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Cleveland-Cliffs (CLF) Earnings Lag Estimates in Q2, Sales Beat

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Cleveland-Cliffs Inc. (CLF - Free Report) logged profits (attributable to the company’s shareholders) of $596 million or $1.13 per share in second-quarter 2022, down from $780 million or $1.33 per share in the prior-year quarter.

Barring one-time items, adjusted earnings came in at $1.31 per share, missing the Zacks Consensus Estimate of $1.34.
 
Revenues increased 26% to $6,337 million in the quarter. The top line beat the Zacks Consensus Estimate of $6,079.9 million. The company benefited from higher average selling prices in the quarter.

 

ClevelandCliffs Inc. Price, Consensus and EPS Surprise

 

ClevelandCliffs Inc. Price, Consensus and EPS Surprise

ClevelandCliffs Inc. price-consensus-eps-surprise-chart | ClevelandCliffs Inc. Quote

 

Operational Highlights

The company reported Steelmaking revenues of $6.2 billion for the second quarter, up around 25% year over year.  Average net selling price per net ton of steel products was $1,487 for the quarter, up around 33% year over year. External sales volumes for steel products were roughly 3.6 million net tons, down around 13% year over year.

Financial Position

Cleveland-Cliffs ended the second quarter with cash and cash equivalents of $47 million, down around 36% year over year. Long-term debt declined 13% year over year to $4,668 million at the end of the second quarter.

Net cash provided in operating activities was $865 million for second-quarter 2022.

Cleveland-Cliffs repurchased 7.5 million shares during the second quarter. It had around 517 million shares outstanding at the end of the quarter.

Outlook

The company expects its full-year 2022 average selling price to be around $1,410 per net ton. The projected figure is based on the current 2022 futures curve, which suggests an average hot-rolled coil steel index price of $850 per net ton for the balance of the year. It also incorporates the company's expectation of significant increases in fixed price contracts resetting on Oct 1, 2022.

The company also expects healthy levels of free cash flow to continue in the second half of 2022, driven by lower capital spending needs, the accelerating release of working capital and the heavy use of fixed price sales contracts.

Price Performance

Cleveland-Cliffs’ shares have lost 29.1% in the past year compared with a 29.6% decline of the industry.

 

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Zacks Rank & Other Key Picks

Cleveland-Cliffs currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , ATI Inc. (ATI - Free Report) and Albemarle Corporation (ALB - Free Report) .

Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 29% over a year.

ATI, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 1,069.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 17.8% upward in the past 60 days.

ATI’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI shares are up around 13% in a year.

Albemarle has a projected earnings growth rate of 241.8% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 18% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 14% in a year. The company flaunts a Zacks Rank #2 (Buy).


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