Cleveland-Cliffs earnings returned to profit in the third quarter of 2026, with net income of $165 million on revenue of $5.6 billion. Results announced October 19 for the period ended September 30 reversed a second-quarter loss, as higher steel selling prices, increased sales volumes and lower unit costs supported the recovery.
Key Takeaways
- GAAP diluted earnings reached $0.26 per share, compared with a $0.25 loss in the second quarter.
- Adjusted EBITDA of $612 million exceeded management’s earlier $575 million guidance.
- Management expects further improvement in Q4, despite seasonal pressures and planned maintenance outages.
Table of Contents
- Cleveland-Cliffs earnings recover as steel pricing improves
- Fourth-quarter guidance anticipates another increase
- Stelco shifts production away from galvanized steel
- Conclusion
Cleveland-Cliffs earnings recover as steel pricing improves
The company’s third-quarter results announcement showed revenue rising to $5.612 billion from $5.226 billion in the preceding quarter. Net income of $165 million compared with a $134 million second-quarter loss and a $234 million loss a year earlier.
Net income attributable to Cliffs shareholders was $152 million after accounting for noncontrolling interests. Reported diluted earnings were $0.26 per share, while adjusted earnings were $0.28 per share.
Adjusted EBITDA, a non-GAAP measure distinct from net income, increased by $326 million from the second quarter’s $286 million. Chairman and CEO Lourenco Goncalves called it the company’s strongest quarter in three years.
Steel product sales volumes increased to 4.150 million net tons from 4.025 million in the second quarter. Average net selling prices rose to $1,177 per net ton from $1,124. The combination of higher prices, increased volumes and improved unit costs helped lift steelmaking gross margin to $454 million from $113 million.
| Item | Details |
|---|---|
| Quarter-end liquidity | $3.2 billion as of September 30, 2026. |
| Automotive customers | $1.5 billion, or 28%, of third-quarter steelmaking revenue. |
| Distributors and converters | $1.8 billion, or 34%, of third-quarter steelmaking revenue. |
| Steel product mix | Hot-rolled products represented 46% of third-quarter sales volumes; coated products accounted for 31%. |
Fourth-quarter guidance anticipates another increase
Cleveland-Cliffs expects approximately $715 million in fourth-quarter adjusted EBITDA. Management said increased pricing should more than offset seasonality, additional maintenance outages, input costs and incentive compensation accruals.
For 2027, the company expects adjusted EBITDA to exceed $4 billion, based on contract changes and prevailing price forecasts. That is a conditional management outlook, not a reported result.
Goncalves also said the company expects substantial fourth-quarter debt reduction, supported by stronger free cash flow and property sale proceeds. Management maintained its target of net debt below 2.5 times EBITDA by the middle of 2027.
Stelco shifts production away from galvanized steel
Goncalves said Stelco delivered its strongest quarter since Cleveland-Cliffs acquired it two years earlier, becoming a positive contributor to adjusted EBITDA as the Canadian hot-rolled market improved.
However, the company decided to indefinitely idle Stelco’s galvanizing lines, citing an oversupplied Canadian galvanized steel market. Management expects to maintain total Stelco production tonnage by concentrating on hot-rolled products.
The differing conditions across those products show that the broader earnings recovery does not mean every part of the business is improving. Goncalves said affected employees would return when conditions improve, without providing a restart date.
Conclusion
The next reporting period to watch is the fourth quarter of 2026, when Cleveland-Cliffs expects higher adjusted EBITDA and substantial debt reduction. Those remain management expectations; the third-quarter results establish a return to profit, not completion of that recovery plan.
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