Executive Summary

Q3 showed sequential improvement in profitability on richer automotive mix and cost actions: Adjusted EBITDA rose to $143M from $97M in Q2, while adjusted diluted EPS improved to $(0.45) from $(0.50) . Revenue dipped to $4.73B vs $4.93B in Q2 on seasonally lower shipments, but ASP increased to $1,032/nt on a higher auto mix .
Versus S&P Global consensus, revenue missed ($4.73B vs $4.90B*), EPS matched a loss of $(0.45), and EBITDA was modestly ahead ($129M EBITDA vs $127M) — with Cliffs highlighting improved pricing/mix and footprint savings as drivers .
Guidance tightened lower on costs: FY25 CapEx cut to ~$525M (from $600M) and SG&A to ~$550M (from $575M); unit cost reduction guide maintained at ~$50/nt; DDA at ~$1.2B; Pension/OPEB at ~$150M .
Strategic/catalyst updates post-quarter include: MoU named with POSCO (definitive agreement expected late 2025/early 2026), a $964M equity offering to reduce ABL borrowings, and continued debt terming/refinancing — collectively de-risking the balance sheet and enabling strategic optionality .

What Went Well and What Went Wrong

What Went Well

Automotive mix/pricing improved: ASP rose to $1,032/nt as auto shipments moved from 26% to 30% of mix, supporting margin expansion; Adjusted EBITDA increased to $143M from $94–97M in Q2 (call and press release) .
Multi‑year auto contract wins and narrative strength: “We were able to lock in two or three-year agreements with all major automotive OEMs covering higher sales volumes and favorable pricing through 2027 or 2028” (CEO) .
Operating discipline and cost actions flowing through: Company reaffirmed ~$300M annual savings; FY25 CapEx and SG&A reduced further; liquidity increased to $3.1B .

What Went Wrong

Continued GAAP losses and softer QoQ revenue: GAAP net loss $(234)M, operating loss $(204)M; revenue down to $4.73B from $4.93B in Q2, with lower seasonal shipments (4.03M nt vs 4.29M nt) .
Canada (Stelco) remains weak: management cited 65% imported steel penetration and limited Canadian trade action as a headwind; “the picture in Canada remains disappointing” (CEO) .
Leverage remains elevated (though termed): long‑term debt rose to $8.04B from $7.73B in Q2; management reiterated need to pay down debt with asset sales and FCF (CFO) .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025 (Actual)	Q3 2025 (Consensus)*
Revenue ($USD Billions)	$4.57	$4.63	$4.93	$4.73	$4.90*
Adjusted EBITDA ($USD Millions)	$122	$(174)	$97	$143	$127.2*
EPS (Diluted, Adjusted, $)	$(0.34)	$(0.92)	$(0.50)	$(0.45)	$(0.45)*
Shipments (Steel Products, MM nt)	3.84	4.14	4.29	4.03	—
ASP ($/net ton)	$1,045	$980	$1,015	$1,032	—

Note: Consensus cells marked with * are S&P Global; Values retrieved from S&P Global.

Segment/End-Market Mix (Q3 2025):

Steelmaking revenue $4.56B; distribution by market: Automotive $1.4B (30%), Infrastructure & Manufacturing $1.3B (29%), Distributors & Converters $1.3B (28%), Steel Producers $591M (13%) .
Product mix: 37% hot‑rolled, 29% coated, 15% cold‑rolled, 6% plate, 4% stainless & electrical, 9% other (incl. slabs/other) .

KPIs and Balance Sheet (Quarterly):

Liquidity: $3.0B (Q1), $2.7B (Q2), $3.1B (Q3) .
Long‑term debt: $7.60B (Q1), $7.73B (Q2), $8.04B (Q3) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capital Expenditures	FY 2025	~$600M (Q2 guide)	~$525M	Lowered
SG&A	FY 2025	~$575M (Q2 guide)	~$550M	Lowered
Steel unit cost reduction	FY 2025 vs 2024	~$(50)/nt maintained	~$(50)/nt maintained	Maintained
DDA	FY 2025	~$1.2B (from $1.1B in Q2)	~$1.2B	Maintained
Cash Pension & OPEB	FY 2025	~$150M	~$150M	Maintained

Management also indicated Q4 shipments should be similar to Q3 (~4.0M nt), with costs “relatively similar” and pricing calculable from disclosed mix/lag mechanics (call color) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
Automotive contracts/reshoring	Expectation of gaining back share; contracts extending; higher auto volumes coming; ASP tailwinds	Multi‑year auto contracts locked with all major OEMs; richer mix drove ASP up; more impact into 2026	Improving, accelerating into 2026
Trade/tariffs (Sec. 232)	Strong support cited; removal of circumvention; pig iron tariffs; enforcement critical	“Hostile territory for dumped steel”; tariff environment aiding demand/pricing	Supportive policy tailwinds
Cost/footprint optimization	Idles to save >$300M; savings ramp in 2H25	First full quarter of efficiencies; $300M savings on track	Executing; visible in results
Slab contract expiration (Calvert)	Onerous contract ending 12/9/25; ~$500M annualized EBITDA benefit in 2026	Contract expiry Dec 9; plan to reclaim production internally	Imminent tailwind
Canada/Stelco	Reposition volumes to Canada; Canadian tariffs/market risks	Canadian market weak due to imports; advocacy continues	Ongoing headwind
DOE projects (Middletown/Butler)	Middletown scope changes; Butler grant intact	Butler proceeding; Middletown re‑scoping continues	Proceeding selectively
Rare earths initiative	Not highlighted	Two promising sites (MI, MN) under assessment; potential strategic alignment	New optionality
Government/Defense	—	$400M DLA GOES award (5‑year)	New demand driver

Management Commentary

“We were able to lock in two or three-year agreements with all major automotive OEMs covering higher sales volumes and favorable pricing through 2027 or 2028.” — Lourenco Goncalves, CEO .
“Our adjusted EBITDA…improved to $143 million, a 52% increase over the prior quarter, driven by margin expansion from higher realized prices and improved mix.” — Celso L. Goncalves, CFO .
“With the contract expiring [Dec 9], we will reclaim that production internally using our melted and poured slabs to serve growing automotive demand.” — CFO .
“The United States is… now hostile territory for dumped steel from abroad… we entered into a Memorandum of Understanding with a major global steel producer.” — CEO .
“We were awarded a five-year, $400 million fixed-price contract by the Defense Logistics Agency… for grain-oriented electrical steel.” — CEO .

Q&A Highlights

Asset actions: Under agreement to sell Florida FPT assets to SA Recycling; exploring options for the Toledo HBI plant in context of the POSCO MoU; emphasis on debt reduction from proceeds (CEO) .
Auto contract timing and volumes: Some contracts started Oct 1; larger ramp expected into 2026; Q4 auto typically seasonal with shutdowns (CEO) .
Outlook specifics: Q4 shipments similar to Q3 (~4M nt); costs relatively similar; ASP calculation guided by contract/lag mix (CFO) .
Policy and Canada: Management critical of Canadian import penetration (~65%), pressing for enforcement to stabilize Stelco’s market (CEO) .

Estimates Context

Revenue: $4.73B vs $4.90B consensus* → miss driven by seasonal shipments and non-auto end markets still weak; auto mix/pricing offset part of the impact .
EPS (Primary/Adjusted): $(0.45) vs $(0.45) consensus* → in line; cost savings and mix improvement offset volume .
EBITDA: $129M (GAAP EBITDA) vs $127M consensus* → slight beat; Adjusted EBITDA $143M reflects non‑recurring adjustments .
Consensus coverage: EPS (4 ests), Revenue (7 ests)*. Potential estimate revisions: Higher 2026 estimates likely as slab contract headwind ends in Dec and auto contracts ramp; nearer term revenue trajectory tempered by seasonal Q4 and still-soft non-auto sectors .
Note: Consensus values marked with * are S&P Global; Values retrieved from S&P Global.

Guidance Changes (Detail)

See table above; key takeaways: FY25 CapEx and SG&A trimmed again, underscoring cost discipline; unit cost reduction of ~$50/nt maintained; DDA and Pension/OPEB unchanged . Management color suggests Q4 is seasonally softer on auto volumes, with costs and shipments similar to Q3; pricing influenced by disclosed lag mechanics .

Other Relevant Press Releases (Q3 period and shortly after)

POSCO named as MoU counterparty; definitive agreement targeted late 2025/early 2026; strategic U.S. industrial alignment highlighted .
$964M equity offering (75M shares) to reduce ABL borrowings; improves liquidity and flexibility .
Additional $275M 2034 notes (6.992% implied yield) to term debt; proceeds to repay ABL .
Breakthrough auto stamping trial: Exposed steel parts stamped using aluminum-forming equipment; customer moved to routine orders .
Applauded inclusion of electrical/stainless derivative products under Section 232 (50% tariffs), supportive of GOES/stainless businesses .

Key Takeaways for Investors

Mix-driven earnings recovery is underway; automotive’s share rose to 30% and should continue to support ASP and margins as multi‑year contracts ramp in 2026 .
A major structural headwind ends Dec 9: the slab supply contract expiration should unlock material EBITDA in 2026, alongside footprint savings and potential asset sale deleveraging .
Near-term revenue remains sensitive to seasonal auto shutdowns and still‑weak construction/manufacturing; Q4 shipments and costs seen similar to Q3, with pricing guided by disclosed contract/lag mix .
Balance sheet de-risking is active: equity raise and debt terming reduce ABL exposure and extend maturities, creating room for FCF‑led deleveraging and strategic execution (POSCO MoU, asset monetizations) .
Policy tailwinds (Section 232 enforcement, derivative coverage) and the $400M DLA GOES award provide supportive end‑market demand visibility beyond autos .
Watch 1) definitive POSCO agreement timing/structure, 2) asset sale proceeds and debt paydown, 3) ASP/lag dynamics into Q4, and 4) Canada/Stelco policy resolution — all potential stock catalysts .

CLEVELAND-CLIFFS INC. (CLF)·Q3 2025 Earnings Summary