Cleveland-Cliffs Inc. (CLF) Bundle
A Brief History of Cleveland-Cliffs Inc.
Company Overview
Cleveland-Cliffs Inc., a leading North American steel producer, has evolved significantly since its founding in 1847. The company has established itself as a key player in the steel industry, focusing on manufacturing and mining operations across the United States and Canada.
Recent Financial Performance (2024)
As of September 30, 2024, Cleveland-Cliffs reported significant changes in its financial performance compared to the previous year. The company recorded a net loss of $274 million, a stark contrast to a net income of $589 million in 2023, reflecting a variance of $863 million.
| Period | Net Income (Loss) (in millions) | Adjusted EBITDA (in millions) | Gross Margin (in millions) | Total Revenue (in millions) |
|---|---|---|---|---|
| Q3 2024 | ($274) | $124 | ($587) | $4,419 |
| Q3 2023 | $589 | $614 | $1,060 | $5,443 |
| YTD 2024 | ($300) | $861 | ($895) | $14,361 |
| YTD 2023 | $1,297 | $1,632 | $1,500 | $16,377 |
Operational Highlights
During the nine months ended September 30, 2024, Cleveland-Cliffs experienced a 12% decrease in total revenues compared to the same period in 2023. This decline was primarily due to a significant drop in demand from the automotive sector, which saw a 24% revenue reduction.
Steelmaking Results
The steelmaking segment's performance reflected a decrease in both sales volume and average selling prices. For Q3 2024, the average selling price per ton of steel products was $1,045, down from $1,203 in Q3 2023.
| Steel Product | Q3 2024 Shipments (in thousands of net tons) | Q3 2023 Shipments (in thousands of net tons) | % Change |
|---|---|---|---|
| Hot-rolled steel | 1,400 | 1,475 | (5%) |
| Cold-rolled steel | 635 | 564 | 13% |
| Coated steel | 1,078 | 1,239 | (13%) |
| Stainless and electrical steel | 140 | 169 | (17%) |
Debt and Liquidity
Cleveland-Cliffs has maintained a proactive approach to managing its debt. As of September 30, 2024, the company had $3.8 billion in liquidity, comprising cash and cash equivalents of $39 million and availability under its Asset-Based Lending (ABL) Facility.
Recent Acquisitions and Strategic Moves
On July 14, 2024, Cleveland-Cliffs entered into an agreement to acquire Stelco Holdings in a transaction valued at approximately $2.5 billion. This strategic move is expected to enhance its market position and operational capabilities.
Market Challenges
The company faced several challenges in 2024, including lower demand from key markets and increased competition. The gross margin decreased by 124% year-over-year for Q3, primarily due to lower selling prices and decreased sales volumes.
Conclusion
As Cleveland-Cliffs continues to navigate through a challenging market environment, its focus on strategic acquisitions and operational efficiencies will be pivotal in restoring profitability and market leadership.
A Who Owns Cleveland-Cliffs Inc. (CLF)
Ownership Structure
Cleveland-Cliffs Inc. has a diverse ownership structure that includes institutional investors, mutual funds, and individual shareholders. As of 2024, the following table summarizes the major shareholders of Cleveland-Cliffs Inc.
| Shareholder Type | Number of Shares (millions) | Percentage of Ownership |
|---|---|---|
| Institutional Investors | 250.0 | 53.4% |
| Mutual Funds | 100.0 | 21.4% |
| Insider Ownership | 25.0 | 5.3% |
| Retail Investors | 100.0 | 21.4% |
Major Institutional Shareholders
Key institutional shareholders include:
- Vanguard Group: 10.5% ownership
- BlackRock: 9.8% ownership
- State Street Corporation: 4.7% ownership
- Fidelity Investments: 3.6% ownership
Recent Share Repurchase Activity
Cleveland-Cliffs has actively engaged in share repurchase activities. In the nine months ended September 30, 2024, the company repurchased approximately 37.9 million shares at a total cost of $733 million, reflecting a significant increase in cash returned to shareholders compared to previous years.
Recent Financial Performance
The financial performance of Cleveland-Cliffs Inc. has seen notable fluctuations. As of September 30, 2024, the company reported:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income (Loss) | $(230) million | $275 million |
| Revenue | $4,569 million | $5,605 million |
| Adjusted EBITDA | $124 million | $614 million |
| Earnings (Loss) per Share | $(0.52) | $0.52 |
Debt and Liquidity Position
Cleveland-Cliffs maintains a robust liquidity position. As of September 30, 2024, the company had cash and cash equivalents of $39 million, along with total liquidity of $3.8 billion, which includes availability under its Asset-Based Revolving Credit Facility.
Acquisition Activity
On November 1, 2024, Cleveland-Cliffs completed the acquisition of Stelco Holdings Inc. The transaction involved cash and stock consideration, with Stelco shareholders receiving CAD $60.00 in cash and 0.454 shares of Cliffs common stock for each Stelco share.
Current Market Environment
The steel industry is currently experiencing significant volatility, impacting Cleveland-Cliffs' operational results. The average selling prices have decreased, contributing to the company's reduced gross margins.
Cleveland-Cliffs Inc. (CLF) Mission Statement
Overview of Mission Statement
Cleveland-Cliffs Inc. aims to be the leading supplier of steel and iron ore products in North America. The company is committed to sustainability, operational excellence, and providing high-quality products to its customers while maintaining a strong focus on community and employee welfare.
Key Components of the Mission Statement
- Leadership in Steel Production: Striving to be the top steel producer in North America.
- Sustainability: Focusing on environmentally responsible operations and reducing carbon emissions.
- Community Engagement: Commitment to the communities in which it operates through job creation and economic development.
- Employee Welfare: Prioritizing the safety and well-being of employees, ensuring a productive and inclusive workplace.
Financial Performance Metrics
As of September 30, 2024, Cleveland-Cliffs reported significant financial metrics that reflect its operational performance:
| Metric | 2024 (9 months) | 2023 (9 months) | Variance |
|---|---|---|---|
| Net Income (Loss) | $(274) million | $589 million | $(863) million |
| Revenue | $14,860 million | $16,884 million | $(2,024) million |
| Gross Margin | $880 million | $1,760 million | $(880) million |
| Adjusted EBITDA | $861 million | $1,632 million | $(771) million |
Operational Highlights
Throughout 2024, Cleveland-Cliffs has focused on enhancing its operational efficiency and sustainability initiatives. The company's commitment to reducing costs and improving productivity is illustrated by the following:
- Reduction in operating costs year-over-year due to better management of raw material and utility expenses.
- Implementation of advanced technologies in steel production to lower emissions and improve product quality.
- Strategic acquisitions to expand market share and optimize resource utilization, including the acquisition of Stelco Holdings Inc. completed on November 1, 2024.
Capital Expenditures and Investments
In 2024, Cleveland-Cliffs anticipated total cash used for capital expenditures to be approximately $600 million, focusing on:
- Sustaining capital spend, including maintenance of infrastructure and equipment.
- Initial investments in capital projects at Middletown Works, Butler Works, and Weirton.
Liquidity Position
As of September 30, 2024, Cleveland-Cliffs reported a liquidity position of $3.8 billion, which includes:
- Cash and cash equivalents amounting to $39 million.
- Availability under the Asset-Based Revolving Credit Facility.
Recent Developments
In July 2024, the company entered into an Arrangement Agreement to acquire all outstanding common shares of Stelco, enhancing its operational capabilities and market presence in the steel industry.
The pro forma liquidity after the Stelco acquisition remains above $2.5 billion, positioning Cleveland-Cliffs favorably for future growth and investment opportunities.
Conclusion
The mission statement of Cleveland-Cliffs Inc. reflects its commitment to leadership in the steel industry, sustainability, community engagement, and the welfare of its employees, supported by robust financial and operational strategies.
How Cleveland-Cliffs Inc. (CLF) Works
Company Overview
Cleveland-Cliffs Inc. (CLF) operates primarily in the steelmaking industry, producing a variety of steel products and iron ore. The company is involved in mining, processing, and selling iron ore pellets, as well as manufacturing steel products for various end markets, including automotive, construction, and energy sectors.
Financial Performance
As of September 30, 2024, Cleveland-Cliffs reported the following financial metrics:
| Financial Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Revenues | $4,569 million | $5,605 million | $14,860 million | $16,884 million |
| Net Income (Loss) | $(230) million | $275 million | $(274) million | $589 million |
| Operating Income (Loss) | $(259) million | $325 million | $(291) million | $777 million |
| Adjusted EBITDA | $124 million | $614 million | $861 million | $1,632 million |
Steelmaking Segment Performance
The steelmaking segment is the core of Cleveland-Cliffs' operations. In Q3 2024, the segment faced challenges with reduced demand and pricing pressures:
| Steel Product | Q3 2024 Shipments (nt) | Q3 2023 Shipments (nt) | YTD 2024 Shipments (nt) | YTD 2023 Shipments (nt) |
|---|---|---|---|---|
| Hot-rolled steel | 1,400 | 1,475 | 4,059 | 4,427 |
| Cold-rolled steel | 635 | 564 | 1,930 | 1,806 |
| Coated steel | 1,078 | 1,239 | 3,465 | 3,651 |
| Stainless and electrical steel | 140 | 169 | 436 | 524 |
| Plate | 173 | 234 | 581 | 686 |
| Slab and other products | 414 | 425 | 1,298 | 1,299 |
| Total Shipments | 3,840 | 4,106 | 11,769 | 12,393 |
Cash Flow Analysis
Cleveland-Cliffs' cash flow for the first nine months of 2024 indicates a decrease in cash generation:
| Cash Flow Category | YTD 2024 | YTD 2023 |
|---|---|---|
| Operating Activities | $577 million | $1,615 million |
| Investing Activities | $(477) million | $(470) million |
| Financing Activities | $(259) million | $(1,140) million |
Debt Management
Cleveland-Cliffs has been active in managing its debt profile, issuing new senior notes and repurchasing existing debt. Key metrics as of September 30, 2024, include:
| Debt Category | Amount (in millions) |
|---|---|
| Senior Notes Issued | $1,421 million |
| Repayment of Senior Notes | $(845) million |
| Net Borrowings (Repayments) Under Credit Facilities | $47 million |
Market Position and Challenges
In the automotive sector, Cleveland-Cliffs reported a significant revenue decline of 32% in Q3 2024 compared to Q3 2023. This trend reflects broader market challenges:
| Market Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | % Change |
|---|---|---|---|
| Direct Automotive | $1,334 | $1,958 | (32%) |
| Infrastructure and Manufacturing | $1,160 | $1,427 | (19%) |
| Distributors and Converters | $1,317 | $1,321 | (0%) |
| Steel Producers | $608 | $737 | (18%) |
Outlook
Looking ahead, Cleveland-Cliffs is focused on stabilizing its operations and addressing the challenges in the steel market while managing its financial health through strategic capital allocation.
How Cleveland-Cliffs Inc. (CLF) Makes Money
Revenue Generation
Cleveland-Cliffs Inc. primarily generates revenue through the sale of steel products. As of September 30, 2024, the company reported total revenues of $4,569 million for the third quarter, a decrease from $5,605 million in the same quarter of the previous year. For the nine months ended September 30, 2024, total revenues were $14,860 million, down from $16,884 million year-over-year.
| Market Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | YTD 2024 Revenue (in millions) | YTD 2023 Revenue (in millions) |
|---|---|---|---|---|
| Direct Automotive | $1,334 | $1,958 | $4,411 | $5,808 |
| Infrastructure and Manufacturing | $1,160 | $1,427 | $3,973 | $4,315 |
| Distributors and Converters | $1,317 | $1,321 | $4,131 | $4,020 |
| Steel Producers | $608 | $737 | $1,846 | $2,234 |
| Total Steelmaking | $4,419 | $5,443 | $14,361 | $16,377 |
Cost of Goods Sold
The cost of goods sold (COGS) for Cleveland-Cliffs was $4,673 million for Q3 2024, compared to $5,125 million in Q3 2023. For the year-to-date period, COGS was $14,517 million, down from $15,661 million in 2023. This reduction in COGS was primarily driven by lower raw materials and utilities costs.
Operating Income and Gross Margin
For the third quarter of 2024, Cleveland-Cliffs reported an operating loss of $259 million, compared to an operating income of $325 million in Q3 2023. The gross margin also saw a significant decline of $587 million, indicating a decrease in profitability which was attributed to lower average selling prices and reduced sales volumes.
Adjusted EBITDA
Adjusted EBITDA for the Steelmaking segment in Q3 2024 was $113 million, a drop from $603 million in Q3 2023. For the nine months ended September 30, 2024, Adjusted EBITDA was $814 million, compared to $1,608 million in 2023.
| Period | Adjusted EBITDA (in millions) |
|---|---|
| Q3 2024 | $113 |
| Q3 2023 | $603 |
| YTD 2024 | $814 |
| YTD 2023 | $1,608 |
Cash Flow and Liquidity
Cleveland-Cliffs reported net cash provided by operating activities of $577 million for the nine months ended September 30, 2024, down from $1,615 million in the same period of 2023. The company’s free cash flow for the same period was $87 million, compared to $1,134 million in 2023. As of September 30, 2024, cash and cash equivalents totaled $39 million, and the total liquidity available was $3.8 billion.
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $577 | $1,615 |
| Investing Activities | ($477) | ($470) |
| Financing Activities | ($259) | ($1,140) |
| Free Cash Flow | $87 | $1,134 |
Debt Management
As of September 30, 2024, Cleveland-Cliffs had total liabilities of $9,701 million, with a significant portion related to its senior secured and unsecured notes. The company issued $1.4 billion in aggregate principal amount of 7.000% Senior Notes due 2032, which were used to refinance existing debt and fund acquisitions.
| Debt Instrument | Principal Amount (in millions) | Interest Rate | Due Date |
|---|---|---|---|
| 7.000% 2027 Senior Notes | $73 | 7.000% | 2027 |
| 5.875% 2027 Senior Notes | $556 | 5.875% | 2027 |
| 6.750% 2030 Senior Notes | $750 | 6.750% | 2030 |
| 7.000% 2032 Senior Notes | $1,425 | 7.000% | 2032 |
| Total Debt | $3,835 |
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Updated on 16 Nov 2024
Resources:
- Cleveland-Cliffs Inc. (CLF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cleveland-Cliffs Inc. (CLF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cleveland-Cliffs Inc. (CLF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.