On July 22, 2024, Cleveland-Cliffs Inc (CLF, Financial) released its 8-K filing for the second quarter of 2024. Cleveland-Cliffs Inc is a flat-rolled steel producer and manufacturer of iron ore pellets in North America. The company operates through one reportable segment - Steelmaking, and serves a diverse range of markets, primarily in the United States.
Performance Overview
For the second quarter of 2024, Cleveland-Cliffs Inc reported revenues of $5.1 billion, slightly below the analyst estimate of $5.2 billion. However, the company posted an adjusted earnings per share (EPS) of $0.11, surpassing the analyst estimate of $0.02. The company recorded a GAAP net income of $9 million, compared to a GAAP net loss of $53 million in the first quarter of 2024.
Key Financial Metrics
Below are some of the key financial metrics from the second quarter of 2024:
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Revenue | $5.1 billion | $5.2 billion |
| Net Income | $9 million | -$53 million |
| Adjusted EPS | $0.11 | $0.02 |
| Adjusted EBITDA | $323 million | $414 million |
| Net Debt | $3.4 billion | $3.6 billion |
| Free Cash Flow | $362 million | $299 million |
Operational Highlights
During the second quarter, Cleveland-Cliffs Inc achieved steel shipments of 4.0 million net tons. The company also repurchased 7.5 million shares under its $1.5 billion share repurchase program. The company’s liquidity stood at $3.7 billion as of June 30, 2024.
Commentary from Management
"Our substantial free cash flow generation of $362 million in the second quarter clearly demonstrates Cliffs’ ability to perform through the cycle, even in times of adverse business conditions. Despite a less than ideal steel demand and weak pricing throughout the quarter, Cliffs operated very well. We met our cost reduction target and shipped the tonnage we had planned for. With that, we were able to pay down over $200 million in debt and also return approximately $125 million to our shareholders via share buybacks."
- Lourenco Goncalves, Chairman, President, and CEO
Financial Statements Summary
From the income statement, Cleveland-Cliffs Inc reported total revenues of $5.1 billion for Q2 2024, compared to $5.9 billion in Q2 2023. The cost of goods sold was $4.9 billion, resulting in a gross margin of $145 million. The company’s operating income was $6 million, and net income attributable to Cliffs shareholders was $2 million.
On the balance sheet, the company’s total assets were $16.9 billion as of June 30, 2024, with total liabilities of $9.6 billion and total equity of $7.4 billion. The cash flow statement showed net cash provided by operating activities of $519 million and free cash flow of $362 million.
Analysis and Outlook
Cleveland-Cliffs Inc’s performance in Q2 2024 highlights its resilience in a challenging market environment. The company’s ability to generate substantial free cash flow and reduce net debt is a positive indicator of its financial health. However, the slight miss on revenue suggests that market conditions remain tough, particularly in the steel industry.
Looking ahead, Cleveland-Cliffs Inc has lowered its full-year 2024 expected capital expenditures range to $650 to $700 million. The company remains focused on cost reductions and strategic initiatives, including the acquisition of Stelco and repurposing its Weirton tinplate plant to produce transformers.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Cleveland-Cliffs Inc for further details.
