Cleveland-Cliffs Inc (NYSE:CLF) stock rose 5.51% (As on July 25, 11:41:27 AM UTC-4, Source: Google Finance) after the company beats the topline expectations for the second quarter of FY 23. For the second quarter of 2023, the Company recorded net income of $356 million. Second-quarter 2023 Adjusted EBITDA was $775 million, compared to $243 million in the first quarter of 2023. The company’s total steel shipments of more than 4.2 million net tons in the second quarter were a direct result of another record in automotive shipments.

Further, the second-quarter 2023 steel product sales volumes of 4.2 million net tons consisted of 35% hot-rolled, 30% coated, 15% cold-rolled, 6% plate, 4% stainless and electrical, and 10% other, including slabs and rail. Steelmaking revenues of $5.8 billion included $2.0 billion, or 34%, of direct sales to the automotive market; $1.6 billion, or 27%, of sales to the infrastructure and manufacturing market; $1.4 billion, or 25%, of sales to the distributors and converters market; and $796 million, or 14%, of sales to steel producers.

CLF in the second quarter of FY 23 has reported the adjusted earnings per share of 69 cents, which matches the analysts’ estimates for the adjusted earnings per share of 69 cents. The company had reported the adjusted revenue of $5.98 billion in the second quarter of FY 23, beating the analysts’ estimates for revenue of $5.63 billion.

Additionally, Cliffs recorded free cash flow of $756 million during the second quarter of 2023, the majority of which was used toward debt repayment on the Company’s ABL facility. As of June 30, 2023, the Company had total liquidity of $3.8 billion. During the second quarter of 2023, the Company reduced outstanding borrowings on its ABL Facility by $1.3 billion. Cliffs reduced its net debt to $3.9 billion, from $4.5 billion in the first quarter of 2023. Cliffs also repurchased 6.5 million shares at an average price of $14.43 per share during the second quarter of 2023.

Cliffs currently expects another $40 per net ton reduction in steel unit costs from the second quarter to the third quarter of 2023, with an additional $10 per ton reduction from the third to the fourth quarter of 2023.

Meanwhile, Service center inventories are significantly lower than historical levels, creating support for a healthy second half of the year. And finally, while the performance of our automotive clients continues to improve, the sector has not returned to pre-COVID levels yet, indicating that Cleveland-Cliffs still has plenty of value to be unlocked in the near future.