Cleveland-Cliffs (CLF +3.90%), a vertically integrated steel producer serving end-markets from automotive to infrastructure, reported its second-quarter 2025 results on July 21, 2025. The company posted a non-GAAP loss of $0.50 per share for Q2 2025, beating the consensus estimate of a $0.71 non-GAAP loss for Q2 2025, and generated $4.9 billion in GAAP revenue for Q2 2025, topping analyst forecasts of $4.86 billion (GAAP) for Q2 2025. Despite improvements in shipments and lower costs, Q2 2025 showed ongoing challenges: losses persisted, gross margins for steel remained negative, and non-recurring charges tied to restructuring continued. Overall, the quarter reflected early impacts from the company's cost-saving and operational changes, yet meaningful uncertainty remains for sustainable profitability.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $(0.50) | $(0.71) | $0.11 | (554.5%) |
| Revenue | $4.9 billion | $4.86 billion | $5.09 billion | (3.1%) |
| Adjusted EBITDA (Non-GAAP) | $97 million | $323 million | (70.0%) | |
| Steel Shipments (net tons) | 4.3 million | 4.0 million | 7.5% | |
| Liquidity | $2.7 billion | $3.7 billion | (27%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Core Focus
The company is vertically integrated, being fully or partially self-sufficient in key raw materials and processes for steelmaking. It mines iron ore, produces iron pellets and direct reduced iron, and turns these into steel for customers—primarily in the automotive, infrastructure, and manufacturing sectors. Its business model centers on vertical integration: owning the supply chain from raw material extraction to end-product delivery. This structure helps Cliffs manage costs and insulate itself from global raw material price swings.
The company has made the automotive market a key focus, aiming to provide advanced, high-margin steel to car makers. It also invests in electrical steels for the growing electric vehicle and energy infrastructure segments and pursues operational efficiency through acquisitions and asset optimization. Maintaining tight labor relations and delivering on environmental commitments round out its most critical success factors in a highly competitive, capital-intensive industry.
Quarter Highlights: Financial and Operational Developments
Cliffs delivered record steel shipment volumes of 4.3 million net tons in Q2 2025, up 7.8% from the same period last year. This increase partly reflects the integration of recently acquired Canadian operations. Despite boosting output, total revenue (GAAP) fell 3.1% compared to the prior-year period, as realized steel prices dropped to $1,015 per ton, down from $1,125 in Q2 2024, narrowing margins across the steelmaking segment.
GAAP revenue came in ahead of consensus, but profitability remained under pressure. Gross margin for steelmaking (GAAP) notably swung from a positive $145 million in Q2 2024 to a negative $225 million. Adjusted EBITDA fell 70% from $323 million to $97 million. The core reason is sustained price and margin pressure, especially as older contracts and lower-priced sales continue to weigh on overall results. The quarter also included non-recurring charges of $323 million related mainly to facility idlings—part of a broader footprint optimization strategy.
Cliffs made tangible progress with cost control. Steel unit costs dropped by $15 per ton versus the previous quarter, and management reaffirmed its guidance for a $50 per ton cost reduction for full-year 2025. The company realized working capital gains from reducing inventories, with inventory levels falling from earlier in the year. Operating cash flow for the quarter, however, was just $45 million, highlighting ongoing challenges for consistent cash generation.
The product mix profile included hot-rolled steel (40%), coated steel (27%), cold-rolled steel (15%), plate (5%), stainless and electrical steels (3%), and other types such as slabs and rail (10%). Sales to the automotive sector made up 26% of steelmaking revenue, while infrastructure and manufacturing, distributors, and steel producers composed the rest. Direct auto industry sales reached $1.2 billion.
There were significant one-time events. The company recognized $39 million in asset impairments and $19 million in severance charges, mostly tied to the idling of non-core plants. Restructuring actions affected roughly 2,000 employees, but management described ongoing idle costs as minimal, at less than $5 million annually going forward (as stated on the Q1 2025 earnings call).
Looking Ahead: Guidance and Considerations
Management reiterated its outlook for continued cost reductions, reaffirming its full-year 2025 steel unit cost savings target of $50 per net ton compared to 2024. Capital expenditure guidance was trimmed to about $600 million from $625 million for full-year 2025, as the company canceled or deferred non-core investment projects—most notably a previously planned transformer project. Selling, general, and administrative expense forecast was also reduced by $25 million to $575 million. Depreciation and amortization (GAAP) are expected to total about $1.2 billion for FY2025, influenced by the accelerated write-down of idled assets.
Leadership stated it expects further gains in adjusted EBITDA in the second half of 2025, and highlighted that the elimination of a legacy slab supply contract in the coming months should remove a significant earnings drag. No explicit forward-looking revenue or earnings range was provided, but management described its plans for rapid debt reduction and a return to positive free cash flow as "in sight." Investors are likely to track the ongoing effects of cost cutting, the company's progress in shifting to higher-margin markets, and any potential asset sales, which could free up several billion dollars in value dedicated to debt reduction.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
