Cliffs(US:CLF)2025-05-08 13:32Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA loss of $174 million for Q1 2025, reflecting the lagged impact of low steel prices and underperforming non-core assets [30][4] - Total shipments in Q1 were 4.14 million tons, consistent with guidance to exceed 4 million tons, aided by a full quarter contribution from Stelco [30] - Price realization for Q1 was $980 per net ton, a slight improvement from Q4's $970, but still weighed down by lower realizations in cold rolled products [30] Business Line Data and Key Metrics Changes - The automotive segment remains a high-margin business, with expectations of an annual EBITDA benefit of $250 million to $500 million starting in the second half of 2025 [10] - The company is idling several non-core assets, which is expected to lead to a $50 per ton year-over-year reduction in costs for 2025 [31][12] Market Data and Key Metrics Changes - In 2024, only 50% of cars sold in the U.S. were domestically produced, highlighting the need for reshoring automotive production [6] - The company is seeing a shift of automotive production back to the U.S., which is expected to benefit its steel supply business significantly [9][61] Company Strategy and Development Direction - The company is focused on returning to profitability and free cash flow generation by addressing three key issues: underperformance in automotive markets, loss-making operations, and a burdensome slab supply contract [5][19] - Strategic actions include idling non-core assets and optimizing the operating footprint to enhance cost competitiveness [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved pricing and a more consistent business environment starting in April and May 2025 [4] - The company anticipates significant EBITDA improvement in the second half of 2025 and a reset higher in 2026 as various strategic initiatives take effect [31][38] Other Important Information - The company has reduced its 2025 capital expenditure guidance from $700 million to $625 million, primarily due to idling non-core assets [35][107] - The company maintains a healthy liquidity position with approximately $3 billion in available liquidity and $3.3 billion in secured capacity [36] Q&A Session Summary Question: Timing for achieving $300 million savings - Management indicated that the full impact of the $300 million savings will start to materialize in the second half of 2025, primarily from the Cleveland Dearborn switch [40][42] Question: Cost and ASP expectations for Q2 - Costs are expected to increase by about $5 per ton from Q1 to Q2, while ASP is projected to rise by approximately $40 per ton [62][63] Question: Impact of steel tariffs on Stelco - Management clarified that the tariffs do not change the strategic plan for Stelco, which is focused on serving the Canadian market [49][50] Question: Domestic auto production assumptions - Management expects an increase in domestic auto production, which will benefit the company significantly, regardless of overall car sales in North America [57][61] Question: Updates on asset sales - The company has received unsolicited inquiries for non-core assets, which could potentially bring several billion dollars in value [68][69] Question: CapEx and project updates - The company is lowering its CapEx guidance and expects significant reductions in future years, particularly related to strategic projects [107][108]