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Sep 30, 2024
Cleveland-Cliffs Q3 2024 Earnings Report
Cleveland-Cliffs reported a net loss due to weaker demand and pricing, partially offset by cost reduction efforts and the recent acquisition of Stelco.
Key Takeaways
Cleveland-Cliffs reported third-quarter 2024 results with revenues of $4.6 billion and a GAAP net loss of $230 million. The company faced challenges due to weaker demand and pricing, particularly in the automotive sector. However, cost reduction targets were exceeded, and the acquisition of Stelco is expected to provide resilience and cost advantages.
Revenues reached $4.6 billion.
Steel shipments amounted to 3.8 million net tons.
GAAP net loss was $230 million, with an adjusted net loss of $156 million.
Adjusted EBITDA was $124 million.
Cleveland-Cliffs
Cleveland-Cliffs
Forward Guidance
Cleveland-Cliffs anticipates a rebound in steel demand in early 2025, supported by economic and political factors. The company has set a lower capital budget for 2025 and expects benefits from lower coal costs. Stelco's assets and cost reductions are expected to enable the company to capitalize on the upswing and reduce acquisition debt with healthy free cash flow.
Positive Outlook
- Steel demand is expected to rebound in early 2025.
- A much lower capital budget has been set for 2025.
- Lower coal costs will bring a $70 million benefit next year compared to 2024.
- Stelco's assets and cost reductions are expected to drive growth.
- Healthy free cash flow will allow for quick reduction of acquisition debt.
Challenges Ahead
- Weaker demand and pricing drove tighter margins in Q3.
- Two of the top four automotive clients continue to underperform their own expectations.
- Cliffs was more affected than competitors due to high exposure to the automotive sector.
- Acquisition-related expenses impacted GAAP results.
- Discrete charges and losses totaling $145 million were included in GAAP results, primarily related to an arbitration decision.