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Sep 30, 2023
Cleveland-Cliffs Q3 2023 Earnings Report
Cleveland-Cliffs reported strong Q3 2023 results driven by robust automotive shipments and effective cost management.
Key Takeaways
Cleveland-Cliffs reported a net income of $275 million and an adjusted EBITDA of $614 million. The company generated over $600 million in free cash flow, which was used to reduce debt and repurchase shares. Record automotive steel shipments and a decrease in unit cost per ton contributed to the positive results.
Steel shipments exceeded 4 million tons for the third consecutive quarter.
Free cash flow generation was over $600 million, enabling debt reduction and share repurchases.
Automotive steel shipments reached a new record.
Unit cost per ton of steel decreased by $165 compared to the previous year.
Cleveland-Cliffs
Cleveland-Cliffs
Forward Guidance
The Company expects a further $15 per net ton reduction in steel unit costs from Q3 to Q4 2023, with additional cost reductions expected into 2024. Working capital is expected to provide a significant benefit to free cash flow in Q4 2023. The full-year 2023 capital expenditures expectation lowered to $670 million.
Positive Outlook
- Anticipated cost reduction of $15 per net ton in steel unit costs from Q3 to Q4 2023.
- Further cost reductions expected into 2024.
- Working capital expected to significantly benefit free cash flow in Q4 2023.
- Full-year 2023 capital expenditures expectation lowered to $670 million.
- Locked in approximate $250 million cost reduction related to purchases of metallurgical coal.
Challenges Ahead
- Continued volatility of steel, iron ore and scrap metal market prices.
- Uncertainties associated with the highly competitive and cyclical steel industry.
- Potential weaknesses and uncertainties in global economic conditions.
- Excess global steelmaking capacity and oversupply of iron ore.
- Prevalence of steel imports and reduced market demand, including as a result of inflationary pressures.