Company Actions - Cleveland-Cliffs, a US steel producer, will undertake a share offering [1] - The share offering aims to repay debt [1]

Core Insights - Cleveland-Cliffs Inc. is enhancing its financial position by upsizing an additional $275 million in senior unsecured notes due 2034, part of a larger $850 million issuance of 7.625% Senior Guaranteed Notes [1][2] - The company plans to utilize the net proceeds from this offering to repay borrowings under its asset-based credit facility, indicating a focus on debt management [2] - Cleveland-Cliffs remains optimistic about the second half of the year despite a challenging macroeconomic environment and is exploring non-core asset sales and strategic foreign investments to further reduce debt [3] Company Overview - Cleveland-Cliffs Inc. is a leading North American steel producer with a vertically integrated business model, controlling the entire production process from iron ore mining to steel processing [4] - The company is the largest supplier of steel to the automotive industry, highlighting its significant role in this sector [4]

Core Insights - The article revisits Cleveland-Cliffs (NYSE: CLF) after a gap since 2019, indicating ongoing interest in the company's performance and its relation to the broader economy [1] Company Analysis - Cleveland-Cliffs is monitored due to its significance in understanding economic trends and its connection to downstream companies like Mesabi Trust [1] Analyst Background - The analyst, Bram de Haas, has 15 years of investment experience and over 5 years managing a Euro hedge fund, bringing a unique perspective to investment analysis [1]

Core Insights - Cleveland-Cliffs Inc. (NYSE:CLF) experienced a share price increase of over 20% following a surprising announcement regarding rare earth metals by its CEO [1] - The CEO, Lorenzo Goncalves, emphasized the renewed importance of rare earth elements and indicated that the company is refocusing on its upstream mining assets in Michigan and Minnesota [1] Company Performance - The third-quarter earnings report for Cleveland-Cliffs Inc. was positively received, leading to a significant rise in share value [1] - The company's strategic pivot towards rare earth metals is seen as a response to the evolving trade environment in the United States, which is considered the most attractive steel market globally [1] Industry Context - The announcement aligns with the current trade policies enforced by the Trump administration, which are aimed at preventing dumping practices in the steel market [1] - The focus on rare earth elements reflects a broader trend in the industry, where companies are exploring additional revenue streams beyond traditional steel production [1]

Core Points - Cleveland-Cliffs Inc. (NYSE:CLF) experienced a significant decline of 17.24% on Tuesday, closing at $13.39, following a "sell" recommendation from Wells Fargo and profit-taking by investors [1][3] - The company's net loss attributable to shareholders widened by 2.87% in Q3, reaching $251 million compared to $244 million in the same period last year, while revenues increased by 2.8% to $4.7 billion from $4.57 billion year-on-year [3] Company Strategy - Cleveland-Cliffs is diversifying from steelmaking into rare earths mining to support government initiatives aimed at bolstering domestic supply, with exploration efforts underway in Michigan and Minnesota [2] - Wells Fargo expressed skepticism regarding the potential returns from these new ventures, citing a lack of known deposits in the region [2]

Revenue and Production - Total revenue for the third quarter of 2025 was significantly impacted by higher domestic HRC pricing, averaging $843 per net ton, which is 24% higher than the same period in 2024[112]. - Consolidated revenues increased by $165 million in Q3 2025 but decreased by $563 million for the nine months ended September 30, 2025, compared to the prior year[153]. - For the nine months ended September 30, 2025, revenues amounted to $12,973 million, with a net loss of $980 million attributable to Cliffs shareholders[188]. - North American light vehicle production increased to approximately 3.9 million units in Q3 2025, up from 3.8 million units in Q3 2024, indicating a recovery in automotive demand[117]. - The average seasonally adjusted annualized rate of light vehicle sales in the U.S. was 16.3 million units in Q3 2025, representing a 5% increase compared to Q3 2024[117]. Costs and Financial Performance - Adjusted EBITDA for Q3 2025 increased by $20 million, while it decreased by $787 million for the nine months ended September 30, 2025, primarily due to changes in gross margin[152]. - The company reported a loss from continuing operations of $980 million for the nine months ended September 30, 2025[188]. - The company’s free cash flow for the nine months ended September 30, 2025, was $(870) million, a decrease from $87 million in 2024[180]. - Operating activities generated a net cash outflow of $449 million for the nine months ended September 30, 2025, compared to a cash inflow of $577 million in 2024, resulting in a variance of $1,026 million[164]. - The company recorded $3 million and $92 million in restructuring charges for Q3 and nine months ended September 30, 2025, respectively, related to idled operations[155]. Strategic Initiatives and Acquisitions - The Stelco Acquisition, completed on November 1, 2024, is expected to double the company's exposure to the North American spot market, enhancing its customer base and cost position[138]. - The company identified significant synergy opportunities from the Stelco Acquisition, including asset optimization and procurement savings, with confidence in achieving these synergies[139]. - A Memorandum of Understanding was signed with a major global steel producer to leverage the company's U.S. operations, potentially benefiting shareholders[141]. - In Q3 2025, the company engaged J.P. Morgan to explore the sale of non-core operating assets, with proceeds expected to be used for debt reduction[140]. Environmental and Operational Efficiency - The company achieved a 27% reduction in Scope 1 and 2 emissions per ton of crude steel produced, now at 1.58 metric tons CO2e, compared to the global industry average[144]. - The company is the first and only producer of HBI in the Great Lakes region, enhancing operational efficiency and reducing carbon intensity in steel production[128]. - The company is exploring rare earth extraction at identified sites, aligning with national strategies for critical material independence, though economic feasibility studies are pending[142]. Market and Economic Risks - The company is exposed to price fluctuations in raw materials and energy, impacting both production costs and selling prices[192]. - Forward-looking statements indicate potential volatility in steel, scrap metal, and iron ore market prices, which could affect product pricing and demand from the automotive industry[210]. - The company is exposed to risks related to U.S. government actions and trade agreements, which could impact operations and financial performance[210]. - The company faces significant supply concentration risks as many operations rely on a single source of electric power and natural gas, which could materially impact production costs and profitability[209]. - The company must navigate uncertainties associated with environmental regulations and the costs of compliance, which could affect financial flexibility[210]. Labor and Operational Challenges - The company faces challenges in maintaining labor relations and attracting skilled workers, which could affect operational capacity[214]. - The company is at risk of supply chain disruptions affecting critical raw materials and energy sources, which could impact production and operational efficiency[214]. - The company’s strategy includes improving energy efficiency and utilizing alternative providers to mitigate pricing risks[193]. Financial Position and Liquidity - As of September 30, 2025, the company had cash and cash equivalents totaling $66 million, contributing to a total liquidity of $3.1 billion when combined with the availability under the ABL Facility[168]. - The company issued $1.7 billion in senior notes during the nine months ended September 30, 2025, with net proceeds of $1.1 billion, primarily used for general corporate purposes and repayment of borrowings[171]. - The company has approximately $3.2 billion of secured debt capacity available for future financing needs[175]. - As of September 30, 2025, current assets totaled $6,370 million, while non-current assets were $11,562 million[188].

Core Insights - Cleveland-Cliffs Inc. reported an adjusted loss of 45 cents per share for Q3 2025, which was better than the Zacks Consensus Estimate of a loss of 48 cents per share and narrower than the adjusted loss of 33 cents per share in the same quarter last year [1][7] - Revenues increased by 3.6% year over year to $4,734 million, but fell short of the Zacks Consensus Estimate of $4,886.6 million [1][7] Operational Highlights - Steelmaking revenues were approximately $4.6 billion for Q3, reflecting a year-over-year increase of around 3% [2] - The average net selling price per net ton of steel products was $1,032, down about 1.2% year over year, but exceeded the estimate of $996 [2] - External sales volumes for steel products reached roughly 4.03 million net tons, up about 5% year over year, although this was below the estimate of 4.3 million net tons [2] Financial Position - As of the end of Q3, the company had cash and cash equivalents of $66 million, an increase of approximately 8.2% from the previous quarter [3] - Long-term debt rose by 4% sequentially to $8,039 million [3] - Total liquidity stood at $3.1 billion as of September 30, 2025 [3] Outlook - The company revised its full-year 2025 guidance, lowering capital expenditures to approximately $525 million from the previous estimate of $600 million [4] - Selling, general and administrative (SG&A) expenses were also reduced to around $550 million from an earlier estimate of $575 million [4] - The company continues to target steel unit cost reductions of approximately $50 per net ton compared to 2024 [5] Price Performance - Shares of Cleveland-Cliffs have increased by 3% over the past year, while the industry has seen a rise of 13.9% [6]

Group 1 - Cleveland-Cliffs Inc. is highlighted in Jim Cramer's game plan, indicating its importance in assessing the real economy's performance [1] - The company reported Q3 earnings on October 20, with a non-GAAP EPS of -$0.45, aligning with estimates, while revenue reached $4.7 billion, a 3.5% year-over-year increase, but fell short of estimates by $200 million [2] - Cleveland-Cliffs has revised its capital expenditure guidance for full-year 2025 from $600 million to approximately $525 million [2]

Company Performance & Outlook - Cleveland Cliffs' narrative is shifting from a company with a highly levered balance sheet to one with improving prospects [3] - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) came in better than expected [10] - The company anticipates continued tariffs due to national security concerns [11] Demand & Contracts - Auto demand is picking up, representing one-third of Cleveland Cliffs' business [4] - The company has signed favorable contracts with major OEMs (Original Equipment Manufacturers) for the next two to three years [4] - Cleveland Cliffs has signed a memorandum of understanding with an international steel company to leverage idle assets [5] Government & Strategic Initiatives - The company received a $400 million order from the Department of War for grain-oriented electrical steel for a national strategic stockpile [11][12] Stock Analysis - Wells Fargo downgraded the stock to underweight due to "excess exuberance" [2] - The 200-day moving average is trending upwards, and the 50-day is soaring [6] - The recent stock drop is viewed as filling a gap that formed previously [7]

Core Viewpoint - The narrative surrounding Cleveland Cliffs is shifting, with a focus on improving auto demand and strategic partnerships rather than solely on rare earths [3][4]. Company Developments - Cleveland Cliffs has signed contracts with major OEMs for favorable pricing over the next two to three years, indicating a positive outlook for auto production, which constitutes one-third of their business [4]. - The company has entered a memorandum of understanding with an international steel company to leverage idle assets, which is seen as a significant development despite differing opinions on its impact [5]. - A recent order from the Department of War for $400 million of grain-oriented electrical steel is aimed at building a national strategic stockpile, highlighting the company's role in national security [11][12]. Financial Performance - Despite the stock experiencing a downturn, the company's EBITDA came in better than expected, suggesting underlying profitability even amidst negative gross margins [10]. - The stock's technical indicators, such as the 200-day moving average, are showing positive trends, indicating potential for recovery [6][7]. Market Sentiment - The stock was downgraded to underweight by Wells Fargo, citing excess exuberance, but there is a contrasting view that the current price presents a buying opportunity [2][3][7].