Cleveland-Cliffs 2025 Q1 Earnings Significant Loss as Net Income Declines 811%

Cleveland-Cliffs (CLF) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The company's results were disappointing, with a significant net loss of $483 million amidst an 11% drop in revenue compared to the previous year. This performance fell short of market expectations, prompting a reassessment of investor strategies. The company did not revise its guidance, maintaining its forecast amid challenging market conditions and operational changes aimed at long-term improvement.

Revenue

The total revenue of Cleveland-Cliffs decreased by 11.0% to $4.63 billion in 2025 Q1, down from $5.20 billion in 2024 Q1.

Earnings/Net Income

Cleveland-Cliffs's losses deepened to $1.00 per share in 2025 Q1 from a loss of $0.14 per share in 2024 Q1 (614.3% wider loss). Meanwhile, the company's net loss widened to $-483 million in 2025 Q1, representing an 811.3% increase from the $-53 million loss recorded in 2024 Q1. The EPS performance is notably weak.

Price Action

The stock price of Cleveland-Cliffs has edged down 1.74% during the latest trading day, has climbed 3.03% during the most recent full trading week, and has surged 21.98% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Cleveland-Cliffs (CLF) shares following a quarter-over-quarter revenue decline and holding for 30 days has consistently produced disappointing results over the past five years. The strategy yielded a return of -10.03%, starkly underperforming the benchmark return of 58.66%, with an excess return of -68.69%. The compound annual growth rate (CAGR) stood at -2.32%, indicating notable losses. Additionally, the strategy experienced a maximum drawdown of -54.30% and a Sharpe ratio of -0.10, underscoring its high risk and negative returns. This highlights the volatility and risk associated with such an investment approach, which has not fared well against market benchmarks.

CEO Commentary

Lourenco Goncalves, Chairman, President and CEO, emphasized that first-quarter results were adversely affected by underperforming non-core assets and the continued impact of lower index prices. To enhance efficiency, the company is taking decisive actions, including idling certain facilities, which are expected to yield over $300 million in annual savings. He highlighted a strategic focus on the automotive sector, reinforced by the U.S. Administration's support, and expressed optimism regarding higher volume commitments from automotive customers. Goncalves noted that exiting an unprofitable slab contract would significantly benefit EBITDA starting in 2026.

Guidance

Cleveland-Cliffs expects to achieve substantial annualized EBITDA improvements following the termination of the slab contract with ArcelorMittal/Nippon Steel Calvert at year-end, providing an estimated $500 million upside from current levels. The company anticipates continued automotive volume recovery and reduced capital expenditures as it shifts focus from underperforming assets. With a solid liquidity position of $3.0 billion and secured note capacity of $3.3 billion, Cleveland-Cliffs is well-prepared to navigate market fluctuations while restoring consistent cash flow generation and facilitating debt reduction.

Additional News

Cleveland-Cliffs recently announced the cancellation of plans to establish a new electrical distribution transformer production plant in Weirton, West Virginia. This decision follows the company's disappointing financial performance in Q1 2025, with a net loss of $483 million. The idling of the Weirton facility, along with five other facilities, reflects Cleveland-Cliffs' strategy to optimize its operations and focus on profitable ventures. This adjustment comes as a setback for the Weirton community, which had hoped for renewed economic activity and job creation. However, Cleveland-Cliffs remains committed to its strategic focus on the automotive sector and cost-saving initiatives.