What happened

On Tuesday morning, Cleveland-Cliffs (CLF 0.19%) reported third-quarter results that came in well below expectations due to higher input costs and maintenance expenses. In response to the report, disappointed investors sent shares of the giant steelmaker down by more than 12% in early trading. As of 10:37 a.m. ET, shares were still down by 10.8%.

So what

This is an uncertain time for industrial companies. Prices for raw materials and commodities have spiked, and there are serious questions about future demand and the macroeconomic outlook. In the recently ended quarter, Cleveland-Cliffs earned $0.29 per share in the quarter on revenue of $5.65 billion, well short of the $0.55 per share in earnings on revenue of $5.81 billion that analysts had been expecting.

In the press release accompanying the results, CEO Lourenco Goncalves said that the quarter's results were affected "by the delayed inventory impact of higher input costs and maintenance activities from prior periods." He also said that the company has completed its major maintenance projects and production levels have returned to normal, noting "we expect costs to decline meaningfully, into Q4 and further into 2023."

Now what

Demand for steel held up pretty well in Q3. Shipments to automotive customers hit what Goncalves called "a level among the highest in six quarters," which offset weakness in other areas. The company expects the positive automotive sector trend to continue into the fourth quarter.

Also in the quarter, Cleveland-Cliffs sealed a new four-year deal with its unionized workers. That labor agreement should give it more clarity about where its costs are going from here, and will allow the company to rework its retirement liabilities.

The steelmaker is controlling what it can, but its success in the next few quarters will largely come down to macroeconomic factors in demand and input costs that are out of its control. Given the uncertainty, it's understandable that some investors are moving to the sidelines on Cleveland-Cliffs following its earnings report.