become less attractive, and infrastructure spending increases.

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

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

• Management is bullish on a strong 2025, expecting demand recovery and improved market conditions.