The steelmaker's third-quarter revenue of $5.6 billion fell short of Financial Modeling Prep's consensus, but adjusted earnings of 28 cents a share beat it and adjusted EBITDA topped the company's own guidance. The chief executive said 2027 adjusted EBITDA should exceed $4 billion based on signed contracts and index forecasts.
Cleveland-Cliffs' third quarter was its best in three years. The number investors priced was the one for 2027.
The steelmaker reported revenue of $5.6 billion for the quarter ended Sept. 30, up from $5.2 billion in the second quarter but below the roughly $5.7 billion consensus compiled by Financial Modeling Prep. Consolidated net income was $165 million, or 26 cents a share, compared with a loss of $134 million in the second quarter. Adjusted earnings were 28 cents a share, above FMP's consensus of about 21 cents. Adjusted EBITDA was $612 million, more than double the $286 million of the prior quarter and above the company's own guidance of $575 million.
Shipments were 4.2 million net tons, and the company ended the quarter with $3.2 billion of liquidity. Average selling prices rose to about $1,177 a ton from about $1,032 a year earlier. The company guided fourth-quarter adjusted EBITDA to about $715 million.
"Third quarter was our strongest quarter in three years," Chief Executive Lourenco Goncalves said.
The 2027 number
Looking to 2027, Goncalves put adjusted EBITDA above $4 billion, a figure he said rests on contracts already signed and on current index price forecasts. "Our 2027 outlook has improved materially since our last earnings call," he said. He also said imports "remain well below historical levels." The company is targeting net debt below 2.5 times EBITDA by mid-2027.
Executives told analysts on the call that almost every contract customer is asking for additional tonnage in 2027, and estimated that renewed contracts alone add more than $1 billion of EBITDA versus this year, before index prices move.
Set against the quarter, the outlook implies a step up. Annualizing the fourth-quarter guide gives about $2.9 billion, by this publication's arithmetic, a crude run rate because the fourth quarter carries seasonal maintenance, so the 2027 target asks for more than $1 billion of additional EBITDA, roughly the amount management attributes to contract renewals.
The reaction
The outlook was in the 6 a.m. release, and shares rose sharply in premarket trading, swung after the open and were up about 15% at about $13.95 by early afternoon. Peers rose less: Nucor about 1.4% and Steel Dynamics about 1%.
What it depends on
The $4 billion target rests on two supports. Contracts lock in volumes and pricing for many automotive and industrial customers. Index prices, which set the rest, depend heavily on trade policy, because tariffs have kept imports low.
Canada is a mixed picture. The company called the third quarter Stelco's strongest since it acquired the business, but it is idling galvanizing lines there indefinitely because of oversupply in galvanized steel.
Market implications
One reading is that signed contracts de-risk 2027. Customers are asking for more volume, renewals account for most of the step up from the fourth-quarter run rate, and a company that beat its own EBITDA guidance has credibility on its outlook.
A second reading is that the outlook is a bet on policy. Without tariffs holding imports down, index prices would be weaker, and the forecast relies on index assumptions the company does not control.
What to watch
Steel Dynamics' results after Monday's close; hot-rolled coil prices; any change in U.S. tariff policy on steel; fourth-quarter EBITDA against the $715 million guide; and debt reduction. A decline in index prices while contracts hold would test how much of the $4 billion is locked in.