• Adjusted EBITDA Loss (Q4 2024): $81 million, primarily due to weaker automotive demand and lagged pricing.
• Total Shipments (Q4 2024): 3.8 million tons, lower due to the idling of the C6 furnace and seasonal demand.
• Price Realization (Q4 2024): $976 per net ton, a decrease of $70 per net ton from the previous quarter.
• Unit Steel Costs (2024): Reduced by $30 per ton year over year.
• Expected Cost Reduction (2025): Additional $40 per net ton with Stelco integration.
• SG&A Reduction (2024): Down nearly $100 million or 16% from the prior year.
• Liquidity Position: $3 billion, with all secured debt capacity intact.
• Capital Expenditures (2025): Expected to be $700 million, down from $800 million in 2024.
• Net Pension and OPEB Liabilities: Reduced by 90% from over $4 billion to $400 million by end of 2024.

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

Release Date: February 25, 2025

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

Positive Points

• Cleveland-Cliffs Inc (NYSE:CLF) has seen a substantial increase in its order book and lead times for hot-rolled steel, indicating strong demand and a positive outlook for 2025.
• The company is benefiting from the recently announced 25% tariffs on steel imports, which are expected to strengthen domestic producers and improve market conditions.
• Cleveland-Cliffs Inc (NYSE:CLF) has successfully integrated Stelco, with operational transitions going smoothly and expected synergies of $120 million set in motion.
• The company has a strong liquidity position with $3 billion available, and its recent capital raise was oversubscribed, indicating strong investor confidence.
• Cleveland-Cliffs Inc (NYSE:CLF) has a robust safety record, with a total reportable incident rate of 0.9 in 2024, showcasing its commitment to workforce safety.

Negative Points

• Cleveland-Cliffs Inc (NYSE:CLF) posted an $81 million adjusted EBITDA loss in Q4 2024, primarily due to weaker automotive demand and low commodity pricing.
• The company faced challenges from high interest rates and trade distortions, impacting its service center customers' ability to purchase steel.
• Cleveland-Cliffs Inc (NYSE:CLF) had to idle its C6 blast furnace due to weak demand, affecting production capacity.
• The company is dealing with the impact of foreign competition and overproduction, which has been a longstanding issue in the steel industry.
• Cleveland-Cliffs Inc (NYSE:CLF) experienced a significant working capital build in Q4 2024, which could impact cash flow management in the short term.

Q & A Highlights

Q: Can you discuss how Cliffs navigates the evolving tariff environment, its implications on price and demand, and what the strategy is for the recently acquired Stelco asset? A: Lourenco Goncalves, CEO, explained that tariffs are necessary and beneficial for Cleveland-Cliffs. Stelco's primary business is in Canada, and any negative impact from tariffs will be offset by benefits to the rest of the company's footprint. He noted that Stelco's best financial year was during a period of tariffs, indicating potential positive outcomes.

Q: How did pricing change for the January resets on fixed contracts for flat-rolled products, and what is the updated sensitivity for steelmaking ASPs? A: Lourenco Goncalves, CEO, stated that Stelco operates primarily on spot pricing, which is advantageous in the current environment. Fixed contract negotiations are going well, with a shift back to domestic suppliers like Cleveland-Cliffs due to a more favorable pricing environment compared to 2024.

Q: Is there a possibility of pausing debt paydown for share repurchases if equity remains under pressure? A: Lourenco Goncalves, CEO, emphasized that the focus remains on debt reduction, with a target of 2.5 times EBITDA. He stated there are no plans for share repurchases, as paying down debt is seen as the best way to build equity value.

Q: Can you provide an update on capital expenditures and the status of projects like Middletown and Butler? A: Lourenco Goncalves, CEO, outlined a clear CapEx plan for 2025, including $500 million for legacy operations, $100 million for Stelco, and $100 million for projects at Middletown, Butler, and Weirton. He noted that the projects are progressing well, with Weirton and Butler moving quickly.

Q: What are the conditions for potentially restarting the Cleveland Works number six blast furnace? A: Lourenco Goncalves, CEO, stated that there are no current plans to restart the C6 blast furnace, which remains idled indefinitely. The decision will depend on future market conditions and strategic considerations.

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