Cleveland-Cliffs' Q3 Loss Widens Amid Soaring Costs, Debt

Ticker: CLF · Form: 10-Q · Filed: Oct 22, 2025 · CIK: 764065

Sentiment: bearish

Topics: Steel Industry, Earnings Miss, Debt Increase, Cash Flow Negative, Acquisition Impact, Manufacturing, Automotive Supply Chain

Related Tickers: X, NUE, STLD, CMC

TL;DR

**CLF is bleeding cash and piling on debt; this steel giant is looking rusty, avoid for now.**

AI Summary

CLEVELAND-CLIFFS INC. (CLF) reported a significant net loss of $251 million for the three months ended September 30, 2025, compared to a net loss of $244 million in the prior-year quarter. For the nine months ended September 30, 2025, the net loss attributable to Cliffs shareholders dramatically widened to $1,235 million, a substantial increase from the $313 million loss in the same period of 2024. Revenues for the three months ended September 30, 2025, increased to $4,734 million from $4,569 million year-over-year, but nine-month revenues decreased to $14,297 million from $14,860 million. Operating loss for the nine months ended September 30, 2025, was $1,248 million, a sharp deterioration from the $298 million loss in the prior year, primarily driven by a significant increase in cost of goods sold to $14,951 million. Long-term debt increased to $8,039 million as of September 30, 2025, from $7,065 million at December 31, 2024, reflecting increased financing activities including $1,700 million in proceeds from senior notes. The company completed the Stelco Acquisition on November 1, 2024, which is expected to impact future financial performance. Risks include increased interest expense, which rose to $442 million for the nine months ended September 30, 2025, from $235 million in the prior year, and a substantial negative shift in net cash from operating activities, which went from $577 million provided in 2024 to $449 million used in 2025.

Why It Matters

Cleveland-Cliffs' widening net loss and negative operating cash flow signal significant challenges for investors, raising concerns about profitability and liquidity. The substantial increase in long-term debt to $8,039 million and interest expense to $442 million will pressure future earnings and cash available for shareholders. For employees, the company's financial performance could impact job security and compensation, especially given the unionized workforce. Customers, particularly in the automotive industry, might face supply chain uncertainties if CLF's operational struggles persist, potentially affecting steel prices and availability in a competitive market dominated by other major steel producers.

Risk Assessment

Risk Level: high — The company reported a net loss of $1,235 million for the nine months ended September 30, 2025, a significant increase from the $313 million loss in the prior year. Net cash used by operating activities was $449 million for the nine months ended September 30, 2025, a sharp reversal from $577 million provided in the same period of 2024, indicating severe cash flow issues. Long-term debt increased by nearly $1 billion to $8,039 million, and interest expense more than doubled to $442 million, signaling a deteriorating financial structure.

Analyst Insight

Investors should consider selling or avoiding CLF shares given the substantial increase in net loss, negative operating cash flow, and rising debt. The deteriorating financial performance suggests significant headwinds that could continue to erode shareholder value. Monitor future filings for any signs of improved operational efficiency or debt reduction strategies.

Financial Highlights

debt To Equity
2.67
revenue
$14,297M
operating Margin
-8.7%
total Assets
$20,290M
total Debt
$8,039M
net Income
-$1,235M
eps
N/A
gross Margin
N/A
cash Position
$66M
revenue Growth
-3.8%

Revenue Breakdown

SegmentRevenueGrowth
Steelmaking$14,297M-3.8%

Key Numbers

Key Players & Entities

FAQ

What were Cleveland-Cliffs' revenues for the three months ended September 30, 2025?

Cleveland-Cliffs reported revenues of $4,734 million for the three months ended September 30, 2025, an increase from $4,569 million in the same period of 2024.

How did Cleveland-Cliffs' net loss change for the nine months ended September 30, 2025?

For the nine months ended September 30, 2025, Cleveland-Cliffs' net loss attributable to shareholders significantly widened to $1,235 million, compared to a net loss of $313 million for the same period in 2024.

What was the impact of the Stelco Acquisition on Cleveland-Cliffs?

The Stelco Acquisition was completed on November 1, 2024, and involved Stelco shareholders receiving CAD $60.00 in cash and 0.454 shares of Cliffs common stock per share. The full financial impact of this acquisition will be reflected in future reporting periods.

What is Cleveland-Cliffs' current long-term debt position?

As of September 30, 2025, Cleveland-Cliffs' long-term debt stood at $8,039 million, an increase from $7,065 million at December 31, 2024.

How has Cleveland-Cliffs' cash flow from operations changed?

For the nine months ended September 30, 2025, Cleveland-Cliffs used $449 million in cash from operating activities, a significant reversal from the $577 million provided by operating activities in the same period of 2024.

What are the primary risks highlighted in Cleveland-Cliffs' 10-Q filing?

Key risks include a substantial increase in interest expense to $442 million for the nine months ended September 30, 2025, and a significant negative shift in operating cash flow, indicating potential liquidity challenges.

What is the significance of the One Big Beautiful Bill Act for Cleveland-Cliffs?

The One Big Beautiful Bill Act, enacted on July 4, 2025, includes tax provisions effective in 2025 and future years. Cleveland-Cliffs does not expect it to materially impact their consolidated financial statements for the interim period ended September 30, 2025, or their effective income tax rate for 2025.

How many common shares of Cleveland-Cliffs were outstanding as of October 22, 2025?

As of October 22, 2025, the number of common shares outstanding for Cleveland-Cliffs Inc. was 494,707,468.

What are Cleveland-Cliffs' main business segments?

Cleveland-Cliffs is organized into four operating segments: Steelmaking, Tubular, Tooling and Stamping, and European Operations, with Steelmaking being the primary reportable segment.

Did Cleveland-Cliffs identify any material accounting errors in this filing?

Cleveland-Cliffs identified an immaterial error related to the accrual for certain employment costs, which resulted in an understatement of Cost of goods sold in prior periods. Adjustments were made, but management determined the impact was not material to historical financial statements.

Risk Factors

Industry Context

Cleveland-Cliffs operates in the highly competitive North American steel industry, which is subject to global economic conditions, raw material price volatility, and trade policies. The industry is characterized by significant capital intensity and cyclical demand, particularly from the automotive and construction sectors. Recent trends include consolidation and a focus on higher-value, specialized steel products.

Regulatory Implications

As a major steel producer, Cleveland-Cliffs is subject to environmental regulations concerning emissions and waste disposal, as well as labor laws and trade policies that can impact import/export dynamics and domestic pricing. Compliance with these regulations requires ongoing investment and operational adjustments.

What Investors Should Do

  1. Monitor debt levels and interest coverage ratios closely.
  2. Analyze the impact of the Stelco acquisition on operational efficiency and profitability.
  3. Assess the sustainability of current operating costs relative to revenue.
  4. Evaluate the company's ability to generate positive operating cash flow.

Key Dates

Glossary

Cost of goods sold
The direct costs attributable to the production of the goods sold by a company. (A significant increase in COGS for CLF contributed directly to the widening operating loss.)
Long-term debt
Money borrowed by a company that is due more than one year from the date of the balance sheet. (CLF's long-term debt has increased substantially, raising concerns about financial leverage and interest expense.)
Net cash used by operating activities
The net amount of cash generated or consumed by a company's normal business operations over a period. (A negative figure indicates the company is spending more cash on operations than it is generating, a concerning trend for CLF.)
Retained earnings (deficit)
The cumulative amount of net income that a company has retained over time, rather than distributing as dividends. (A deficit in retained earnings indicates that the company has accumulated more losses than profits over its history.)
Stelco Acquisition
The acquisition of Stelco, a Canadian steel producer, by Cleveland-Cliffs. (This acquisition, completed in November 2024, is a major event impacting the company's scale, operations, and financial structure.)

Year-Over-Year Comparison

Compared to the prior year, Cleveland-Cliffs has experienced a significant deterioration in financial performance. While Q3 revenues saw a modest increase to $4,734 million, nine-month revenues declined to $14,297 million. More critically, the net loss attributable to shareholders widened substantially to $1,235 million for the nine months ended September 30, 2025, from $313 million in the prior year. This is coupled with a sharp increase in operating costs and a reversal in operating cash flow from a positive $577 million to a negative $449 million, alongside a substantial rise in long-term debt and interest expenses.

Filing Stats: 4,937 words · 20 min read · ~16 pages · Grade level 15.9 · Accepted 2025-10-22 16:24:15

Key Financial Figures

Filing Documents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 43

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 43

CONTROLS AND PROCEDURES 44

ITEM 4. CONTROLS AND PROCEDURES 44

- OTHER INFORMATION

PART II - OTHER INFORMATION

LEGAL PROCEEDINGS 45

ITEM 1. LEGAL PROCEEDINGS 45

RISK FACTORS 45

ITEM 1A. RISK FACTORS 45

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 45

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 45

MINE SAFETY DISCLOSURES 46

ITEM 4. MINE SAFETY DISCLOSURES 46

OTHER INFORMATION 46

ITEM 5. OTHER INFORMATION 46

EXHIBITS 46

ITEM 6. EXHIBITS 46 SIGNATURES 47 Table of Contents DEFINITIONS The following abbreviations or acronyms are used in the text. References in this report to the "Company," "we," "us," "our," "Cleveland-Cliffs" and "Cliffs" are to Cleveland-Cliffs Inc. and subsidiaries, collectively. References to "$" is to United States currency, unless otherwise stated. Abbreviation or acronym Term ABL Facility Asset-Based Revolving Credit Agreement, dated as of March 13, 2020, which matures the earlier of June 9, 2028, or 91 days prior to the maturity of certain other material debt, among Cleveland-Cliffs Inc., the lenders party thereto from time to time and Bank of America, N.A., as administrative agent, as amended as of March 27, 2020, December 9, 2020, December 17, 2021, June 9, 2023, July 31, 2024, and September 13, 2024, and as may be further amended from time to time Adjusted EBITDA EBITDA, excluding certain items such as EBITDA from noncontrolling interests, idled facilities charges, acquisition-related costs, changes in fair value of derivatives, net, currency exchange, loss on extinguishment of debt, arbitration decision, severance, and other, net. AOCI Accumulated other comprehensive income (loss) Arrangement Agreement Arrangement Agreement, by and between Stelco Holdings Inc., 13421422 Canada Inc. and Cleveland-Cliffs Inc., dated July 14, 2024, in respect of the Stelco Acquisition ASU Accounting Standards Update BOF Basic oxygen furnace CERCLA Comprehensive Environmental Response, Compensation and Liability Act of 1980 CODM Chief Operating Decision Maker CO 2 e Carbon dioxide equivalent Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act EAF Electric arc furnace EBITDA Earnings before interest, taxes, depreciation and amortization EPA U.S. Environmental Protection Agency EPS Earnings per share Exchange Act Securities Exchange Act of 1934, as amended FASB Financial Accounting Standards Board GAAP Accounting principles general

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CLEVELAND-CLIFFS INC. AND SUBSIDIARIES (In millions, except share information) September 30, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 66 $ 54 Accounts receivable, net 1,797 1,576 Inventories 4,683 5,094 Other current assets 143 183 Total current assets 6,689 6,907 Non-current assets: Property, plant and equipment, net 9,508 9,942 Goodwill 1,796 1,768 Intangible assets 1,142 1,170 Pension and OPEB assets 469 427 Other non-current assets 686 733 TOTAL ASSETS $ 20,290 $ 20,947 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 1,914 $ 2,008 Accrued employment costs 565 486 Accrued expenses 339 375 Other current liabilities 462 492 Total current liabilities 3,280 3,361 Non-current liabilities: Long-term debt 8,039 7,065 Pension and OPEB liabilities 645 751 Deferred income taxes 506 849 Asset retirement and environmental obligations 614 601 Other non-current liabilities 1,499 1,453 TOTAL LIABILITIES 14,583 14,080 Commitments and contingencies (See Note 18) Equity: Common shares - par value $ 0.125 per share Authorized - 1,200,000,000 shares (2024 - 1,200,000,000 shares); Issued - 531,051,530 shares (2024 - 531,051,530 shares); Outstanding - 494,699,774 shares (2024 - 493,948,905 shares) 66 66 Capital in excess of par value of shares 4,783 4,758 Retained earnings (deficit) ( 286 ) 949 Cost of 36,351,756 common shares in treasury (2024 - 37,102,625 shares) ( 660 ) ( 676 ) Accumulated other comprehensive income 1,563 1,537 Total Cliffs shareholders' equity 5,466 6,634 Noncontrolling interests 241 233 TOTAL EQUITY 5,707 6,867 TOTAL LIABILITIES AND EQUITY $ 20,290 $ 20,947 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents C

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CLEVELAND-CLIFFS INC. AND SUBSIDIARIES NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES BUSINESS, CONSOLIDATION AND PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC rules and regulations and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive income (loss), cash flows and changes in equity for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025 or any other future period. Certain prior period amounts have been reclassified to conform with the current year presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2024. NATURE OF BUSINESS We are a leading North America-based steel producer with focus on value-added sheet products, particularly for the automotive industry. We are vertically integrated from the mining of iron ore, production of pellets and direct reduced iron, and processing of ferrous scrap through primary steelmaking and downstream finishing, stamping, tooling and tubing. Headquartered in Cleveland, Ohio, we employ approximately

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