• Adjusted EBITDA: $124 million on 3.8 million tons of shipments during the third quarter.

• Average Selling Price: Fell $80 per ton compared to the prior quarter.

• Shipments: Decreased by 150,000 tons compared to the prior quarter.

• Unit Costs: Reduced by over $40 per ton during the quarter.

• SG&A Costs: $112 million for the quarter.

• Capital Spending: $151 million for the quarter.

• Capital Expenditure Budget for 2025: Guided to $600 million on an ex-Stelco basis.

• Cost Synergies from Stelco Acquisition: Expected $120 million within the first year.

• Blast Furnace Idling: Temporarily idled one blast furnace in Cleveland, reducing 1.5 million tons of annual capacity.

• Automotive Build Rates: 3.75 million units built during the quarter, lowest since semiconductor shortage.

• Warning! GuruFocus has detected 4 Warning Sign with CLF.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cleveland-Cliffs Inc (NYSE:CLF) successfully closed the acquisition of Stelco, which is expected to enhance their EBITDA margin and provide cost synergies.

• The company achieved a significant cost reduction of $40 per ton in Q3, demonstrating strong operational efficiency.

• Cleveland-Cliffs Inc (NYSE:CLF) has secured favorable coal supply contracts, leading to a $70 million cost improvement year over year.

• The company has received Phase one funding approvals from the Department of Energy for efficiency projects at Middletown and Butler.

• Cleveland-Cliffs Inc (NYSE:CLF) maintains a strong position in the automotive industry, with expectations of a rebound in automotive demand in 2025.

Negative Points

• Q3 results were impacted by weaker steel demand and pricing, leading to a decrease in shipments and average selling prices.

• The company temporarily idled one of its blast furnaces in Cleveland due to ongoing demand weakness, affecting production capacity.

• Cleveland-Cliffs Inc (NYSE:CLF) faced challenges with lower automotive build rates, the lowest since the semiconductor shortage, impacting shipments and margins.

• The company anticipates slightly lower prices for automotive contracts in 2025 compared to 2024.

• High interest rates are negatively affecting consumer demand for automotive and housing markets, contributing to weak market conditions.

Q & A Highlights

Q: Can you speak to Q4 volume, price, and cost expectations following the Stelco acquisition? A: Lourenco Goncalves, CEO, mentioned that they anticipate a strong Q1 with volumes returning to normal by the first half of next year. The automotive business is expected to improve as some business lost to lower prices returns. Celso Goncalves, CFO, added that Q4 average selling prices should be similar to Q3, with shipments slightly lower on a standalone basis but offset by Stelco's contribution.