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Cleveland-Cliffs (CLF) Misses Q3 Earnings and Revenue Estimates
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Cleveland-Cliffs Inc. (CLF - Free Report) logged profits (attributable to the company’s shareholders) of $165 million or 29 cents per share in third-quarter 2022, down from $1.3 billion or $2.33 per share in the prior-year quarter. Earnings per share missed the Zacks Consensus Estimate of 45 cents. The bottom line in the reported quarter was hurt by higher costs.
Revenues fell roughly 6% year over year to $5,653 million in the quarter. The top line missed the Zacks Consensus Estimate of $5,807.1 million.
ClevelandCliffs Inc. Price, Consensus and EPS Surprise
The company reported Steelmaking revenues of $5,511 million for the third quarter, down around 6% year over year. Average net selling price per net ton of steel products was $1,360 for the quarter, up around 2% year over year. External sales volumes for steel products were roughly 3.6 million net tons, down around 12% year over year.
Steelmaking unit costs rose on a sequential comparison basis in the third quarter due to the lagged impacts of higher cost inventory produced in prior periods, hurt by higher repair and maintenance expenses, reduced production volume and increased higher costs in natural gas, electricity, scrap, and alloys.
Financial Position
Cleveland-Cliffs ended the third quarter with cash and cash equivalents of $56 million, up around 33% year over year. Long-term debt declined roughly 16% year over year to $4,475 million at the end of the third quarter.
Net cash provided in operating activities was $536 million for the reported quarter. Cleveland-Cliffs also repurchased 2 million shares during the third quarter.
Outlook
The company expects its full-year 2022 average selling price to be around $1,370 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 $730 per net ton for the balance of the year. It also incorporates the company's expectation of an improvement in fixed contract prices resetting on Oct 1, 2022 and higher expected slab shipments during the fourth quarter.
The company also expects lower repair and maintenance costs, increased production volume, and lower energy and raw material costs to result in Steelmaking unit operating costs at least $80 per net ton lower in the fourth quarter.
Shipments to Cleveland-Cliffs’ automotive clients improved significantly in the third quarter and the company envisions this positive trend to continue into the fourth quarter.
Price Performance
Cleveland-Cliffs’ shares have lost 42.4% in the past year compared with a 16.4% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Cleveland-Cliffs currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Ryerson Holding Corporation (RYI - Free Report) .
Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 430.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 5.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 22% in a year.
Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 80% in a year. The company currently carries a Zacks Rank #1.
Ryerson Holding, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.
Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 33% over a year.
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Cleveland-Cliffs (CLF) Misses Q3 Earnings and Revenue Estimates
Cleveland-Cliffs Inc. (CLF - Free Report) logged profits (attributable to the company’s shareholders) of $165 million or 29 cents per share in third-quarter 2022, down from $1.3 billion or $2.33 per share in the prior-year quarter. Earnings per share missed the Zacks Consensus Estimate of 45 cents. The bottom line in the reported quarter was hurt by higher costs.
Revenues fell roughly 6% year over year to $5,653 million in the quarter. The top line missed the Zacks Consensus Estimate of $5,807.1 million.
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 $5,511 million for the third quarter, down around 6% year over year. Average net selling price per net ton of steel products was $1,360 for the quarter, up around 2% year over year. External sales volumes for steel products were roughly 3.6 million net tons, down around 12% year over year.
Steelmaking unit costs rose on a sequential comparison basis in the third quarter due to the lagged impacts of higher cost inventory produced in prior periods, hurt by higher repair and maintenance expenses, reduced production volume and increased higher costs in natural gas, electricity, scrap, and alloys.
Financial Position
Cleveland-Cliffs ended the third quarter with cash and cash equivalents of $56 million, up around 33% year over year. Long-term debt declined roughly 16% year over year to $4,475 million at the end of the third quarter.
Net cash provided in operating activities was $536 million for the reported quarter. Cleveland-Cliffs also repurchased 2 million shares during the third quarter.
Outlook
The company expects its full-year 2022 average selling price to be around $1,370 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 $730 per net ton for the balance of the year. It also incorporates the company's expectation of an improvement in fixed contract prices resetting on Oct 1, 2022 and higher expected slab shipments during the fourth quarter.
The company also expects lower repair and maintenance costs, increased production volume, and lower energy and raw material costs to result in Steelmaking unit operating costs at least $80 per net ton lower in the fourth quarter.
Shipments to Cleveland-Cliffs’ automotive clients improved significantly in the third quarter and the company envisions this positive trend to continue into the fourth quarter.
Price Performance
Cleveland-Cliffs’ shares have lost 42.4% in the past year compared with a 16.4% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Cleveland-Cliffs currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Ryerson Holding Corporation (RYI - Free Report) .
Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 430.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 5.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 22% in a year.
Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 80% in a year. The company currently carries a Zacks Rank #1.
Ryerson Holding, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.
Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 33% over a year.