CLF Q1 FY2026 Earnings: $507M ABL Draw Behind the $3B Liquidity

Cleveland-Cliffs Inc. (NYSE: CLF) reported Q1 FY2026 revenue of $4.92 billion (+6.3% year over year, +14.1% sequentially) and a $274 million Y/Y swing in adjusted EBITDA to $95 million on April 21, 2026. The 10-Q filed the same day shows the cleaner number underneath the headline: the $3.1 billion liquidity figure management repeated on the call is composed of $45 million of cash and $3,096 million of borrowing capacity under an ABL revolver — and the company drew an extra $507 million on that revolver during the quarter.

The $507 Million ABL Draw Behind the $3 Billion Liquidity Headline

The Q1 FY2026 8-K opens with "Total liquidity above $3 billion." On the call, CFO Celso Goncalves reiterated: "We're also pleased to have come out of the most cash-intensive use periods at Cliffs still with liquidity above $3 billion." Both statements are technically accurate. The 10-Q's debt footnote and MD&A liquidity section show the composition: $45 million of cash on hand under the company's stricter MD&A definition (or $52 million on the balance-sheet line), plus $3,096 million of remaining borrowing capacity under the ABL Facility after $959 million of outstanding borrowings and $48 million of letters of credit are subtracted from a $4,103 million available borrowing base.

The component that grew during the quarter is the ABL outstanding balance. It went from $452 million at December 31, 2025 to $959 million at March 31, 2026 — a $507 million sequential draw, or a 112% increase. That single line item explains essentially 100% of the $510 million Q/Q increase in CLF's total long-term debt ($7,253M to $7,763M). The senior note stack — nine tranches with coupons ranging 4.625% to 7.625% and an aggregate principal of $7,053 million — was unchanged during the quarter. ABL utilization rose from roughly 11% to 23.4% of the available borrowing base.

The framing change is structural. A year ago, CLF's net financing cash inflow of $499 million came from issuing $850 million of fixed-rate 7.500% senior notes due 2031 and paying down the revolver by $305 million — replacing short-term variable-rate debt with longer-dated fixed-rate paper. This year, net financing cash inflow of $454 million came from a single source: a $507 million ABL draw at the facility's variable effective rate of 5.305%. The cash-flow output looks similar; the funding mix is materially different. CLF chose not to access the bond market in Q1 2026, or could not access it on terms it found acceptable. Either reading matters for retail readers tracking how the recovery is being financed.

The $959 million ABL balance is now Cleveland-Cliffs' nearest debt maturity (June 2028); senior note maturities do not begin until 2029, when $1,268 million comes due. The springing fixed-charge-coverage covenant on the ABL was not in force at quarter end because the company maintained the required liquidity threshold. The covenant becomes applicable only when ABL availability drops below a defined floor — which gives the revolver another $3.1 billion of headroom before the financial covenant triggers. The constraint that did move during the quarter is mix, not capacity.

A second 10-Q-only disclosure threads through the same liquidity story: a $14 million currency exchange loss, up from $2 million in Q1 2025. MD&A attributes this to "routine remeasurement of an intercompany note with our Stelco subsidiary." Stelco was acquired in 2024 and its Canadian-dollar exposure now flows through CLF's quarterly income statement as a recurring sub-line item. The 8-K and call did not flag the seven-fold expansion.

Where the EBITDA Beat Comes From — and Where It Stops

The headline number from the 8-K — adjusted EBITDA of $95 million, a $274 million improvement from the Q1 2025 loss of $179 million — is corroborated by the 10-Q's segment footnote. The footnote also breaks the consolidated figure into its components for the first time at the quarterly level.

The Steelmaking segment swung from -$189M to +$80M — a $269M Y/Y improvement that drives the consolidated EBITDA story. But the segment is still earning a 1.67% EBITDA margin on a $19,512 million asset base. Other Businesses — Tubular, Tooling and Stamping, and European Operations combined — generated 15.8% of consolidated EBITDA from 3.4% of revenue, at an 8.98% margin. The press release reported only the consolidated $95M figure; the segment-level disaggregation that makes the EBITDA quality visible is in the 10-Q footnote.

Capital allocation runs the other way. Of the $126 million of capital additions in Q1 2026, $124 million (98.4%) went to the Steelmaking segment; Other Businesses received $2 million, down from $6 million in Q1 2025. CLF is funneling growth capital to the segment running a sub-2% EBITDA margin and starving the segment running a 9% margin. The 10-Q anticipates "approximately $800 million" of capital expenditures over the next 12 months — a $100 million step-up versus the Q4 8-K guide of roughly $700 million, not flagged as a guidance change on the call.

A third quality flag sits below the EBITDA line: diluted shares outstanding went from 494.49 million in Q1 2025 to 570.40 million in Q1 2026 — an increase of 75.91 million shares, or 15.35% year over year. Sequentially the count rose 38.55 million shares (+7.2%) from 531.85 million at Q4 2025. The reported EPS improvement of -$0.42 versus -$1.01 is a 58.4% headline gain. Holding the share count constant at the Q1 2025 level, the underlying per-share loss reduction is closer to 49%. Roughly 9 percentage points of the EPS improvement is share-count optics rather than profit-pool growth.

The receivable build is the cleanest "good problem" line in the quarter — higher prices mean larger invoices that have not yet been collected, partly offset by inventory drawdown. CFO Celso Goncalves told Nick Giles of B. Riley Securities the Q1 working capital build was "about $130 million... primarily driven by AR as pricing continued to rise in March," and that "you should see a slight release in working capital" in Q2. A Q2 working capital release is the cleanest near-term path to compressing the ABL balance back below 20% utilization.

POSCO Was the #1 Strategic Priority 70 Days Ago. Now It's "or Slightly Later."

The most consequential management-language drift between the Q4 2025 release and the Q1 2026 call is on POSCO. The Q4 release ranked POSCO as the company's leading strategic objective and put a definitive timing peg on the deal:

Seventy days later, on the Q1 FY2026 call, POSCO had been demoted to the fifth strategic priority — behind AI integration, infrastructure modernization, footprint optimization, and labor agreement renegotiation. CEO Lourenco Goncalves's response to Nick Giles's POSCO question reframed the timeline and the urgency:

Albert Realini of Jefferies pushed the implication further by asking whether asset sales — Toledo and certain Future Pellets Trust assets that had been described as "off the table while discussions with POSCO were ongoing" — could be reactivated if no deal closes. Goncalves declined to walk through the no-deal scenario, replying: "we can try to create hypothetical scenarios here until the cows come home, but I don't think it's productive... that's why I don't like playing hypothetical scenarios." On the same call, Goncalves also disclosed that a previously POSCO-conditional asset — the HBI hot-briquetted-iron operation — was no longer for sale because "HBI stretches my ability to produce hot metal and helps me increase production." The carve-out plan is now structurally tied to the POSCO process, with no public alternative path.

The 10-Q's signal-extracted risk inventory mirrors the language drift. The prior 10-Q (Q3 2025) carried 3 risk-signal items; the Q1 FY2026 10-Q carries 8. The five additions: tariffs and trade policies, global tensions and war, automotive industry demand fluctuations, supply chain disruptions on raw materials, and "Potential impairment of goodwill and long-lived assets." The goodwill addition is material because CLF carries $1.80 billion of goodwill, 8.9% of total assets, and most of it traces to the Stelco acquisition in 2024. Item 1A in the literal 10-Q text says no material changes from the 2025 10-K — the inventory expansion lives in MD&A, footnote, and forward-looking-statement language, not in Item 1A itself.

How CLF Stacks Against Peers

CLF sits in a steel-producer peer set with NUE, STLD, CMC, and RS — a custom selection that overrode the auto-selected hint set (CF, CCK, CDE, SUZ) on grounds of commodity mismatch. NUE and STLD are the most relevant operational comps: NUE is the largest US steel producer and the EAF (electric-arc-furnace) mini-mill reference operator; STLD is the closest revenue-scale match ($18.18B vs CLF $18.90B). CMC is a long-products specialist with consistent through-cycle profitability. RS is a metals service center (distributor) included for end-market context, with most TTM metrics not reported.

CLF is the only peer with a negative gross margin (-2.87% vs +11.93% NUE / +13.16% STLD / +17.74% CMC) and the only peer with negative ROIC (return on invested capital, profit generated per dollar of capital deployed). Revenue is comparable in scale to STLD ($18.90B vs $18.18B), but CLF's $4.27 billion market capitalization is 5.9 times smaller than STLD's $25.04 billion. The valuation gap is not about leverage alone — it is about the structural margin gap CLF has to close before peer-relative valuation multiples become comparable.

Capex intensity tells the structural story. CLF reinvests 3.52% of revenue in capex versus NUE 11.71%, STLD 7.24%, and CMC 7.00%. Even at the 10-Q's forward-12-month figure of approximately $800M, CLF underspends the peer set on reinvestment while peers post +7%-9% ROIC. The Q1 narrowing-loss narrative does not yet show up in TTM peer-relative metrics; the trailing window still reflects 2025 fully-loaded losses. CLF's Q1 2026 free cash flow (operating cash flow minus capex) was -$477M on $4.92B of revenue, a -9.69% quarterly FCF margin — distinct from the TTM FCF yield (free cash flow over market cap) shown in the table.

Peers: NUE, STLD, CMC, RS (selected by business-model overlap; agent override of auto-hint set CF, CCK, CDE, SUZ as commodity-mismatch) — source: agent.

What This Means for CLF Shareholders

The Q1 FY2026 quarter is genuinely better than Q4 2025: revenue up 14.1% sequentially, gross margin still negative but 311 basis points (one basis point = 0.01 percentage point) less negative, operating margin up 335 bps, EBITDA flipped from a loss to a $95 million profit. The 10-Q adds segment-level evidence that Other Businesses runs a far better margin than the Steelmaking segment that absorbs 98% of capex.

The complication is how the recovery is being financed. The $507M ABL draw funded a quarter in which operating cash flow was -$325M (working capital build, dominated by AR as steel prices rose) and capex was $152M. Free cash flow was -$477M. Last year CLF accessed the bond market at 7.500% for 2031 paper; this year it leaned on the revolver at 5.305% variable. Short-term price comparison favors the revolver; the maturity profile does not — the $959M ABL is now the nearest debt maturity (June 2028), three years before the 2029 senior note tranches. The peer-relative read is direct: CLF's negative P/E and 5.9x-smaller market cap relative to scale-matched STLD reflect a structural margin and ROIC gap, not just balance-sheet leverage.

The POSCO reframing matters because it removes a near-term capital-allocation catalyst. The Q4 framing put a "definitive agreement in the first half of 2026" peg on a #1-priority partnership. The Q1 framing replaces that with "or slightly later" and "no longer in a hurry," paired with a CEO who declined to discuss the no-deal scenario when asked directly. The $425 million asset-sale guide has the same hedge profile: $70M has closed year-to-date; the implied Q4 close is $205M, or 48% of the full-year target back-loaded to a single quarter.

Not investment advice — analysis of SEC filings, earnings calls, and press releases.

Frequently Asked Questions

How big was Cleveland-Cliffs' Q1 FY2026 EBITDA improvement and how did the stock react?

Q1 FY2026 adjusted EBITDA was $95 million, a $274 million improvement from the $179 million loss in Q1 FY2025. Revenue rose 6.3% year over year to $4.92 billion, beating published consensus by roughly 2.4%, and adjusted EPS of -$0.40 beat consensus of -$0.42 by about 5%. Despite the beat, CLF shares fell 6.17% on the day after the report and trade at $10.22 as of April 28, 2026 — 36.8% below the 52-week high. The stock reaction reflects the divergence between the headline EBITDA recovery and the 10-Q balance-sheet detail.

Why did Cleveland-Cliffs' ABL Facility draw double in Q1 2026?

Outstanding ABL Facility borrowings rose from $452 million at December 31, 2025 to $959 million at March 31, 2026 — a $507 million Q/Q draw representing essentially 100% of the $510 million quarter-over-quarter increase in total long-term debt ($7,253M to $7,763M). The 10-Q's cash flow statement shows zero senior note issuance during the quarter, in contrast to Q1 2025 when CLF issued $850 million of 7.500% Senior Notes due 2031 and used proceeds in part to pay down the ABL by $305 million. The net financing cash flow was similar in both periods (~$454M vs $499M), but the funding mix shifted from longer-dated bonds to short-term revolver. ABL utilization rose from roughly 11% (452/4,103 borrowing base) to 23.4% (959/4,103) in one quarter.

What is the Steelmaking segment EBITDA margin versus Other Businesses?

Q1 FY2026 Steelmaking EBITDA was $80 million on $4,797 million of segment revenue — a 1.67% margin. Other Businesses (Tubular, Tooling and Stamping, European Operations combined) generated $15 million of EBITDA on $167 million of revenue — an 8.98% margin, more than five times the Steelmaking ratio. Other Businesses is 3.4% of consolidated revenue but 15.8% of consolidated EBITDA. The 8-K press release reported only the consolidated $95 million figure; segment EBITDA disaggregation is a 10-Q-only disclosure.

How much did CLF's diluted share count change year over year?

Diluted shares outstanding rose from 494.49 million in Q1 2025 to 570.40 million in Q1 2026, an increase of 75.91 million shares or +15.35% year over year. Sequentially, the count rose 38.55 million shares (+7.2%) from 531.85 million at Q4 2025. The Q1 2026 diluted EPS of -$0.42 versus Q1 2025 of -$1.01 represents a 58.4% headline improvement; on a same-share-count basis the underlying improvement is closer to 49%. The dilution ties to share-based consideration in the Stelco acquisition path and ongoing equity issuance.

What did Cleveland-Cliffs say about POSCO this quarter and how does it compare to last quarter?

In the Q4 2025 8-K release filed February 9, 2026, management said POSCO "remains the number one strategic priority for both Cleveland-Cliffs and POSCO" and "we are targeting signing a definitive agreement in the first half of 2026." On the Q1 FY2026 call, POSCO had been demoted to the fifth strategic priority and CEO Lourenco Goncalves told Nick Giles of B. Riley Securities: "we still believe a deal can be completed within this time frame or slightly later... we are no longer in a hurry. We were not before — we are a lot less in a hurry now." POSCO has separately committed to disclose its position on the deal by September 30, 2026.

What new risks did Cleveland-Cliffs disclose in its Q1 2026 10-Q?

MetricDuck's signal-extracted risk inventory grew from 3 items in the prior 10-Q (Q3 2025) to 8 items in this Q1 FY2026 10-Q. The five additions: tariffs and trade policies impact, global tensions and war impact, automotive industry demand fluctuations, supply chain disruptions on raw materials, and "Potential impairment of goodwill and long-lived assets." The goodwill-impairment risk is material because CLF carries $1.80 billion of goodwill (8.9% of total assets), most of it from the Stelco acquisition. The literal Item 1A in the 10-Q says no material changes from the 2025 10-K — the inventory expansion lives in MD&A, footnote, and forward-looking-statement language.

How does CLF compare to Nucor, Steel Dynamics, and Commercial Metals?

On trailing-twelve-month metrics, CLF is the only peer with a negative gross margin (-2.87%) versus Nucor 11.93%, Steel Dynamics 13.16%, and Commercial Metals 17.74%. CLF revenue ($18.90B TTM) is comparable to STLD ($18.18B), but CLF's market cap of $4.27B is 5.9 times smaller than STLD's $25.04B — the market is pricing structural margin gap, not just leverage. CLF ROIC (return on invested capital, profit generated per dollar of capital deployed) is -5.42% versus a peer average of +8.04% across NUE/CMC/STLD. CLF's 3.52% capex intensity is the lowest in the peer set; NUE invests 11.71% of revenue in capex, STLD 7.24%, CMC 7.00%.

What is Cleveland-Cliffs' nearest debt maturity?

The $959 million ABL Facility outstanding balance at March 31, 2026 matures in June 2028, making it the company's nearest debt maturity. There are no senior note maturities scheduled in 2026 or 2027. Senior note maturities begin in 2029 with $1,268 million ($368M of 4.625% notes plus $900M of 6.875% notes), followed by $750M in 2030 and $4,860M thereafter through 2040. Total long-term debt of $7,763 million as of Q1 2026 carries a weighted-average coupon of approximately 6.7%. The ABL was in compliance with its springing fixed-charge-coverage covenant at quarter end.

How much asset-sale proceeds is CLF expecting to close in 2026?

On the Q1 FY2026 call, CEO Lourenco Goncalves told Carlos De Alba of Morgan Stanley that the cadence is "$50 million in Q2 and $100 million in Q3 with the remainder in Q4" — implying roughly $205 million of the $425 million full-year asset-sale guide back-loaded to Q4. CLF has received $70 million of asset-sale proceeds year-to-date. Q4 close-rate risk is meaningful: 48% of the full-year proceed target is contingent on counterparty closes in a single quarter.

Methodology

This analysis uses MetricDuck's filing intelligence pipeline to compare disclosures across three event types within a single quarter: the Q1 FY2026 10-Q (filed April 21, 2026, accession 0000764065-26-000070), the Q1 FY2026 8-K earnings release (filed April 20, 2026, accession 0000764065-26-000067), and the Q1 FY2026 earnings call transcript (April 20, 2026). Q4 FY2025 release language (accession 0000764065-26-000022, filed February 9, 2026) is the comparison anchor for the Q4-to-Q1 management-language shift.

Data sources: MetricDuck filing intelligence platform (signal-extracted risk inventories, segment disaggregation, multi-event cross-comparison), SEC EDGAR (raw 10-Q text and footnote data), and the company's own earnings call transcript. Peer comparison metrics are trailing-twelve-month figures from MetricDuck's compare_companies tool as of late April 2026.

Original analysis includes: the $507 million ABL draw quantification and Q1 2025 vs Q1 2026 funding-mix decomposition (10-Q-only); Steelmaking-vs-Other-Businesses EBITDA-margin asymmetry (1.67% vs 8.98%) from the segment footnote; share-count dilution arithmetic; the Q4-to-Q1 POSCO language drift table; signal-extracted risk inventory expansion (3 items to 8). All numbers trace to the linked SEC filings and the public earnings call transcript.

Limitations: The Q4 2025 shares-outstanding column in MetricDuck's quarterly snapshot reads 54.45M (a partial-period stub artifact unrelated to a stock split); this article uses 531.85M from the prior quarterly snapshot for Q4 2025 sequential comparisons. RS reports limited TTM data; primary peer comparisons center on NUE, STLD, and CMC. The literal Item 1A in the Q1 FY2026 10-Q points back to the FY2025 10-K — the risk-signal inventory expansion is the structured signal layer's read across MD&A, footnote, and forward-looking-statement language, not the literal Item 1A text.

Disclaimer

Not investment advice. This article is educational analysis of publicly filed SEC documents. Always do your own research and consult a qualified financial advisor before making investment decisions.