Cleveland-Cliffs reports Q3 EPS 52c, consensus 43c

Reports Q3 revenue $5.61B, consensus $5.58B. Cliffs’ Chairman, President and CEO Lourenco Goncalves said: “Q3 2023 was our third consecutive quarter with steel shipments above 4 million tons. We generated over $600 million in free cash flow in the quarter and, as we had announced we would do, we continued to use this strong cash generation to pay down debt and buy back shares. With that, our net debt and diluted share count have reached new record lows since our full transformation from a merchant mining to a steel company. Our liquidity is also now at an all-time high. Q3 was specifically highlighted by Cleveland-Cliffs achieving another record in automotive steel shipments. This strength in shipments to our automotive clients has been happening both before and also after the UAW strike affecting three of our clients headquartered in Detroit was announced, with our other major clients outside of Detroit picking up the slack. Despite this continued strength in automotive shipments, the service center sector collectively decided to buy steel from us at very low volumes in Q3, prioritizing transactions among themselves instead. This dynamic led to a higher value mix of shipments than expected and, consequently, better-than-expected realized prices. With underlying demand that is still strong and depleted inventories among service centers, we were able to successfully bring buyers off the sidelines with our price increase announcements. We expect that in Q4 we will see the end of the UAW strike and more normal buying patterns from service centers. That should support us not only in Q4, but into 2024 as well. Compared to the third quarter of last year, our unit cost per ton of steel is down a staggering $165 per net ton. With further cost decreases in place for next year, including an approximate $250 million cost reduction locked in related to our purchases of metallurgical coal, we have a lot to look forward to. As we look to the future, it should be clear to all of those who have followed us that very exciting and transformational events are ahead.”