Key Takeaways
- CLF shares jumped 12.39% to $13.65 during premarket hours following impressive third-quarter financial performance.
- Quarterly revenue reached $5.6 billion while the company posted net income of $165 million.
- The steelmaker’s adjusted EBITDA of $612 million exceeded its prior guidance of $575 million.
- Total steel shipments hit 4.2 million tons with average prices climbing to $1,177 per ton.
- Management projects fourth-quarter EBITDA of $715 million and anticipates surpassing $4 billion by 2027.
Shares of Cleveland-Cliffs soared 12.39% to $13.65 in Monday morning premarket activity on October 19, propelled by the steelmaker’s impressive third-quarter financial results. The company swung back to profitability as both revenue figures and steel pricing showed substantial improvement. Management’s optimistic forward guidance further energized the stock’s upward momentum.
Steelmaker Delivers Solid Third-Quarter Performance
Cleveland-Cliffs generated $5.6 billion in revenue for the three months ending in September, representing an increase from the $5.2 billion recorded in the prior quarter. The company posted net income of $165 million, a dramatic turnaround from the $134 million loss reported in Q2. On a per-share basis, diluted earnings came in at $0.26, compared to the $0.25 loss previously.
On an adjusted basis, the steelmaker earned $0.28 per share, contrasting sharply with the $0.20 adjusted loss in the second quarter. Adjusted EBITDA surged to $612 million from $286 million in the comparable period, surpassing the company’s own projection of $575 million and representing its best quarterly performance in three years.
CLF finished Friday’s trading session at $12.12, slipping 0.25% for the day. The premarket surge on Monday reflected improvements across multiple operational metrics including steel volumes, pricing power, and operational efficiency. The vertically integrated producer serves diverse sectors including automotive, manufacturing, infrastructure, and distribution channels throughout North America.
Pricing Strength Drives Revenue Expansion
The steelmaker moved approximately 4.2 million net tons of steel products throughout the quarter. Steel product sales volume totaled 4.15 million net tons, showing growth from the 4.03 million net tons sold in Q2. Average realized pricing improved to $1,177 per ton compared to $1,124 in the previous period.
Within the steelmaking division, quarterly sales climbed to $5.45 billion while generating a gross margin of $454 million. This margin represented a significant improvement over the second quarter’s $113 million as both pricing and volume metrics strengthened. Hot-rolled steel products represented 46% of total sales volume, with coated products making up 31%.
Distributors and converter customers generated 34% of segment revenue, while automotive clients contributed 28%. Infrastructure and manufacturing sectors combined for another 28%, with steel producers comprising the final 10%. Stelco delivered enhanced operational results in Canada, though Cleveland-Cliffs intends to idle its galvanizing production lines for an indefinite period.
Management Raises Long-Term EBITDA Expectations
The company anticipates generating roughly $715 million in adjusted EBITDA during the fourth quarter, even accounting for typical seasonal headwinds and scheduled maintenance activities. Improved selling prices are expected to provide support, though increasing operational costs and compensation adjustments will partially offset these benefits. The company maintained $3.2 billion in liquidity at the conclusion of the third quarter in September.
Executives expect enhanced cash generation combined with proceeds from anticipated asset sales to facilitate substantial debt reduction. The company has established a target of reducing net debt to below 2.5 times EBITDA by the middle of 2027. Meanwhile, constrained import volumes and strengthening domestic market fundamentals have enhanced its business outlook.
Cleveland-Cliffs now projects adjusted EBITDA will surpass $4 billion in 2027. This extended forecast is supported by existing customer agreements and current steel price projections. Nonetheless, actual results will ultimately depend on prevailing market prices, customer demand, cost management, and operational execution.
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