Cleveland-Cliffs 2025 Q2 Earnings Misses Targets as Net Income Plummets 5322.2%

Cleveland-Cliffs Inc. (CLF) announced its fiscal 2025 Q2 earnings, revealing a significant decline in net income compared to the previous year. The results missed expectations, with the company reporting a substantial net loss. Guidance was adjusted, indicating a reduction in capital expenditures and selling expenses. Despite these challenges, Cleveland-Cliffs remains optimistic about future cost performance improvements and a return to meaningful free cash flow. The company continues to focus on optimizing its footprint and reducing inventory to enhance working capital.

Revenue

Cleveland-Cliffs reported a decrease in total revenue, amounting to $4.93 billion for 2025 Q2, down 3.1% from $5.09 billion in 2024 Q2.

Earnings/Net Income

The company maintained stable EPS at $-0.97 for 2025 Q2, mirroring the previous year's results. Cleveland-Cliffs reported a net loss of $-470 million, a stark decline from the net income of $9 million in 2024 Q2. The persistent negative EPS reflects ongoing challenges in profitability.

Post-Earnings Price Action Review

The strategy of buying Cleveland-Cliffs (CLF) shares after a quarter-over-quarter revenue increase on the earnings release date and holding for 30 days has yielded strong returns over the past three years. This approach achieved a 96.74% return, outperforming the benchmark return of 85.53% by 11.21%. With a compound annual growth rate of 14.55% and a maximum drawdown of 0.00%, the strategy has demonstrated robust performance and minimal risk, offering an attractive option for investors seeking capital appreciation with controlled volatility.

CEO Commentary

Lourenco Goncalves, Chairman, President and CEO, highlighted the positive impact of footprint optimization initiatives on costs and revenues. He expects further improvements in cost performance in Q3 and Q4, boosting adjusted EBITDA. Goncalves expressed optimism about returning to meaningful free cash flow and debt reduction, citing strong domestic steel pricing, a healthy order book, and the impending expiration of an unfavorable slab supply contract as advantageous for the company.

Guidance

Cleveland-Cliffs updated its full-year 2025 expectations, projecting capital expenditures of approximately $600 million, down from $625 million, and selling, general and administrative expenses of about $575 million, reduced from $600 million. The company maintained its forecast for steel unit cost reductions of approximately $50 per net ton compared to 2024. However, it raised its depreciation, depletion, and amortization guidance to approximately $1.2 billion, primarily due to accelerated depreciation related to idled facilities. Cash pension and OPEB payments are expected to remain at about $150 million.

Additional News

In recent weeks, Cleveland-Cliffs has been actively involved in several significant developments. The company held a ribbon-cutting ceremony for its new $150 million Stainless Bright Annealing Line at Coshocton Works in Ohio, highlighting its commitment to expanding production capabilities. Additionally, Cleveland-Cliffs celebrated the successful start-up of this new line, positioning itself to meet increasing demand for high-quality steel products. Amid these advancements, Cleveland-Cliffs has faced legal scrutiny, with multiple law firms encouraging investors to inquire about potential securities class action investigations related to the company. These investigations are centered on recent losses experienced by investors and aim to assess the company's adherence to securities regulations.