Cleveland-Cliffs returned to profit, but cash flow remained negative
Cleveland-Cliffs returned to GAAP net income in the third quarter and reported adjusted earnings above analysts’ expectations. Quarterly operating margin improved, while trailing-twelve-month free cash flow remained negative and the company’s share count was higher year on year.
The company reported higher revenue and earnings
For the quarter ended September 30, Cleveland-Cliffs reported revenue of $5.61 billion and GAAP net income of $165 million. GAAP diluted earnings per share were $0.26. Adjusted diluted EPS was $0.28, a non-GAAP measure that should be read separately from the GAAP result.
Adjusted EBITDA, another non-GAAP measure, was $612 million. The release compares that with $286 million in the preceding quarter. Management said the result exceeded its prior guidance and described better selling prices, sales volumes and unit costs relative to the prior quarter. The company also reported $3.2 billion of liquidity at quarter end.
The outlook is company guidance, not a reported result. Cleveland-Cliffs expects fourth-quarter adjusted EBITDA of approximately $715 million, citing increased pricing partly offset by seasonality, maintenance outages, input costs and incentive compensation. It said adjusted EBITDA for 2027 would exceed $4 billion, based on contract changes and prevailing price forecasts. Those figures are forward-looking estimates and depend on conditions that can change.
The GAAP statements show $224 million of cash provided by operating activities during the quarter. The longer trailing-twelve-month view is less favourable: operating cash flow was $116 million and capital expenditure left TTM free cash flow at negative $485 million. That gap between the quarterly and trailing-twelve-month totals reflects how quarterly figures are built from the cumulative totals each filing reports.
Adjusted EPS exceeded analysts’ expectations
Adjusted diluted EPS was $0.28. The analysts’ average estimate was $0.24. Adjusted diluted EPS was 17.2% above the analysts’ average. This comparison concerns adjusted EPS and third-party consensus data; it is not a comparison between GAAP EPS and an internal Fundamentalytics forecast.
Cleveland-Cliffs beat consensus in four of the last eight quarters. The current quarter’s result exceeded the analysts’ average, while the recent sequence includes quarters without a beat.
Revenue growth and margins improved
Quarterly revenue was $5.61 billion. Revenue grew 18.5% year on year, and no quarter in the last eight had faster revenue growth. TTM revenue was $20.07 billion. TTM revenue growth was 7.79%, an increase of 3.79 percentage points from the previous quarter. The measures cover different periods: the quarterly rate compares one quarter with its year-earlier counterpart, while the TTM rate compares the latest four quarters with the prior four.
The quarterly operating margin was 5.54%, while TTM operating margin remained -1.40%. TTM operating margin improved by 7.79 percentage points year on year. A strong quarter lifted the recent run rate, while the full-year operating picture remained negative.
TTM FCF margin was -2.42%, even after improving by 5.89 percentage points year on year. The diluted share count also rose 14.8% year on year, a factor in comparing company earnings growth with per-share results.
| Measure | Period | Result |
|---|---|---|
| Revenue | FY2026 Q3 | $5.61 billion |
| Revenue growth | FY2026 Q3, year on year | 18.5% |
| Operating margin | FY2026 Q3 | 5.54% |
| Operating margin | FY2026 Q3, TTM | -1.40% |
| Free cash flow | FY2026 Q3, TTM | Negative $485 million |
Shares rose after the release
The shares rose 12.6% in the next close after the release. The S&P 500 rose 0.76% over the same window. The median absolute next-day move across the previous 11 reports was 10.9%, putting the observed move above that historical median. These figures describe what happened around the release; they do not establish why the shares moved.
Margin gains have yet to produce positive cash flow
The improvement in margins matters because sustained cash generation depends on converting revenue into cash after operating costs and investment. The TTM FCF margin improved by 5.89 percentage points year on year, while TTM free cash flow remained negative $485 million. It remains unclear whether the better quarter will persist strongly enough to change the full-period cash result.
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The next quarter will test the outlook
The next reported period will show whether the fourth-quarter adjusted EBITDA guidance is achieved and whether the expected improvement reaches GAAP earnings and cash flow. The release’s 2027 outlook is management’s expectation, not a filed historical result. Quarterly improvement may reflect favourable pricing, mix and cost conditions that may not continue at the same pace. Negative TTM free cash flow and a higher diluted share count make subsequent filed cash flow and share-count figures important context for judging whether the improvement persists.
