8-K: Cleveland-Cliffs Reports Improved Q2 2025 Results Driven by Record Shipments and Cost Cuts

Cleveland-Cliffs Inc. reported a second-quarter 2025 GAAP net loss of $470 million, an improvement from the prior quarter, driven by record steel shipments and cost reductions, while also highlighting the positive impact of footprint optimization initiatives and strong domestic steel pricing.

Summary

• Record steel shipments of 4.3 million net tons were achieved in the second quarter of 2025.
• Revenues for the second quarter of 2025 were $4.9 billion, an increase from $4.6 billion in the first quarter of 2025.
• A GAAP net loss of $470 million was recorded for Q2 2025, which includes $323 million of previously disclosed non-recurring charges related to idled facilities.
• The adjusted net loss for Q2 2025 was $247 million, or $0.50 per diluted share.
• Adjusted EBITDA for Q2 2025 was $97 million, representing a $271 million improvement compared to the Adjusted EBITDA loss of $174 million in the first quarter of 2025.
• Steel unit costs were reduced by $15 per net ton compared to the first quarter of 2025.
• Total liquidity stood at $2.7 billion as of June 30, 2025.
• The company updated its full-year 2025 outlook, reducing capital expenditures to approximately $600 million from a previous expectation of $625 million.
• Selling, general and administrative expenses for full-year 2025 are now expected to be approximately $575 million, down from $600 million.
• Steel unit cost reductions for full-year 2025 are maintained at approximately $50 per net ton compared to 2024.
• Depreciation, depletion and amortization for full-year 2025 are now expected to be approximately $1.2 billion, up from $1.1 billion, primarily due to accelerated depreciation from idled facilities.
• Cash Pension and OPEB payments and contributions for full-year 2025 are maintained at approximately $150 million.

Sentiment

Score: 7

Explanation: Despite reporting a net loss, the company showed significant quarter-over-quarter improvement in Adjusted EBITDA, achieved record shipments, and implemented cost reductions. Management's commentary is optimistic about future profitability, debt reduction, and the positive impact of trade policies, indicating a strong positive trajectory despite current losses.

Positives

• Record steel shipments of 4.3 million net tons were achieved in Q2 2025.
• Revenues increased to $4.9 billion in Q2 2025 from $4.6 billion in Q1 2025.
• Adjusted EBITDA improved significantly to $97 million in Q2 2025 from a $174 million loss in Q1 2025, marking a $271 million quarter-over-quarter improvement.
• Steel unit cost reductions of $15 per net ton were realized compared to Q1 2025, with further amplification expected into Q3 and Q4.
• A meaningful release in working capital occurred during the quarter due to inventory reduction.
• Domestic steel pricing remains strong, and the order book is healthy.
• The five-year contract to supply slabs from Indiana 1Harbor to a competitor, which became a negative EBITDA contributor, will end in less than five months and will not be extended.
• Full-year 2025 capital expenditures guidance was reduced to $600 million from $625 million.
• Full-year 2025 selling, general and administrative expenses guidance was reduced to $575 million from $600 million.
• The company notes strong support from the Trump Administration for both the domestic steel and automotive sectors, with positive impacts from tariffs protecting domestic jobs and national security.
• Cleveland-Cliffs is uniquely positioned to benefit from the trend of foreign competitors needing to acquire steel capacity within the United States.

Negatives

• Reported a GAAP net loss of $470 million in Q2 2025.
• Reported an adjusted net loss of $247 million in Q2 2025.
• Q2 2025 results included $323 million of previously disclosed non-recurring charges related to idled facilities.
• The slab supply contract to a competitor became a negative contributor to EBITDA due to abnormally low index-based prices.
• Full-year 2025 depreciation, depletion and amortization guidance increased to $1.2 billion from $1.1 billion, primarily due to accelerated depreciation from idled facilities.
• Operating loss was $498 million in Q2 2025, compared to an operating income of $6 million in Q2 2024.
• Gross margin was negative $225 million in Q2 2025, compared to positive $145 million in Q2 2024.
• Net loss attributable to Cliffs shareholders was $483 million in Q2 2025, compared to net income of $2 million in Q2 2024.

Risks

• Continued volatility of steel, scrap metal, and iron ore market prices, which directly and indirectly impact product prices.
• Uncertainties associated with the highly competitive and cyclical steel industry and reliance on demand for steel from the automotive industry.
• Potential weaknesses and uncertainties in global economic conditions, excess global steelmaking capacity and production, prevalence of steel imports, reduced market demand, and oversupply of iron ore.
• Severe financial hardship, bankruptcy, temporary or permanent shutdowns, or operational challenges of major customers, key suppliers, or contractors.
• Risks related to U.S. government actions and other countries' reactions with respect to Section 232 of the Trade Expansion Act, the United States-Mexico-Canada Agreement, and/or other trade agreements, tariffs, treaties, or policies.
• Uncertainty of obtaining and maintaining effective antidumping and countervailing duty orders to counteract the harmful effects of unfairly traded imports.
• Impacts of existing and changing governmental regulation, including actual and potential environmental regulations relating to climate change and carbon emissions, and related costs and liabilities.
• Potential impacts to the environment or exposure to hazardous substances resulting from operations.
• Ability to maintain adequate liquidity, level of indebtedness, and the availability of capital could limit financial flexibility and cash flow.
• Ability to reduce indebtedness or return capital to shareholders within currently expected timeframes or at all.
• Adverse changes in credit ratings, interest rates, foreign currency rates, and tax laws.
• Challenges to successfully implementing business strategy to achieve operating results in line with guidance.
• Outcome of, and costs incurred in connection with, lawsuits, claims, arbitrations, or governmental proceedings.
• Supply chain disruptions or changes in the cost, quality, or availability of energy sources, critical raw materials, and supplies.
• Problems or disruptions associated with transporting products to customers, moving manufacturing inputs or products internally, or suppliers transporting raw materials.
• Risk that the cost or time to implement a strategic or sustaining capital project may prove to be greater than originally anticipated.
• Ability to consummate any public or private acquisition or divestiture transactions and to realize any or all of the anticipated benefits or estimated future synergies, as well as to successfully integrate any acquired businesses.
• Uncertainties associated with natural or human-caused disasters, adverse weather conditions, unanticipated geological conditions, critical equipment failures, infectious disease outbreaks, tailings dam failures, and other unexpected events.
• Cybersecurity incidents relating to, disruptions in, or failures of, information technology systems.
• Liabilities and costs arising in connection with any business decisions to temporarily or indefinitely idle or permanently close an operating facility or mine.
• Ability to realize the anticipated synergies or other expected benefits of the acquisition of Stelco, as well as the impact of additional liabilities and obligations incurred.
• Level of self-insurance and ability to obtain sufficient third-party insurance to adequately cover potential adverse events and business risks.
• Uncertainties associated with ability to meet customers' and suppliers' decarbonization goals and reduce greenhouse gas emissions in alignment with own announced targets.
• Challenges to maintaining social license to operate with stakeholders, including the impacts of operations on local communities and reputational impacts.
• Actual economic mineral reserves or reductions in current mineral reserve estimates, and any title defect or loss of any lease, license, option, easement, or other possessory interest for any mining property.
• Ability to maintain satisfactory labor relations with unions and employees.
• Unanticipated or higher costs associated with pension and other post-employment benefit obligations.
• Uncertain availability or cost of skilled workers to fill critical operational positions and potential labor shortages, as well as ability to attract, hire, develop, and retain key personnel.
• Potential significant deficiencies or material weaknesses in internal control over financial reporting.

Future Outlook

The company updated its full-year 2025 guidance, reducing capital expenditures to approximately $600 million and selling, general and administrative expenses to approximately $575 million. Steel unit cost reductions are maintained at approximately $50 per net ton compared to 2024. Depreciation, depletion, and amortization are now expected to be approximately $1.2 billion, primarily due to accelerated depreciation from idled facilities. The company anticipates a return to generating meaningful free cash flow and rapidly reducing debt, supported by strong domestic steel pricing, visible cost reductions, and a healthy order book. The expiration of a negative-contributing slab supply contract in less than five months is also expected to improve future EBITDA.

Management Comments

• Our second quarter results demonstrate that the footprint optimization initiatives announced a few months ago are already generating a positive impact on both costs and revenues.
• Our good cost performance in Q2 will be even further amplified into Q3 and Q4, with further expected improvements in adjusted EBITDA as a result.
• In Q2 we also further reduced inventories, which drove a meaningful release in working capital during the quarter.
• Our return to generating meaningful free cash flow and rapidly reducing debt is in sight.
• Domestic steel pricing remains strong, we have visibility into our cost reductions, and our order book remains healthy.
• Very importantly, the end of the five-year contract to supply slabs from Indiana 1Harbor to one of our competitors comes in less than five months. Due to the abnormally low index-based prices for slabs we have been exposed to in the last few months, this contract became a negative contributor to EBITDA and will not be extended.
• Cliffs is a major supplier of steel to the automotive manufacturers, and the Trump Administration continues to show strong support to both the domestic steel and the domestic automotive sectors.
• We have started to see the positive impact that tariffs have on domestic manufacturing, protecting domestic jobs and national security. We expect this trend to continue, promoting the resurgence of the American automotive industry supported by a thriving domestic steel industry.
• Going forward, foreign competitors need to acquire steel capacity within the United States if they want to participate in this desirable market.
• As a publicly traded America-based company centered on automotive, electrical steels, stainless and plate, Cleveland-Cliffs assets, business and footprint are uniquely positioned to benefit from this new reality.

Industry Context

The announcement highlights the positive impact of U.S. government policies, specifically tariffs, on domestic manufacturing, steel, and automotive sectors. Management believes this trend will continue, promoting the resurgence of the American automotive industry supported by a thriving domestic steel industry. The company also notes that foreign competitors may need to acquire U.S. steel capacity to participate in the domestic market, positioning Cleveland-Cliffs favorably given its focus on automotive, electrical steels, stainless, and plate products.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess the company's performance against global benchmarks. It focuses on internal improvements and the impact of U.S. domestic policies.

Stakeholder Impact

• Shareholders: Potential for improved profitability, free cash flow generation, and debt reduction, which could lead to increased shareholder value.
• Employees: Positive impact from tariffs protecting domestic jobs. Footprint optimization initiatives involved non-recurring charges, which could imply some impact on employees at idled facilities, though not explicitly detailed as negative.
• Customers (Automotive): Continued supply of steel, with the company being a major supplier.
• Competitors: The end of a slab supply contract with a competitor will impact that competitor. Foreign competitors may need to acquire U.S. capacity.

Next Steps

• Further amplification of cost performance into Q3 and Q4 2025.
• Expected improvements in adjusted EBITDA in Q3 and Q4 2025.
• Return to generating meaningful free cash flow and rapidly reducing debt.
• End of the five-year contract to supply slabs from Indiana 1Harbor to a competitor in less than five months.
• Continued positive impact from tariffs on domestic manufacturing and the American automotive industry.

Key Dates

Recommendation

Keywords

Cleveland-Cliffs, CLF, Steel, Automotive Industry, Financial Results, Q2 2025, Earnings, SEC Filing, 8-K, Manufacturing, Tariffs, Footprint Optimization, EBITDA, Net Loss, Shipments, Liquidity, Capital Expenditures, Risk Factors