Q3 shows a real earnings recovery, not just a below-the-line swing: higher steel pricing, slightly higher volumes and better unit costs turned gross margin positive and lifted operating income. The release is also more ambitious on 2027, but cash flow detail is still thin without the 10-Q.
Cleveland-Cliffs Inc · Q3 2026 · Reported 19 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Revenues | 5,612.00 | 4,734.00 | +18.5 % |
Operating income (loss) | 311.00 | -204.00 | +515.00M USD |
Net income (loss) | 152.00 | -251.00 | +403.00M USD |
Adjusted EBITDA | 612.00 | 143.00 | +328.0 % |
Average net selling price per net ton of steel products | 1,177.00 USD/share | 1,032.00 USD/share | +14.1 % |
Operating margin | 5.5 % | -4.3 % | +9.9 pp |
Net margin | 2.7 % | -5.3 % | +8.0 pp |
Figures in USD, as reported. Margins are computed from the reported lines.
The quarter recovered at the operating line, not just in net income
Revenue rose 18.5% to $5.61 billion and operating income improved to $311 million from a $204 million loss a year earlier, taking operating margin to 5.5% from negative 4.3% 8-K. Net income attributable to Cliffs shareholders was $152 million versus a $251 million loss a year earlier, while company-defined adjusted EBITDA rose to $612 million from $143 million 8-K8-K8-K.
The quality of that improvement looks better than a financing-driven beat because the steelmaking segment's gross margin turned positive at $454 million from negative $56 million a year earlier 8-K. Average net selling price per net ton of steel products increased 14.1% to $1,177, steel product sales volumes increased to 4.2 million net tons from 4.0 million, and management said average selling price, sales volumes and unit costs all improved versus Q2 8-K.
Pricing did most of the work, with Stelco now helping rather than hurting
Steelmaking revenue was $5.4 billion, with 46% of shipments in hot-rolled and 31% in coated products 8-K. Management said the Canadian hot-rolled market improved substantially and made Stelco a positive EBITDA contributor in Q3, which suggests part of the margin recovery came from a better acquired-asset contribution rather than only legacy U.S. operations 8-K.
That said, the release also shows where the recovery is incomplete. Cliffs said Canada remains oversupplied in galvanized steel and it will indefinitely idle Stelco's galvanizing lines, while maintaining total production tonnage by focusing on hot-rolled products 8-K. Management argues this should further increase Stelco's EBITDA contribution, but the release does not quantify the earnings effect or any restructuring cost from that decision 8-K.
Guidance moved up, but leverage and cash still need proof
For Q4, Cliffs expects adjusted EBITDA of about $715 million, with increased pricing more than offsetting seasonality, maintenance outages, input costs and incentive compensation accruals 8-K. Management also said new contracts and prevailing index price forecasts support an expectation that 2027 adjusted EBITDA will exceed $4 billion, which is a much stronger medium-term statement than a normal quarterly outlook 8-K.
The balance-sheet message is improving but not yet fully evidenced in this release. Liquidity was $3.2 billion at September 30, 2026, and management said it expects major debt reduction in Q4 from amplified free cash flow and property sale proceeds, targeting net debt to EBITDA below 2.5x by the middle of next year 8-K. The release includes cash flow statements, with net cash provided by operating activities of $224 million in Q3 and $129 million for the first nine months, but it does not give the fuller quarter-specific working-capital or debt-repayment detail that a 10-Q would provide 8-K.
What to watch next
Whether Q4 reaches the approximately $715 million adjusted EBITDA target despite seasonality, outages, input costs and incentive compensation accruals 8-K.
Whether idling Stelco's galvanizing lines actually lifts EBITDA without meaningful new charges, since the release gives no quantified earnings or cost impact 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.