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Cleveland-Cliffs: A Steel Giant's Earnings Preview and Acquisition Impact

Wesley ParkFriday, Jan 17, 2025 4:39 pm ET

4min read

As Cleveland-Cliffs Inc. (NYSE: CLF) prepares to announce its full-year and fourth-quarter 2024 earnings results on February 24, investors are eager to assess the company's performance and growth prospects. The company will host a conference call on February 25 at 8:30 a.m. ET to discuss the results, providing an opportunity for analysts and investors to ask questions and gain insights into Cleveland-Cliffs' strategies.

Cleveland-Cliffs' third-quarter 2024 results highlighted the challenges faced by the steel industry, with weaker demand and pricing driving tighter margins. The company recorded a GAAP net loss of $230 million and an adjusted net loss of $156 million, despite achieving its lowest unit cost since 2021. The acquisition of Stelco, which closed on November 1, 2024, has brought significant benefits to Cleveland-Cliffs, including diversification of its business portfolio, cost advantages, and a lower capital budget for 2025.

Stelco's industry-best third-quarter adjusted EBITDA margin of 13% is a testament to the cost advantages and strong business model that Cleveland-Cliffs will benefit from. Unlike previous acquisitions, Stelco's assets are well capitalized and contribute significantly to Cleveland-Cliffs' financials from day one. The acquisition has also allowed Cleveland-Cliffs to expand into new markets, reducing its dependence on the automotive industry.

As Cleveland-Cliffs looks ahead to 2025, it expects steel demand to rebound in early 2025, supported by a number of economic and political factors. With Stelco's assets and Cleveland-Cliffs' cost reductions, the company is well-positioned to capitalize on this upswing and reduce acquisition debt quickly with healthy free cash flow.

Investors should pay close attention to Cleveland-Cliffs' earnings results and conference call, as the company's performance and growth prospects are closely tied to the steel industry's dynamics and the success of its strategic initiatives, such as the Stelco acquisition. By staying informed and analyzing the company's financials, investors can make well-informed decisions about Cleveland-Cliffs' stock and the broader steel industry.

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