Cleveland-Cliffs Returns to Profit After Two Quarterly Losses

The Tip Desk · October 21, 2026 · 3 min read

The steel producer reported $612 million in third-quarter adjusted EBITDA, exceeding its $575 million forecast.

Cleveland-Cliffs Inc. (CLF), the North American steel producer focused on value-added sheet products, returned to profit in the third quarter after losses in each of the first two quarters. Net income was $165 million, or $0.26 a share, compared with a $134 million loss in the second quarter.

Adjusted EBITDA more than doubled from $286 million in the second quarter to $612 million in the three months ended September 30, following a first-quarter result of $95 million. Third-quarter earnings on that basis also exceeded the company's $575 million forecast. Chairman and Chief Executive Lourenco Goncalves said average selling prices, sales volumes and unit costs all improved from the second quarter.

Consolidated revenue rose to $5.6 billion from $5.2 billion in the second quarter. Steelmaking, which accounted for most of that revenue, generated sales of $5.447 billion. Its average net selling price rose to $1,177 a net ton from $1,124 in the preceding quarter.

Steel product sales volumes reached 4.15 million net tons. The steelmaking segment's gross margin widened to $454 million from $113 million in the second quarter. Hot-rolled products accounted for 46% of steel volumes, while coated products represented 31%.

The improvement extended to Stelco, which became a positive contributor to adjusted EBITDA during the quarter, according to Goncalves. He attributed the change to an improved Canadian hot-rolled market. But the company also decided to indefinitely idle Stelco's galvanizing lines, citing an oversupplied Canadian galvanized-steel market and an absence of anticipated government action to address it. The decision accompanied a shift in emphasis toward hot-rolled products.

Goncalves said the company expects to maintain Stelco's total production tonnage and increase its contribution to EBITDA. He also said affected employees would return when conditions improved, while the production strategy would preserve approximately 2,000 Canadian jobs.

The earnings recovery produced cash, although quarterly operating cash flow was broadly unchanged from the preceding quarter. Cleveland-Cliffs generated $224 million from operations, against $230 million in the second quarter. Third-quarter purchases of property, plant and equipment totaled $152 million, and net repayments under its asset-based lending facility were $61 million.

Debt remained substantial. At September 30, the company had $3.2 billion in total liquidity, including $77 million in cash and cash equivalents. Long-term debt stood at $7.645 billion, above $7.253 billion at the end of 2025 despite the latest quarterly repayments. Goncalves said the company expects stronger fourth-quarter free cash flow and property-sale proceeds to support a major debt reduction, and still expects net debt to EBITDA to fall below 2.5 times by the middle of next year.

For the fourth quarter, the company expects adjusted EBITDA of approximately $715 million, compared with the third quarter's $612 million. Cleveland-Cliffs attributed the projected increase to higher pricing, partially offset by seasonality, increased maintenance outages, input costs and incentive compensation accruals.

Beyond that, the company expects full-year 2027 adjusted EBITDA to exceed $4 billion, based on signed customer contracts and prevailing index-price forecasts. Goncalves said that outlook had improved materially since the previous earnings call. Cleveland-Cliffs said it could not reconcile either forecast to GAAP net income without unreasonable effort because of uncertainty over items affecting comparability.