Cleveland-Cliffs Swings to Positive Cash Flow as Margins Rebound
Cleveland-Cliffs (CLF) tripled Adjusted EBITDA to $286 million in the second quarter and guided for it to more than double again in the third.
Cleveland-Cliffs (CLF), the Ohio-based steelmaker and largest flat-rolled steel producer in North America, reported a sharp sequential rebound in profitability for the second quarter of 2026, with Adjusted EBITDA tripling to $286 million from $95 million in the first quarter.
The swing follows a first quarter weighed down by an $80 million one-time cold-weather energy cost hit, but the improvement was not limited to the absence of that charge. Steelmaking gross margin turned positive at $113 million, reversing a $95 million loss in the first quarter and a $228 million loss a year earlier, as cash margin expanded to $349 million from $136 million in the prior quarter. Restructuring and impairment charges that had weighed on results a year ago, including $86 million in restructuring and $39 million in impairments tied to idled facilities in the second quarter of 2025, fell to $3 million and zero, respectively, this quarter.
Revenue rose to $5.2 billion, up 6% sequentially from $4.9 billion but roughly flat against the year-earlier quarter. The GAAP net loss narrowed to $134 million, or $0.25 a share, from $229 million, or $0.42 a share, in the first quarter, while the adjusted loss per share improved to $0.20 from $0.40.
The pricing side of the business carried the quarter even as volumes softened. Average net selling price per net ton climbed to $1,124, extending a run that has moved from $993 in the fourth quarter of 2025 to $1,032, then $1,048, then $1,124 over four consecutive quarters. Steel shipment volumes, by contrast, slipped to 4.025 million net tons from 4.108 million in the first quarter and 4.29 million a year earlier, indicating the margin gains are coming from price and mix rather than higher output.
Automotive was the clearest driver of that mix shift. The segment rose to 29% of steelmaking revenue, or roughly $1.5 billion, up from 26% and $1.2 billion a year ago, continuing a climb that started at 28% in the fourth quarter of 2025.
Operating cash flow turned positive at $230 million, a reversal from cash used by operations of roughly $325 million in the first quarter and an improvement on the $45 million generated a year earlier, and the company has returned to positive free cash flow. Long-term debt nonetheless rose to $7.703 billion at June 30 from $7.253 billion at the end of 2025, even as the company has begun paying down debt and is targeting leverage below 2.5 times debt-to-EBITDA within a year. Liquidity held near $3.1 billion, little changed from the first quarter but down from $3.3 billion at year-end.
Cleveland-Cliffs guided third-quarter Adjusted EBITDA to approximately $575 million, more than double the second-quarter figure, and expects the fourth quarter to exceed that pace. Full-year guidance for steel shipments of 16.5 million to 17.0 million net tons, capital expenditures near $700 million, SG&A near $575 million, depreciation and amortization near $1.1 billion, and pension and OPEB payments near $125 million was reiterated without change.
Two disclosures that featured prominently in recent quarters were absent from the release. The company's discussion of a strategic partnership with POSCO, which as recently as the fourth-quarter release carried a target of signing in the first half of 2026, did not appear, nor did an update on the rare-earth minerals exploration initiative at its Michigan and Minnesota sites that was highlighted in the third-quarter 2025 release.