Cleveland-Cliffs lowers its net debt by $500 million in third quarter

By Devika Patel

Knoxville, Tenn., Oct. 24 – Cleveland-Cliffs Inc. kept paying down debt in the third quarter and plans to continue deleveraging in the current quarter.

The company’s debt is largely comprised of low-cost, fixed-coupon debt instruments, and there are no maturities coming up until 2026.

As of Sept. 30, the company’s net debt was $3.4 billion, down from $3.9 billion as of June 30.

Free cash flow was $605 million for the third quarter.

Liquidity was a record $4.4 billion as of Sept. 30.

“During the quarter, we generated free cash flow of $605 million,” executive vice president and chief financial officer Celso L. Goncalves said on the company’s third quarter ended Sept. 30 earnings conference call on Tuesday.

“As planned, we used the majority of that cash to pay down our ABL, bringing our net debt down to $3.4 billion and boosting our total liquidity up to an all-time high of $4.4 billion.

“With our ABL balance down to only $325 million, we now have a capital structure comprised primarily of low-cost, fixed-coupon debt instruments with no upcoming maturities until 2026,” he said.

Since acquiring ArcelorMittal USA in December 2020, the Cleveland-Cliffs has reduced its net debt by nearly $2 billion.

“We’ll generate a lot of cash, perhaps even more cash than EBITDA during the [fourth] quarter, which will support our ongoing capital allocation priorities and deleveraging [to] continue to pay down debt,” Goncalves said.

Adjusted EBITDA for the three months ended Sept. 30, 2023 was $614 million, compared to $463 million for the three months ended Sept. 30, 2022.

Revenues were $5.6 billion for the quarter, compared to $5.7 billion of revenues in the third quarter of 2022.

Cash and cash equivalents were $31 million as of Sept. 30, 2023, compared to $26 million as of Dec. 31, 2022.

Long-term debt was $3,458,000,000 as of Sept. 30, 2023, compared to $4,249,000,000 as of Dec. 31, 2022.

The flat-rolled steel producer is based in Cleveland.

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