Cleveland-Cliffs Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Adjusted EBITDA: $95 million, a significant increase of $274 million year-over-year, primarily due to improved pricing.

Shipments: Over 4.1 million tons, a sequential recovery of more than 300,000 tons, driven by better demand conditions.

Average Selling Prices: Increased by $68 per ton year-over-year and $55 per ton sequentially.

Free Cash Flow: Negative in Q1 due to working capital timing, but expected to turn positive in Q2.

Liquidity: Maintained above $3 billion.

2Strategic Updates and Business Highlights

Market Position: Strong order book with automotive OEMs increasing steel bookings, leading to improved production schedules and operational efficiency.

Trade Enforcement: Positive impact from U.S. trade policies, resulting in reduced steel imports and enhanced domestic market conditions.

Operational Changes: Idling of less efficient mills to consolidate production capabilities, improving overall cost performance without reducing output.

AI Initiative: Partnership with an AI provider to enhance production planning and decision-making processes.

Recognition: Received the Toyota Quality Excellence Award, highlighting high-quality standards.

3Forward Guidance and Outlook

Q2 Expectations: Anticipated improvements in shipments and pricing, with expected average selling prices up by about $60 per ton from Q1.

Cost Outlook: Q2 costs expected to increase by $15 per ton due to scheduled outages and higher input costs, but significant reductions anticipated in Q3.

Long-term Projects: Continued progress on Department of Energy-funded projects, with a focus on modernization and energy efficiency.

4Bad News, Challenges, or Points of Concern

Energy Costs: Q1 results negatively impacted by an $80 million spike in energy costs due to extreme weather conditions, which is expected to normalize but has created short-term challenges.

Canadian Market: Oversupply issues in Canada affecting pricing, with Canadian selling prices at a significant discount to U.S. prices.

Labor Agreement Negotiations: Upcoming renegotiations with the United Steelworkers could impact operational flexibility and cost structure.

5Notable Q&A Insights

Pricing Expectations: Q2 pricing is expected to improve due to a lag in realization, with a stronger market anticipated in Q3.

Working Capital: A slight release of working capital is expected in Q2 as inventory is reduced.

POSCO Negotiations: Ongoing discussions with POSCO remain active, but external market conditions have complicated the timeline.

Unit Cash Costs: Increased exposure to diesel and other input costs, but confidence in a reduction in costs moving into Q3 due to improved operational efficiencies and lower outages. This summary encapsulates the key takeaways from Cleveland-Cliffs' Q1 2026 earnings call, highlighting both the positive developments and the challenges faced by the company.