Cleveland-Cliffs Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Cleveland-Cliffs Inc. is a leading North American steel producer, vertically integrated from iron ore mining to finished steel products, with a primary focus on the automotive industry. The company operates through one reportable segment, Steelmaking, and other businesses including Tubular, Tooling, Stamping, and European Operations.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenues | $4,922 million | $4,629 million |
| Net Loss (Attributable to Cliffs) | $(237) million | $(498) million |
| Adjusted EBITDA | $95 million | $(179) million |
| Operating Loss | $(213) million | $(543) million |
| Cash Used in Operating Activities | $(325) million | $(351) million |
| Cash and Cash Equivalents | $45 million | $57 million |
| Total Debt (Long-term) | $7,763 million | $7,253 million |
| Liquidity (Cash + ABL Availability) | $3.1 billion | N/A |
Note: Average selling price for steel products increased to $1,048 per net ton in Q1 2026, up from $980 in Q1 2025.
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased by $293 million (6%) year-over-year, driven primarily by a 24% increase in domestic Hot-Rolled Coil (HRC) pricing and a favorable sales mix shift following the conclusion of the ArcelorMittal USA slab contract.
- Profitability Improvement: The Net Loss narrowed significantly from $498 million to $237 million. Adjusted EBITDA swung from a loss of $179 million to a profit of $95 million, largely due to higher gross margins and reduced idled facility charges.
- Working Capital: Cash used in operating activities improved slightly, though a $218 million increase in accounts receivable (due to higher steel prices and collection timing) offset the reduction in net loss.
- Debt Levels: Long-term debt increased by $510 million, primarily due to increased borrowings under the Asset-Based Lending (ABL) Facility to support general corporate requirements.
Guidance, Outlook, and Risks
- Market Outlook: Management expects domestic steel demand to grow, supported by Section 232 tariffs, subdued imports, and improving end-user demand. The company anticipitates benefiting from the U.S. administration's pro-manufacturing agenda and tariffs on steel and automotive imports.
- Strategic Initiatives:
- POSCO Partnership: A Memorandum of Understanding was signed with POSCO to explore a strategic partnership leveraging Cliffs' U.S. footprint.
- Asset Optimization: Plans to idle the Gary plate finishing line and one plate mill at Burns Harbor in Q2 2026 to improve utilization.
- AI Integration: Partnership with an enterprise software company to utilize AI for operational efficiency and real-time decision-making.
- Risks and Contingencies:
- Geopolitical: Ongoing war with Iran and global tensions may increase freight rates and energy costs, though these factors are expected to make imports less attractive.
- Environmental: Significant asset retirement and environmental obligations ($605 million and $117 million, respectively) remain on the balance sheet.
- Legal: An MSHA imminent danger order was issued in April 2026 regarding fall protection at a Tilden mine; no injury occurred.
Investor Verification Checklist
- Debt Maturity Profile: Verify the impact of the $959 million ABL Facility maturity in 2028 and the $1.268 billion senior note maturity in 2029 on future refinancing needs.
- POSCO Transaction Status: Monitor progress on definitive agreements with POSCO, as the deal remains subject to negotiation and is not guaranteed.
- Working Capital Trends: Track the build-up in accounts receivable ($1.88 billion) to ensure collection rates align with revenue recognition.
- Idled Facility Charges: Confirm the trajectory of idled facility credits/charges, which significantly impacted Adjusted EBITDA reconciliation.
- Energy Cost Volatility: Assess the sustainability of margins given the temporary spike in natural gas prices due to extreme weather in Q1 2026.