Financial Data and Key Metrics Changes - In Q2 2025, net sales totaled $304.6 million, a sequential increase of $24.1 million or 9% driven by higher shipments across all end markets [19] - Adjusted EBITDA was $26.5 million in Q2, a sequential increase of 50% primarily due to higher shipments and improved melt utilization [19] - Net income for Q2 was $3.7 million or $0.09 per diluted share, while adjusted net income was $8.4 million or $0.20 per diluted share, more than double the first quarter levels [19] - Operating cash flow was $34.8 million, supported by profitability, lower inventory, and a $6.5 million federal income tax refund [19] Business Line Data and Key Metrics Changes - Shipments increased by 10% compared to Q1, with aerospace and defense, automotive, and energy shipments driving this growth [9] - Energy shipments improved by 17% sequentially, while automotive shipments increased by 9% [11][12] - Aerospace and defense shipments nearly doubled sequentially, indicating strong growth potential in this market [13] Market Data and Key Metrics Changes - Industrial shipments saw a slight increase on a sequential basis, with distribution customer inventory levels declining [11] - The tariff environment is helping to reduce imports and stimulate demand for domestically produced steel [12] - The company is experiencing increased customer inquiries driven by tariff-related onshoring, particularly in the automotive sector [12] Company Strategy and Development Direction - The company is focused on enhancing safety management systems with a planned investment of approximately $5 million in 2025 [7] - A new initiative has been launched to optimize day-to-day manufacturing operations, aiming for long-term sustainability and cost reduction [15] - The company is on track to achieve approximately $30 million in bar-related revenue by 2025, reflecting strong market positioning [13] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued demand growth for domestically produced steel due to the trade environment [5] - The company expects third-quarter shipments to be similar to Q2, with lead times extending to October for bar and tube products [26] - Adjusted EBITDA for Q3 is expected to be modestly lower than Q2 due to planned maintenance and increased electricity costs [28] Other Important Information - The company received $5.1 million in government funding during Q2 as part of a nearly $100 million agreement to support U.S. Army munitions production [21] - Capital expenditures for 2025 are planned at approximately $125 million, including $90 million funded by the U.S. government [20] - The company has repurchased 255,000 shares for $3.3 million in Q2, reflecting confidence in cash flow generation [24] Q&A Session Summary Question: Market share gains due to tariff changes - Management noted that most share gains were from regaining industrial and automotive business lost to domestic competitors, with modest increases in new customer inquiries tied to the tariff environment [32] Question: Supply chain issues resolution timeline - Management indicated improvements in demand and expected additional orders in Q4, despite previous delays in munitions production [35] Question: Melt utilization targets and efficiency savings - Management acknowledged that melt utilization was impacted by electrical supply interruptions and auxiliary equipment reliability, but they are engaging third-party expertise to improve operational efficiency [36][38] Question: Price increases and contract discussions - Management stated that contract discussions for 2026 will pick up in late September through early December, with 70% of demand under contract and 30% spot-based [46]

Group 1 - The core viewpoint expressed by President Trump is that if tariffs are reduced for one country, it necessitates reducing them for all countries [1]

Group 1 - The core agreement between the United States and Japan is to maintain a 50% tariff on steel imports [1]

Core Viewpoint - Cleveland-Cliffs reported a decline in revenue and earnings for the second quarter, but both metrics exceeded expectations, leading to a 5.6% increase in share price. The CEO expressed optimism regarding the potential benefits of recent steel tariffs for the company [1][2][3]. Financial Performance - Revenue for Cleveland-Cliffs decreased by 3.1% to $4.9 billion in the second quarter, while adjusted earnings per share fell to a loss of $0.50 from a positive $0.11 in the same quarter last year [2]. - Despite the year-over-year declines, the reported figures were better than anticipated, particularly in a challenging quarter for the automotive sector, which significantly contributes to Cleveland-Cliffs' revenue [3]. Market Context and Tariff Impact - CEO Lourenco Goncalves highlighted that the recent steel tariffs are expected to positively impact domestic manufacturing and the automotive industry, suggesting that foreign competitors will need to establish steel capacity in the U.S. to compete effectively [3]. - The market share of finished steel imports has only decreased by 5 percentage points, from 25% in January to 20% in May, indicating that while tariffs have reduced foreign competition, the anticipated benefits for domestic steelmakers have yet to materialize [7]. Operational Challenges - Cleveland-Cliffs has faced operational challenges, including idling a major blast furnace and several iron ore mines due to initial demand destruction from new tariffs [6][7]. - The company is currently losing money and is focused on cutting costs to generate cash flow for debt repayment, suggesting a cautious approach for investors until the benefits of tariffs are clearly realized [8].

Group 1 - U.S. Steel Corporation (X) increased by 0.6%, reaching a daily high, while Steel Dynamics Inc. (STLD) rose approximately 1% to a daily high, and Nucor Corporation (NUE) gained 0.49% to a daily high [1] - Cleveland-Cliffs Inc. maintained a decline of over 2.6%, stabilizing around a daily low of $7.16 [1] - President Trump promoted his steel tariffs, claiming that U.S. Steel Corporation has a "golden share" controlled by the president, with 51% ownership belonging to the U.S. [1] Group 2 - U.S. Steel Corporation's current stock price is $53.78, with a market capitalization of $12.201 billion and a 52-week high of $63.48 [3] - The stock has a price-to-earnings ratio of 182.56 and a dividend yield of 0.37%, with a quarterly dividend amount of $0.05 [3] - Cleveland-Cliffs Inc. has a current stock price of $7.18, with a market capitalization of $3.549 billion and a 52-week high of $16.47 [5][7]

Group 1 - The U.S. and Mexico are nearing an agreement to eliminate the 50% tariffs on a certain amount of steel imports from Mexico, revising a similar agreement from Trump's first term [1] - The new agreement will allow U.S. buyers to import Mexican steel duty-free as long as the total volume is below a historically set level, with the new import cap being higher than the previous agreement [1] - In 2022, the U.S. imported approximately 3.2 million tons of steel from Mexico, accounting for 12% of total U.S. steel imports [1] Group 2 - Following the news, U.S. steel stocks declined, with Cleveland-Cliffs Inc. dropping over 7% and Nucor Corp. falling over 4% [2] - Mexican Economy Minister Marcelo Ebrard argued that imposing steel tariffs on Mexico is unreasonable, as the U.S. exports more steel to Mexico than it imports [2] - The negotiations occur amid broader discussions on immigration and drug smuggling issues between the U.S. and Mexico, with Trump seeking cooperation from Mexico [2] Group 3 - The G7 summit is approaching, where the presidents of the U.S. and Mexico may meet in Canada [3]

Core Viewpoint - The United States and Mexico are nearing an agreement to eliminate a 50% tariff on steel imports below a certain quantity, which was imposed during the Trump administration [1] Group 1: Agreement Details - The negotiations are led by U.S. Secretary of Commerce Gina Raimondo, with Trump not directly involved [1] - Under the new terms, U.S. buyers can import Mexican steel duty-free as long as the total shipment volume remains below historical trade levels [1] - The new import cap will be higher than the limit set in a similar agreement during Trump's first term [1] Group 2: Trade Statistics - In the previous year, the U.S. imported approximately 3.2 million tons of steel from Mexico, accounting for 12% of total U.S. steel imports [1] - A prior agreement in 2019 aimed to prevent steel imports from exceeding the average levels of 2015-2017 [1]

Group 1 - U.S. Steel Corporation (X) has seen its decline expand to over 0.2%, while Cleveland-Cliffs Inc. has dropped more than 2.1%, and Steel Dynamics Inc. has decreased by approximately 0.7% [1] - U.S. Secretary of Commerce Gina Raimondo stated that steel tariffs are merely a cost issue rather than a market access issue [1] Group 2 - Cleveland-Cliffs Inc. has a current stock price of 7.40 USD, with a market capitalization of 36.48 billion USD and a 52-week high of 16.54 USD [3] - U.S. Steel Corporation's stock price is currently at 53.63 USD, with a market capitalization of 121.63 billion USD and a 52-week high of 54.03 USD [4][7] - Steel Dynamics Inc. is trading at 135.95 USD, with a market capitalization of 202.71 billion USD and a 52-week high of 155.56 USD [9]

Core Viewpoint - The U.S. Secretary of Commerce, Gina Raimondo, stated that steel tariffs are primarily a cost issue rather than an access issue [1] Group 1 - The focus of the discussion is on the implications of steel tariffs for the industry, emphasizing that the tariffs impact costs for manufacturers rather than limiting market access [1]

Core Point - The Mexican President López Obrador stated that if an agreement on steel tariffs with the United States cannot be reached, Mexico will present countermeasures next week [1] Group 1 - The Mexican government is actively seeking to negotiate steel tariffs with the United States [1] - The potential lack of agreement could lead to Mexico implementing its own measures in response [1]