Steel Maker Cleveland-Cliffs Beats Wall Street Earnings Estimates. The Stock Falls.

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Steel maker

Cleveland-Cliffs

had a tough finish to the year as prices for its products fell. Still, quarterly results came in better than expected, but investors Tuesday weren’t giving the company much credit for the quarterly beat.

Cleveland-Cliffs (ticker: CLF) reported a fourth- quarter adjusted loss of 30 cents a share and $123 million in adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, from $5 billion in sales.

Wall Street was looking for a loss of 34 cents a share and about $110 million in Ebitda from $5.2 billion in sales. A year ago, Cliffs earned $1.69 a share and $1.5 billion in Ebitda from $5.3 billion in sales.

The numbers looked OK, but they were down a lot year over year. Cleveland-Cliffs stock was off 3.7% in premarket trading Tuesday.

S&P 500
and

Dow Jones Industrial Average
futures rose 0.3% and 0.1%, respectively.

Coming into Tuesday trading, Cliffs shares have risen 25% this year and have gained about 9% over the past 12 months.

Pricing is the big reason earnings were lower. Hot-rolled coil, a benchmark steel product, averaged roughly $650 a ton in the fourth quarter of 2023, down almost $1,000 a ton year over year.

Those are spot prices. A lot of Cliffs business is done referencing annual pricing contracts. Cliffs also makes many more steel products than hot-rolled coil. Cliffs shipped 3.8 million tons of steel in the fourth quarter at an average selling price of $1,156 a ton. A year ago, those numbers were 3.4 million tons at a price of $1,423 per ton.

“Entering 2023, as our fixed price contracts reset higher, our unit costs continue to decline, and sales volumes improve, we believe our quarterly adjusted Ebitda should progressively improve, confirming our belief that the fourth quarter of 2022 was the inflection point for our profitability,” said CEO Lourenco Goncalves in a news release.

Cliffs expects to ship about 16 million tons of steel in 2023, up from 14.8 million shipped in 2022.

Management hosts a conference call at 10 a.m. Eastern time to discuss results. Investors and analysts will want to hear more about the outlook for 2023 and the likely direction of steel pricing.

Write to Al Root at [email protected]