CLEVELAND - Shares of Cleveland-Cliffs Inc. (NYSE:CLF) rose 2.5% as the company reported a second-quarter earnings beat and demonstrated effective cost management despite challenging market conditions.
The leading North America-based steel producer posted adjusted earnings per share (EPS) of $0.11, surpassing the analyst consensus estimate that predicted a loss of $0.01 per share. However, revenue for the quarter fell slightly short of expectations, coming in at $5.1 billion against the anticipated $5.21 billion.
The company's performance in the second quarter, ending June 30, 2024, was marked by resilience in the face of less-than-ideal steel demand and pricing pressures. Cleveland-Cliffs' ability to meet its cost reduction targets and planned tonnage shipments allowed it to generate substantial free cash flow of $362 million. This financial discipline enabled the firm to reduce its net debt by $237 million to $3.4 billion and repurchase 7.5 million shares, returning approximately $125 million to shareholders.
Chairman, President, and CEO Lourenco Goncalves highlighted the company's agility, stating, "Our substantial free cash flow generation in the second quarter clearly demonstrates Cliffs' ability to perform through the cycle, even in times of adverse business conditions." Goncalves also emphasized the strategic moves made during the quarter, including the acquisition of Stelco (TSX:STLC) and the repurposing of the Weirton tinplate plant to produce transformers, which is expected to re-employ 600 workers.
Looking ahead, Cleveland-Cliffs has revised its full-year 2024 capital expenditure forecast downwards to a range of $650 to $700 million, from the previous range of $675 to $725 million. Additionally, the company reaffirmed its commitment to achieving year-over-year steel unit cost reductions of approximately $30 per net ton.
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