Core Insights - The housing market is experiencing a slowdown, leading to builders cutting prices and offering incentives to sell finished homes, which in turn affects the demand for construction materials like lumber [1][3][19] - Lumber futures have decreased significantly from their August peak of around $695 per thousand board feet to the $590–$610 range, indicating a shift in market dynamics where supply exceeds demand [3][4][17] - Steel demand is also weak, with global prices under pressure due to insufficient consumption across various sectors, although certain regions still show strong demand for steel related to infrastructure and industrial projects [12][16][20] Lumber Market Analysis - Builders overestimated the demand for new homes, leading to excess inventory and a subsequent decline in lumber prices as housing starts and permits dropped [2][3][4] - The lumber market is signaling that housing is not absorbing materials quickly enough, which is a precursor to a slowdown in flatbed freight related to residential construction [8][19] - The expectation is that flatbed carriers heavily reliant on residential construction will face increased competition and need to diversify their service offerings to maintain profitability [10][18] Steel Market Analysis - Global steel demand has been weak throughout 2025, with prices affected by oversupply and insufficient end-use demand, particularly in Asia [12][13] - U.S. steel mills are benefiting from tariffs that limit imported steel, allowing them to maintain production levels despite weak global demand [14][16] - Certain sectors, such as energy and infrastructure, continue to drive demand for steel, indicating that while the overall market is soft, opportunities still exist in specific regions and industries [15][20] Future Outlook - The overall sentiment for flatbed freight heading into 2026 is one of caution, with expectations of a slow recovery in both lumber and steel markets [17][20] - The best opportunities for flatbed carriers will likely shift away from residential construction towards non-residential projects that are less sensitive to interest rates, such as utility infrastructure and industrial builds [18][20] - Carriers are advised to adapt to the changing landscape by broadening their service areas and focusing on sectors that continue to show demand despite the cooling housing market [10][18]

Core Viewpoint - Cleveland-Cliffs (CLF) is expected to report a quarterly loss of -$0.48 per share, reflecting a year-over-year decline of 45.5%, while revenues are anticipated to reach $4.89 billion, marking a 6.9% increase compared to the same quarter last year [1]. Earnings Estimates - The consensus EPS estimate has been revised down by 22.6% over the last 30 days, indicating a significant reevaluation by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts forecast 'Revenues- Other Businesses' to reach $158.71 million, a 5.8% increase from the prior-year quarter [5]. - 'Revenues- Steelmaking' is estimated at $4.72 billion, reflecting a 6.7% increase year-over-year [5]. - 'Revenues- Steelmaking- Coated steel' is projected to be $1.41 billion, indicating a 2.2% increase from the previous year [5]. - 'Revenues- Steelmaking- Slab and other steel products' is expected to reach $265.65 million, showing a year-over-year decline of 3.8% [6]. Steel Shipments - Total steel shipments are projected to be 4,274 thousand tons, up from 3,840 thousand tons reported in the same quarter last year [6]. - The average net selling price per net ton of steel products is expected to be $1,004.08, down from $1,045.00 a year ago [7]. - Steel shipments by product are estimated as follows: - Coated steel: 1,143 thousand tons, up from 1,078 thousand tons [7]. - Slab and other steel products: 409 thousand tons, slightly down from 414 thousand tons [8]. - Plate: 215 thousand tons, up from 173 thousand tons [8]. - Cold-rolled steel: 630 thousand tons, down from 635 thousand tons [9]. - Hot-rolled steel: 1,744 thousand tons, up from 1,400 thousand tons [9]. - Stainless and electrical steel: 132 thousand tons, down from 140 thousand tons [10]. Market Performance - Cleveland-Cliffs shares have increased by 19.1% over the past month, compared to a 1% increase in the Zacks S&P 500 composite [11]. - The company holds a Zacks Rank 4 (Sell), indicating expectations of underperformance relative to the overall market in the near future [11].

Financial Data and Key Metrics Changes - The company reported non-GAAP earnings per share of $4.43, an increase of more than 17% compared to the prior quarter [5] - Non-GAAP pre-tax income increased by over 15% sequentially [5] - Gross profit margin was maintained within the sustainable range of 29% to 31% [4][5] - Operating cash flow for the second quarter was $229 million, supporting investments and shareholder returns [5][20] Business Line Data and Key Metrics Changes - Tons sold decreased by 0.9% compared to the first quarter of 2025 but increased by 4% year-over-year [10] - The non-residential construction market, which includes carbon steel tubing, plate, and structural products, represented roughly one-third of Q2 sales, with shipments up year-over-year [12] - Aerospace products accounted for approximately 10% of Q2 sales, with stable demand in commercial aerospace [14] Market Data and Key Metrics Changes - The company outperformed the service center industry's year-over-year decline of 3.1% [10] - Average selling price per ton sold increased by 6.1% compared to the first quarter of 2025 [11] - Pricing for carbon and aluminum products peaked in April but declined for the remainder of the second quarter [11] Company Strategy and Development Direction - The company remains focused on smart profitable growth, maintaining gross profit margins while expanding market share [4][39] - Capital expenditure budget for 2025 is set at $325 million, with over 50% dedicated to growth projects [5] - The company is actively pursuing M&A opportunities that align with its growth strategy and financial discipline [6][41] Management's Comments on Operating Environment and Future Outlook - Management anticipates some weakness in the third quarter but remains confident in the ability to grow amid market uncertainty [7][21] - The company expects demand to remain stable in the third quarter, with tons sold projected to be down 1% to 3% compared to Q2 [21] - Management highlighted the competitive advantage of sourcing metal from domestic mills in the current trade environment [8] Other Important Information - The company returned $143 million to shareholders in the second quarter through dividends and share repurchases [6] - The total debt as of June 30 was $1.43 billion, with a favorable net debt to EBITDA ratio of less than one [20] Q&A Session Summary Question: Guidance on FIFO gross margin pressure - Management indicated that Q3 typically sees demand weakness due to seasonal patterns, but year-over-year demand remains strong [26][31] Question: Customer sentiment regarding the tariff environment - Management noted continued activity in non-residential construction and confidence in project pipelines despite tariff uncertainties [32][34] Question: Market share gains sustainability - Management emphasized that market share gains are sustainable due to superior customer service and a decentralized structure that allows quick responses to market opportunities [39][54] Question: Acquisition opportunities in the current market - Management observed an uptick in acquisition activity in Q2 and noted that seller expectations are aligning more closely with their valuation perspectives [40][42] Question: Aluminum pricing acceptance by customers - Management confirmed that customers are accepting higher aluminum prices, although they may buy less and more frequently [58][60]

Core Insights - Cleveland-Cliffs reported a revenue of $4.63 billion for Q1 2025, marking an 11% decline year-over-year, with an EPS of -$0.92 compared to $0.18 a year ago [1] - The revenue slightly exceeded the Zacks Consensus Estimate of $4.6 billion, resulting in a surprise of +0.71%, while the EPS fell short of the consensus estimate of -$0.78 by -17.95% [1] Financial Performance Metrics - Total steel shipments were reported at 4,140 KTon, surpassing the average estimate of 4,064.01 KTon [4] - The average net selling price per net ton of steel products was $980, slightly below the estimated $985.85 [4] - Steelmaking revenues totaled $4.47 billion, exceeding the estimate of $4.43 billion but reflecting an 11.1% decline year-over-year [4] - Revenues from coated steel were $1.36 billion, compared to the estimate of $1.34 billion, showing a year-over-year decline of 16.1% [4] - Revenues from slab and other steel products were $247 million, below the estimate of $312.45 million, indicating a 26.3% year-over-year decline [4] - Revenues from cold-rolled steel were $591 million, exceeding the estimate of $555.93 million, with a year-over-year decline of 21.1% [4] - Revenues from hot-rolled steel were $1.17 billion, slightly below the estimate of $1.18 billion, reflecting a year-over-year increase of 3.4% [4] Stock Performance - Cleveland-Cliffs shares have returned +6.8% over the past month, compared to the Zacks S&P 500 composite's +11.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Cleveland-Cliffs (CLF) is expected to report a quarterly loss of $0.67 per share, reflecting a significant year-over-year decline of 472.2%, with anticipated revenues of $4.6 billion, down 11.6% from the previous year [1]. Earnings Projections - Over the last 30 days, the consensus EPS estimate has been revised downward by 59.1%, indicating a significant reassessment by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - Analysts estimate 'Revenues- Other Businesses' will reach $164.80 million, representing a year-over-year decline of 4.2% [5]. - 'Revenues- Steelmaking' is projected to be $4.43 billion, indicating an 11.9% decrease from the same quarter last year [5]. - The average prediction for 'Revenues- Steelmaking- Coated steel' is $1.34 billion, reflecting a 17.4% year-over-year decline [5]. - 'Revenues- Steelmaking- Slab and other steel products' is estimated at $312.45 million, down 6.7% from the prior year [6]. Sales Volumes - Analysts predict 'External Sales Volumes- Steel Products' will reach 4,064.01 tons, compared to 3,940 tons in the same quarter last year [6]. - The 'Average net selling price per net ton of steel products' is expected to be $985.85, down from $1,175 in the same quarter last year [7]. - 'Volumes - Steelmaking - Coated steel' is projected at 1,084.44 tons, compared to 1,216 tons in the previous year [7]. - 'Volumes - Steelmaking - Slab and other steel products' is expected to be 422.79 tons, down from 449 tons year-over-year [8]. - 'Volumes - Steelmaking - Plate' is projected at 201.33 tons, slightly up from 201 tons in the previous year [8]. - 'Volumes - Steelmaking - Cold-rolled steel' is expected to be 541.11 tons, down from 663 tons in the same quarter last year [9]. - 'Volumes - Steelmaking - Hot-rolled steel' is forecasted to reach 1,651.52 tons, compared to 1,266 tons in the same quarter last year [9]. - 'Volumes - Steelmaking - Stainless and electrical steel' is estimated at 151.36 tons, slightly up from 145 tons in the previous year [10]. Stock Performance - Over the past month, shares of Cleveland-Cliffs have returned +27.6%, outperforming the Zacks S&P 500 composite's +0.4% change [10]. - Currently, CLF holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [11].