Cleveland-Cliffs Baffles First Quarter Estimates, Reports Record Free Cash Flow in 2022 (NYSE:CLF)

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Cleveland Cliffs (New York Stock Exchange: CLF) +6.9% ahead of market Friday after easily beating expectations for Q1 earnings and income, as the company’s steel prices rose even as spot steel prices fell during the quarter.

First-quarter net income soared to $801 million, or $1.50/share, from $41 million, or $0.07/share, in the prior quarter; Adjusted EBITDA nearly tripled to $1.45 billion from $513 million a year ago.

Hot-rolled coil spot prices averaged around $1,200/ton in the first quarter, down from over $1,700/ton in the fourth quarter of 2021, but the average Cleveland-Cliffs selling price (CLF ) rose slightly to $1,446/ton from $1,423/ton in the fourth quarter.

“Despite the decline in spot steel prices from the fourth to the first quarter and its lagged impact on our results, we were able to continue to generate strong profitability,” said Chairman and CEO Lourenco Goncalves, adding that the company expects to create another. record cash in 2022.

Wall Street forecasts about $2.9 billion in free cash flow for the current year, after Cleveland-Cliffs (CLF) generated $2.1 billion FCF in 2021.

Cliffs (CLF) raises its full-year average selling price estimate from $220/tonne to $1,445/tonne, due to higher-than-expected prices upon renewal of fixed-price contracts reset on April 1, higher spreads between hot-rolled and cold-rolled steel, and a higher forward curve that currently implies an average hot-rolled coil price of $1,300/ton for 2022.

Cleveland-Cliffs (CLF) shares have gained 35% year-to-date and 73% over the past year.

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