Cleveland-Cliffs Inc. Reports First-Quarter 2026 Results: Key Insights for Investors

Summary of First-Quarter 2026 Results

• Steel shipments: 4.1 million net tons, up by 338,000 tons from Q4 2025
• Revenues: \$4.9 billion, a \$600 million increase from the prior quarter
• GAAP Net Loss: \$229 million, or \$0.42 per diluted share (improved from \$486 million loss in Q1 2025)
• Adjusted EBITDA: \$95 million (includes an \$80 million one-time negative energy cost impact due to extreme cold weather)
• Liquidity: \$3.1 billion as of March 31, 2026

Key Financial Highlights and Trends

Cleveland-Cliffs, a leading North American steel producer, reported robust sequential improvement in Q1 2026, with steel shipments and revenues rising notably compared to both Q4 2025 and Q1 2025. Despite short-term headwinds—especially an \$80 million one-time energy cost spike caused by extreme cold weather—the company’s financial performance showed signs of resilience:

• Improved Earnings: Adjusted net loss narrowed to \$0.40 per diluted share, compared to \$0.93 in Q1 2025 and \$0.43 in Q4 2025.
• Positive Outlook: CEO Lourenco Goncalves stated that the company expects “each quarter to improve sequentially,” and is forecasting a return to positive free cash flow as soon as Q2 2026.
• Steel Pricing: The average net selling price per ton rose to \$1,048 in Q1 2026, up from \$993 in Q4 2025 and \$980 in Q1 2025.
• Segment Performance: Q1 2026 steel product sales (4.1 million net tons) were comprised of 44% hot-rolled, 29% coated, 15% cold-rolled, 5% plate, 3% stainless and electrical, and 4% other (including slabs).
• Market Exposure: Of total steelmaking revenues (\$4.8 billion), 31% came from distributors/converters, 29% from infrastructure/manufacturing, 29% from automotive, and 11% from steel producers.
• Liquidity Position: Maintained strong liquidity of \$3.1 billion, supporting ongoing operations and capital needs.

Guidance and Strategic Developments

• 2026 Guidance Maintained: The company reaffirmed guidance for full-year 2026, including:
  • Steel shipment volumes of 16.5–17.0 million net tons
  • Capital expenditures of ~\$700 million
  • SG&A expenses of ~\$575 million
  • Depreciation, depletion, and amortization of ~\$1.1 billion
  • Cash pension and OPEB payments/contributions of ~\$125 million
• Trade Enforcement and Market Position: CEO Goncalves highlighted the success of U.S. trade enforcement, noting steel imports are at their lowest since the global financial crisis. He also urged the Canadian government to enhance trade defenses to maintain North American steel industry strength and jobs.
• Potential Strategic Partnerships: The ongoing Middle East disruption has strengthened Cliffs’ competitive position, making it an attractive partner for global steel producers. The company is continuing good-faith negotiations with POSCO under a Memorandum of Understanding (MoU), aiming for a shareholder-accretive transaction.

Risks and Forward-Looking Considerations

Cleveland-Cliffs highlighted several risks that could impact future performance, including:

• Continued volatility in steel, scrap, and iron ore prices
• Dependence on the automotive sector and potential for global economic weakness
• Risks related to trade policies, tariffs, and the effectiveness of antidumping/countervailing duties
• Regulatory risks, particularly environmental compliance and potential for new carbon-related costs
• Operational risks: supply chain disruptions, labor shortages, and cybersecurity threats
• Ability to realize synergies from acquisitions (including Stelco) and execute on strategic partnerships (e.g., POSCO)
• Possible impairments or closure costs for facilities, and challenges in resuming idled operations
• Challenges in meeting decarbonization goals and maintaining social license to operate
• Potential for higher costs related to pensions, employee turnover, and attracting key talent
• Potential material weaknesses in internal controls

Detailed Financial Data

• Total Assets: \$20.1 billion as of March 31, 2026
• Total Liabilities: \$14.1 billion
• Total Equity: \$6.0 billion
• Cash and Cash Equivalents: \$45 million (down from \$57 million at year-end 2025)
• Operating Cash Flow: Net cash used by operating activities was \$(325) million, improved from \$(351) million in Q1 2025
• Investing Cash Flow: \$(140) million, largely due to \$152 million in capital expenditures
• Financing Cash Flow: \$454 million provided, mainly from \$507 million net borrowings under the ABL facility
• Net Loss Attributable to Shareholders: \$237 million

Non-GAAP Performance Measures

• Adjusted Net Loss: \$228 million, with key adjustments including currency exchange, changes in fair value of derivatives, and asset disposal gains/losses.
• Adjusted Loss Per Share (Diluted): \$0.40, an improvement from \$0.93 in Q1 2025 and \$0.43 in Q4 2025.
• Adjusted EBITDA: \$95 million (versus \$(179) million in Q1 2025 and \$(21) million in Q4 2025).

What Investors Should Watch

• Sequential Improvement Expected: Management expects each quarter in 2026 to improve, with positive free cash flow anticipated in Q2—a potential catalyst for share price.
• Energy Cost Headwinds: The \$80 million one-off energy cost due to extreme cold weather is not expected to recur, hinting at better margin potential going forward.
• Trade Policy and Strategic Deals: Ongoing trade enforcement, low import levels, and potential strategic transactions (e.g., POSCO) could significantly impact the company’s valuation.
• Liquidity and Leverage: The strong liquidity position and ongoing debt management are critical to support operations and future growth.
• Risks: Investors should monitor macroeconomic conditions, trade policy developments, operational risks, and the outcome of negotiations with POSCO.

Conclusion

Cleveland-Cliffs’ Q1 2026 results demonstrate significant operational resilience amid challenging conditions, with improving underlying metrics and a positive outlook from management. Key catalysts for the stock in the coming quarters include sequential earnings improvement, a return to positive free cash flow, potential strategic partnerships, and further benefits from ongoing trade enforcement. However, investors must remain mindful of the numerous industry and company-specific risks that could impact future performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with a financial advisor before making investment decisions. Financial results and management outlook statements are subject to risks and uncertainties; actual results may differ materially from projections contained herein.

View CLEVELAND-CLIFFS INC. Historical chart here