CLF - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen. My name is Rob, and I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs First Quarter 2024 Earnings Conference Call. [Operator Instructions]. After the speakers' remarks, there will be a question-and-answer session.

harbor that statements made be of that forward-looking the you will today's made XXXX. reminds Private within predictive the include are safe company certain Reform on comments call as Securities The Litigation of Act protections intended to

such that Although assumptions, could results differ that materially. cause on believes to subject company forward-looking statements actual are the based risks are its reasonable statements and uncertainties to

XX-K forth could are that differ results XX-Q in filed reports release cause Forms company's available website. which set factors Important Today's is materially with on broadcast being conference to and at and the SEC, news and call are the available clevelandcliffs.com. also on

The of At found Chief results, archived like it discuss was to introduce the Reconciliation company excluding President time, the certain be Goncalves, At Officer. special replay. Vice earnings would Regulation the will published be will call, and can the yesterday. G Financial purposes this Executive items. also website conclusion which on release for in for and Celso available I

Celso Goncalves

everyone. morning, Good

going As I'm last and on start today update the capital conference M&A. call, providing allocation I on by did an to

said our buyback we do, last during very program bought we buybacks returning February, in in our would back prior indicated be we announced share XX million we utilizing QX by the number made I shares now XXXX. with with million the than priority are $X what CLF Cleveland-Cliffs. remaining Consistent more On $XXX more much billion clear allocation aggressive from capital that for And call shareholders. share to would it that capital one

below purchase diluted an we years, by are today. we In shares XXX of on repurchases, per count trading the share share average $XX.XX or significantly market over XX%, open last have reduced where million of our realizing price couple

to immediately and new much flow we forward, billion Steel. aggressively that $X.X we by powder deploy number healthy This windows. program M&A plan also share introducing compelled that for repurchase the as free preserve U.S. open our buyback strong longer liquidity, outcomes limited no is and dry fact Going a for to given possible outlook cash the program supported are new of we are during given

alternatives competitive that the strategic company was the only at robust invited now creative advisers It's review consortiums and from their and financial no clear with process Goldman their because companies foreign and USW. and Barclays buyers, support Sachs

As Steel the we from is last to explain the without to market U.S. process the there U.S. early sale and and year, of agreement full advisers close to way to in Steel USW. support their entire no the

discussed publicly of in wrong. then, Cliffs process, The position the to unequivocally party Today, be of of the and continue veto We buyer, back his evidently ownership the beginning said outcome to has USW was in wrong. U.S. this USW August Steel denying from the reality Steel denied anymore. it. power U.S. right we There's they facto and be but continue was Back de right U.S. that has no for leaders now Biden that against any endorse go the Union not real foreign word. do more not after they even has clearly Steel, President And only other buyers on company list one. very Cleveland-Cliffs. is a their would expressed of

buyers The U.S. deal Cliffs stand deal Nippon union dead a assets. friendly involving solution no U.S. is only union close Steel. chance the Steel for to American is other and

for real a willing is meaningful only buyer resulting In everything buyers proxy for firms don't opinion. just worth or investor what coming the is auction the real terms included to stand-alone from that neither bids else inflated A an process do it of arts. is from research pay pandering to a company and the and valuation represent the price blind unrealistic targets value,

that last lower investors was is steel U.S. from far valued valuation The The over. industry reset the owned at Steel, time $XX.XX. stock real

we to sell to Cliffs. value to now have saw including the company to around sell a XXs. stock stale. that stick to the have ARBs and always will Steel no as we chance the everything, entity year want assurance reengage investors U.S. can in Obviously, even The in the diligence can reassess always shares back their there's holding last real stand-alone will the We is once as M&A everything due

much we any stock In last a the From X.Xx dollars in real meantime, returning to back stock XX are continue Buying more current M&A QX. use our shareholders capital shareholder-friendly is did handover first months Cliffs we CLF even more a than buy ourselves opportunities are our valuations. leverage at allowing who investors, for EBITDA, like net aggressive and to will to better own own adjusted Cliffs returns. debt standpoint, of implementing of a shareholder leverage flexibility target our

few years. have progress over sheet lot We balance made a past on of the the

ratings are our debt end our might for reduction year level we they stock. of just billion, net the agencies more credit debt to and to going unchanged. of rating now, keep no XXXX, target the the as give us we outperformed massive gave of prior well buy agencies are back As but kept where ourselves last the the If $X our ratings flexibility

we no from net where of X.Xx currently EBITDA, there a to also is risk ratings are. debt downgrade At

share if would have before X still throughout within more on This comfortably ratings to our program buybacks. leverage target billion the X.Xx. for of up while our category. deploy open flexibility ability just allowing $X.X entire year, net any to us existing leverage even this gives X.Xx threshold risking be X.Xx the downgrade. By self-imposing are spectrum the below comfortably we well remaining or execute we new continue We just to flexibility And ourselves, the market

do contribution, will realization the pro increased come by a self-imposed be investors also This we would synergy at to net that will scale Obviously, M&A. agencies of meaningful limited context level. any the that new bond M&A and leverage EBITDA X.Xx viewed in leverage rating acquisition the Any and credit target applies be as also positive. forma with situation same target significant

any currently we prohibit us are situation from due some point and not M&A back the diligence today. resurface would on of doubt, would diligence stock And point were performing steel the in U.S. need to that we expectations future, to For that the at from buying our at opportunity current levels. if even avoidance valuation reset refresh due

in in the with sheet balance XXXX. structure continues and record to for near shape Our bonds first capital secured time be no since liquidity our great

over XXXX, a debt X-year launched bond maturities dated our also now During we the the that redemption maturity. our we company further quarter, that This have target XX capital runway structure ago. was even with in new Lourenco final comfort the our no best us maturity nearest shape debt our since secured been level. until tranche gives of of is took years With the has

QX in QX and U.S. than expected came throughout million in of during As of the quarter, remaining sales in trucks our a our higher healthy sales participation mix. pricing a trough adjusted sales $XXX automotive EBITDA average of latest QX, automotive sales profitability rebound With in marked in due the greater of QX. our cars, steel the SUVs production to from a result in much better

tons of Conversely, distribution X.X centers, reduced and to which to net tons. net in sales delivered sales typical buyer fewer to and led a centers led reduced on more this strike, the to The million result January to went automotive output sales February, dynamic service sector. a service of of

ton ton course, X as distributors reduction an in centers compared to $XX Though million maintain we trend, our the Now again to unit come well heavy the the net pricing quarter. That the the begin drop expect steel in by off quarter-over-quarter. an and that impacted $XX on costs exceed and of ton in automotive expected in Unit overall production second is shipment lower in were, QX we service have mix QX cost sidelines the an in as guidance per costs XXXX. upward will previous of with here approximately volumes. XXXX per level

have heavier prices. unit mix offset production by The impact QX lower automotive in volume and gas on lower natural costs been

as million projects Middletown impact $XXX These the quarter, not case the for project, related first in use DRI to our total And decarbonization worth and year. future in infrastructure. for X this represented government, working a of we the we the cash, which mitigate negotiations capital should other U.S. DOE of QX, were will EMF As a grants. to second publicized related for significantly capital the of blast furnace in to investment spend the is during projects Middletown expectations new widely of expenditures selected typical recover Also award quarter. the expect by

annual cost for With XXXX virtually Our Lourenco capital million his billion expenditures starting to the ultimate XXXX, from that, in outcome net in I $XXX to it is projects that investment will production. expectation hover no $X around to will over of turn impact through remarks. X with the related XXXX with savings our

Lourenco Goncalves

you, everyone. America. simple Thank special and workforce. particularly or complex of somehow in Cleveland-Cliffs respect Celso, good has is that. a corporate beyond morning, unique We There way nothing business conducting yet our very

Our our employees drive our and performance profitability.

why are treated the is Our here, accordingly. we're workforce reason and they

of a brighter course, running I the Of obviously have this. always But year years shared events Cliffs. this has been light the the during been case last the past XX have on

force taken outshined is workers on and our long written all with something by empty promises outsiders with of worthless relationship workers, can have function be union represented we particularly to a the with the Our labor of that and not view paper. respect pieces from

understand unsuccessfully Nippon without that representing do this has they day, baffles U.S. me clueless event in acquirer that to attempted embarrassing this. felt Steel the this of failed individuals to still union Nippon support. Steel Steel, the It could this

workforce. and cannot board fiasco, direct GOES, fellow represented M&A in consequence U.S. USW a do the mind. it had Steel the of just CEO with historic You members was his This

Therefore, were To it do necessary sell second, to and against to Barclays, Cliffs close clearly they the everyone against good the of buyer sense and a Goldman them, cannot else; the for their shows the directors prejudice we not ignoring steel and and Milbank, to Wachtel, USW, only USW. Sachs have demonstrated give from to a that the Cleveland-Cliffs. still advisers to for them, back enormous stockholders First, despite deal. of the it break was all

to The that always the done be and importance union sooner ways of a jobs same view than the transaction terminate America. we administration Nippon shares had class has in have grateful rather we U.S. believe for about middle thriving are different will that later. We the government Biden the

the solution we had position, a assets expressed the of Steel Nippon his facility. the union States not spoken, we represented U.S. attempted and has Biden to them. accept available this keep the option the steel in Nippon the no assets nonunion after to that. first place, President Big is now they United longer where wanted did Before clear River offer to Steel, acquire Nippon President of would would And

value the Nippon is actually great they because technology. now saying can they apply blast the furnaces

point clear. blast me Let the hogwash. be This special furnace There talking is complete technology. Japanese is on about nothing technology

the they use injection of on facts. iron everything and all direct at furnaces, of already is charging not ahead of have furnace far reduction, that of blast Japan. even them are We technology have related. superior gas we low of on not Cleveland-Cliffs, ore sinter, HBI hydrogen, blast that in so-called The and any the do natural in pellets United There based and States in remotely the

now say about blast is But Steel, and that BOFs anymore. bad, say people on BOFs that hell-bent mute. are point. in my are don't States United to one that's to furnaces Nippon and validating good used Steel for They furnaces being thing Thanks, that Nippon blast know now the on what owning

the fee point, breakup million and of appreciate prove to just my pay $XXX to that. have You I

money will well spent. be Your

in been also interest with Steel worse for which downplay. of the U.S. several Probably still violate all. completely In love to the China, trade Unfortunately, among they relevant And Chinese, Nippon board. the the the hide Nippon deep Another perpetual them, that Nippon is trade Steel worst their laws. has exposed. has they my than our international actually the past Chinese. cannot have been steel also ignored view, by actor point over ties in decades a still and significant

has largest for Toyota in back Japan, increase that price for to existence in never the our the sued order customers. in largest done a is States. also States United the automotive manufacturer, By obtain is U.S. Japanese the clients. here the Steel has way, Nippon's here Cleveland-Cliffs bad in the automotive And Toyota. recently record, Nippon United in

the of prerogative. day, feelings to thing are ends, they their a want still Nippon other of And ultimately the the with so. good If end But continue is this only we U.S. hate the have sell new what breakup in company by are to that's them you alternative said assets they themselves done case, to At the that's whole When or I to do If the and hurt, be to directors Steel they running don't there Cleveland-Cliffs, to to fee world. but sell don't don't their Cliffs. from you to going easy way after no the [indiscernible]. the collect respect. workers, force as that is have luck,

Cliffs or We M&A. that The example we now From without has buyers relevant were share other is are our of stock opportunities repurchases. at overdue QX. still side, right new in And our with prices. reauthorization, today's with several of our our most

support displayed just organically profits also initiating our ability projects government. are grow the with We two we with to the of U.S.

company supported federally X direct is history. well our melting technological ago The Middletown our for as and investment X-year at utilization. co-investment we this our reduction game period Works on over our advances U.S. The a blast in made government XX% industry. COX will million for as decarbonization our our replacing receive reduction project emissions a note hydrogen the of largest took $XXX initiative The years furnaces in billion in electric facility $X.X furnaces and changer with DRI X and a makes investment

in In down metric X.XX is net the lowest per cost our cost XXXX integrated report per current average $XXX produce Middletown our our published of reduction Middletown the Middletown United To When COX we net full ton recently significantly sustainability of DRI current global the to steel, tons metric cost pig cost $XXX intensity project and about produce X.XX savings, in the from another iron Works States. below per to reported of current in producing will the illustrate operation, ton. less X.XX. in facility be is is ton, and emissions steel to than in

existing to solid a furnace, getting be time, will into in creating be highest into process process increase iron. fed Hot DRI the pig contaminated will like by pure a melt DRI we be in that fed will melting Knowing liquid, our into avoid a to automotive expensive can scrap and iron maintaining not and over technology, quality intake, it market downstream. the hogwash further ability that demand very scrap simple equivalent scarce, technology, any end more our PR. Japanese using markets serve That's American our BOFs

reheat electrical our electrical electrified DOE will we gas critical with That were these our emissions, natural productivity million slab Works, of At by our $XX Butler and awarded improve steel, reduce furnaces. the to replace country's slab production fired grid. furnaces enhance grain-oriented GOES, to

the in in of future The as all our new used standard States DOE's effectively standard initially emissions at was If proposed, the last initial adopted, of risk replaced year. have in of amorphous under the metal. use with transformers the production proposed new GOES the would as United made of GOES draft Japan

Josh And elected with officials like and Cliffs them. and telling Pennsylvania Sherrod United Pennsylvania. company Butler as well Chris the of we're of American Pennsylvania Kelly transformers help DOE from and Fortunately, representative, of great the County Brown Mike Ohio, heard Deluzio Senator Pennsylvania Senator in what Bob Shapiro the representative in our is States, Pittsburgh, Governor of Casey producing clients, from as

to Just a more standard few, a was reasonable name adopted.

the way, there that's top our By our continue use American has generate in to for business, transformers to that, to more country produce to will a more States in to great GOES the be transformers United customers transformers With demand and workers. jobs and will opportunity needs. for and produce continue the they been

infrastructure, has customers see additional enough in important because our in produce to more for steel both capacity and and totally Pennsylvania deploy this Ohio. must transformers. GOES to already made viable expect significant Zanesville, of we Cliffs That's producing investment in U.S.A. We from piece

production Our idle other major our was of April indefinite move Weirton this quarter ceased facility, the announcing officially XX. which on

In surprising of of X was and past due Department recommended Weirton's some negative countervailing antidumping trade to EBITDA to the our the duties contribution on tinplate million Over imports annual years, of products. the average a Trade unfairly $XXX largely Commerce January, continue States. reverse have allowing the United of would a imports International into mitigated Commission for low-priced decision Commerce totally to in Department issue. But these in flow the which to this imports, February, recommendation

we had than leaving XXX Weirton more exit As employees job. tinplate no but result, market, without a a choice to the

these to retire of we Some able were offer to and at employees elected impacted workers employment the Cliffs facilities. other

we other As of to have locations. XXX today, been over relocate able to employees Cliffs

taken this was in by us. million at charges mainly Our other in is GAAP the Clearly, quarter driven expenses. support QX written employee onetime for impairments an with primarily loss costs $XXX asset eventful along and approximately

us business once improve, U.S. carried automotive growing for year. for consecutive as in sector automotive the to the the again fourth continues day Our the

best-in-class customer customers just car just save other each expertise. competent the their ton. car few need all Our quality, bucks manufacturers. of for to performance service delivery one a us and not suppliers for a is are steel our on per to manufacturers less bet Buying suppliers decision price-driven for willing performance, technical individual But

these so Some to by are willing and Cleveland-Cliffs do delivered. Message will accordingly. be ones treated

in Q&A. With lagged the side, prices should Demand to flip the shipments and both price have and impacting the volume. that, support implementing level turn service quarter, On for This success has returned on X I our business we above had Rob increase. volume million-ton price production our it and will center since recent past QX. over in during

Operator

Riley [Operator is Lucas the question Instructions] from today Securities. of line with B. First Pipes

Lucas Pipes

the is I wondered, -- and nonunion anything you there assets off that could acquired revive and assets And that the that? option that option piece is the you Lourenco, essentially dead. acquire said Nippon of union

Lourenco Goncalves

and to Steel, message the least option, to law were Steel never this the Gray but and discuss. to I'm the able at & representing bank offer, offered I deliver Steel reply Nippon they By said Steel to between to I assuming Nippon Citibank Nippon because down Nippon and Ropes firm courtesy had the sit representing way, the that that my

of just gone said assuming because what they at deliver said dictator. do. the proposal USW, Dave for run. And repeated wait that they already McCall, said, said He to to publicly is the already promised to not President this a I'm to So of will He's to going proposal yes, Steel. situations. he in the President the of That workers United USW this the what then he's needs Nippon they do they States he what had point, and the what the done did public he -- to at the has point, the process to

So cannot it's I the the President go against game of the word United States. over. of

So XXX% off therefore, totally my option table. the is

Lucas Pipes

That's very clear.

prepared also And you the be flow, QX towards any and me you environment free what about rest steel that And of impact deleveraging QX, levels also for us towards buyback? the in remarks, year? the portion the margins cost so as cash current the off the reductions in of kind of higher think would in on you XXX% those? mentioned And remind of the in think I could or would QX go or

Celso Goncalves

Lucas. Sure. Yes.

relates XXXX costs. cost of ton from to an achieve we XXXX, very lower to $XX negotiated gas, savings from well, indicated coal. We that a costs, equates that's million it kind to And alloy contracts coal As come per we're our going primarily natural lower annualized lower $XXX to basis. a going which on decrease, to

costs. that are help to X are drivers going primary these So our the

a you'll here is is relates going see the full coal help be to to ton, value-add costs Natural than been less benefit to mix which to these down QX, gas we be slightly costs. going start lower also lower are As the to from QX in it $XX and contracts. expected, specifically, has going

your other cash I As of question, in deleveraging. terms flow free it asked to believe you and relates

balance look be call. clear use last buy leverage well. QX as above within made essentially ABL. the I as that opportunities a were that share the during all back in bonds clear number bonds But But well. bonds had We're little that giving category, we that the this more do are in because more our back of abundantly would obviously, trading We stock. it look one think to paid rating if ourselves entire to flexibility made to we do bit our do to that open buybacks open to buy already the opportunity to priority. market, I opportunities didn't have we market. if pretty in we'll down buy see par, We'll back and there existing the

Operator

question next of from Our is Bill Peterson JPMorgan. with the line

William Peterson

you've -- prior follow I wanted the mix? the as product that little up should impacts a to of the said bit quarter? we their negotiations And play on Japan you auto trajectory second think but fiscal then the you we do how think that, and question, they about And on the headquarter with how especially pricing maybe answered related companies that, into with had the timing? to contract negotiations, if given year about out, the

Lourenco Goncalves

them. and these eventful clients went And that we April negotiations their auto renewal one asking X one they're have Korean And I'm these they what are The smooth. the the negotiations X related their we that I'm each Japanese, ones are tonnages countries. are on basically period are were totally because of growing that transparent And respective of delivered to the because fiscal for. this for happy year to in glad each April are Asians, completely to the inform guys is sure accomplish And those time. everything

example, Cleveland-Cliffs. for one for Asians bigger bought a as of consolidating, Stellantis So the client

price of So for It's like pack. are now client me priority driven longer became now are much treated part these top and another Cleveland-Cliffs. going for and is us here for the a citizens, the we ones that to specific a Stellantis. like than Stellantis. do Stellantis to as continue that are no second-class bigger for They

And of be great. of cars. the only quality is are that mind, day, what ones automotive. The low less end cost, the When was going its the the building selling differentiate you're of help good that I concentrating crowd matter April up and that's to some reflected April are the say was This one It's to to -- was block. other bad for happen, tonnage on And at the time. we difference of in clients part keep in and grow for the on a more continue end we will sucks. the fantastic. car, ones. totality, you that expect the of It would from a clients. the we I for So hitting good only

William Peterson

Yes. Maybe Celso, the product second please? maybe pricing trajectory mix into to and speak of the quarter,

Lourenco Goncalves

take Let as mix me the product well.

the more Second But a and and quarter that was no a things automotive. the They're for announced buying resolved second of price because more increase, perspective, marketplace for first competitor see lot the bring much then and between went not be will QX waiting returning the very all still that announced had very intentions. But reference still period that go of center price -- day, less. buy. will consequences But for a so us why normal, marketplace, out also at at a increase more the a we Then beginning buy of if different and on of after first a price in we centers is normal a the quarter distribution and the Fed to price waiting service of to became expecting working kind automotive. because for buyers had announced concentration recall, kind buying, down more you all, that's all well. Unlike to in Bill, complicated the through the just first then Automotive a quarter. And was centers. lot a the through this, And are more that lot first than the among service January our I mix and that service and much their increase, we February, in we strike playing and end price we buyer's waiting event. uncertainty

will Service distribution normally automotive to where continue be and bigger, back the mix center good. mix become the So is. that will will and to bring

Celso Goncalves

the and can enough were an But contracts. We're that is lags, just Obviously, obviously, are are kind our with of have in about we've might pricing, XX% kind terms X-month to on month in what true you selling XX%, Bill, our I price, then the calculate XX% refresh quarter XX% on lags on. of slab are believe a impact in which on crumbs question price. year what And of for answer terms the lag. on related rest, have I be. you of mix volumes think XX% the will to And what given bread QX. XX% index-linked focused of just Yes, impact full about which XX% everyone spot. contract to lags call the it, to fixed CRU to is CRU we and your

ton. kind So when selling QX. up can expect be the overall, from is a the But of down is about you QX, QX QX, monthly $XX you think lag quarter lag from average to price around down

William Peterson

That's super helpful.

on company so basis CapEx. Second awards net guess, a stand-alone thinking CapEx I with the excluding one forth. And and is about on

you on billion about this have more in over $X like, or guess, little maybe after you the talked You the year. next XXXX, normalized Can I X granularity provide even assuming years 'XX. visibility better a particular,

is to think how free questions your getting been year. flow cash this generation ability of lot a beyond we've about Just

Celso Goncalves

Yes.

of a granularity think go little I it's XXXX. into to too the early

detail billion I think able stick more With to we be way then confident. the and to that you just is share $X when about million billion which exceeding easiest very and only to to get 'XX won't we'll as year, you're get But think closer, XXXX, we're XXXX. $X get probably it 'XX. related to even for to $XXX this

Operator

question comes of the Gibbs with next Phil from Our line KeyBanc Capital Markets.

Philip Gibbs

DOE I've grant. timing of question on got the a the just

the lagged fund funding? substantial over Or DOE brands those get projects get CapEx a X to have start that 'XX frame. obviously is 'XX very you that kind you project? Do on sum before You capital you lump the upfront of time as spend

Lourenco Goncalves

take Celso let that. I'll

Celso Goncalves

with you're out Phil, spend. right, No, about the pro Yes. they're way to That's rata think easiest the paid it.

Philip Gibbs

you it? And the pockets or technology, the the relatively what complete of at substantial line can kind need with is you terms You've timing then at so diligence that more maybe it's or us and Middletown And due of given the least looking as of to are design? time give project, this of in do all new phases scope, to you given in states.

think I people interested hearing would just that. in be

Lourenco Goncalves

to producing we Yes. Toledo, it's instead No. it's there, be stretch, new any DRI EMF? from and our arc this facility on-site not, that facility DRI EMFs. to producing of brand-new by case combination Look, in melt iron, be be It's melt a instead direct the of metallic plant will furnace in hot an -- then I'm HBI plant. the what's reduction new it sorry, producing sponge And it's hot iron like it's ore because ore, a hot -- plant just of DRI, direct fed through we'll will in DRI technology producing electric because of the reduction iron but be will to

nothing And So that There's are it's things well. extremely X complex. really we setup. these do a simple

arc furnaces, world. I we we We far this so the plant as dominate have the direct electric as And operation. in reduction best-in-class know absolutely have

to be we are and ready Toledo. ready hydrogen are hydrogen we So going in

hydrogen. using been have We

the just early term, immediately then start are short So go XXXX, natural goes with the plant sync this hydrogen when able in start hopefully, up by and gas or into the the XXX% stock and the we or to for with to hydrogen operation, by be XXs. gas

these produce full capability. combination of are So and this how have automotive one, changing particular operational that, terms And game the it's But use to of grid a technology we steel. lot operational knowledge to in full in a things terms things. we real proven in produce of steel, a of to all second, -- is

So there's big deal. no

Philip Gibbs

mix. the on lastly just And

Are and or the are to centers be of QX back. You we expecting rather auto in mentioned be the expecting a QX, well? in Or centers then took automotive carried step the auto service the increased to relatively as day improving stable volume? you service driver is

Lourenco Goncalves

now they selling into automotive all to the They very or they not all Phil, particularly they're no They ago. even hybrids. are months be vehicles are X going now the and XX Tesla. talking as to continues on electric that months longer hell-bent The are next turkey. that cars as do are now were well, are ICE pursuing

ones winning so only pretty day. cheap ones moving the in are that And all because buys So to that are except are the them faster big much are that of stuff. we supporting hybrids one the

a really among support to And don't We car we and are have the problem the winners going losers to manufacturer. that growing. ones continue picking are

in able to I sending States sell yesterday, the I'm Mexico, no longer that cheaper to is to to now to plant Volkswagen Mexico. in the then Tennessee Volkswagen steel from support example, For wages would just the United States to back have I UAW to not cars going pay United Chattanooga, workers to there selling Volkswagen. that. unionize was I'm steel to no announced rather for Mexico Chattanooga, point in Particularly that in Tennessee. because just selling

sell So make we is our among we are can more be to that the lot a automotive going no to alliance to business price. selective clients. But But start mistake, innovation only American lower to need up this for us. automotive with a for good the come innovation

that. to do play to We to Cleveland-Cliffs' going continue not need through the are And automotive don't grow size we our to we game. in are M&A. So going

can be And do, Cleveland-Cliffs but bear for forward. market. in this going are enough, smaller, and to but we are going be that's fruit what will that We big we

Philip Gibbs

in comments to team when to the take grain of timing outlook I and around it the spend on in terms years the bullish, Lourenco that X and of But lastly, what's your particularly maybe very And oriented market, the relates going over grid your place. XX in shorter think steel are next is months electrical next to as volumes? several term, the

mentioned light expected after some Canada years of XX this and on offshoring Mexico side. that that Maybe the within last spat, in transformer shed reshoring question, you too. you remarks saw perhaps we also then into on your in prepared some aspect, the And that

Lourenco Goncalves

Look, because go this us. situation hard administration bleeding. of while, since only we But from working reshoring stop thing to have been we allowed very for the happens to the Trump this away a

very by that from ambassador, with Lighthizer. put XXX, happen. that hard laminations. couple Bob of on despite XXX the the to a If Mexico never Section the we the worked years fix you signed efforts And Trump was which allowing the able We were recall, to USTR way, to great President was by Trump without Section during of main the the reason that was cores and distribution the administration, last

thing For not thing. But We President clients. least the the Mexico with signed a And that some are anymore, the major the reason, in that to bridge. water Trump under never fixed this at not clients is doing scale.

On Among are the that we we other things, know when transformer taking inside was importation the import Secretary, don't the you risk hand, transformers what's we the of discussing the with when Jennifer Granholm yesterday transformers. other have still transformer. we into import country. I entire this situation even about And

and to reasons. need there's that we financial stop security So

will to the can't President We allow that And to on that. the is Biden our work fantastic. to The in administration. States more continue whoever the importing happen. work need We continue to produce election, transformers build thing We transformers we is So with stop good we in the dialogue these United transformers. is the that clients will United to States. that need with after

We of with situation are transformers. allow will grain to investments, produce oriented a per the increase to can minor GOES, rehabs will throughput we XX% more us with GOES working on electrical to steels XX% a solution just Butler for for transformers, lot resolve capacity in that produce Weirton our the more

availability to and That's be the in of successful. believe to and we workers. So we We transformers takes, what with throughput need workforce made the we for can the factory the increase can Weirton, it we to we're supply Virginia but We in are support we on, hopefully our working whatever there want new union to transformers. do can chain, U.S.A. co-invest, just West going and steel. the transformers a using produce with put

Operator

Hacking with question Alex next of the Citi. from Our is line

Alexander Hacking

Lourenco and Celso.

to sounds timing be a you're awards. Just I somewhat assumption? confirmed? confident there timing would money awards am that like of expected in the the very the is coming be those back then -- when awarded, formality, It correct what and the And DOE negotiations of assumption would that there, be are that, will that

Lourenco Goncalves

or don't I Alex, the a Look, a are you confident be to believe finalize year we answers. basically, with that of frame are it's lot questions, and rest is asking discussions negotiation. successful. lot going a to good call to we this And the whatever formality providing this we fairly the for are time because we're the of of believe are what good But going or they use negotiation we

Middletown They I to they not good be don't the think and payers it's a at doing day, $XXX we it's formality. need do. I diligence it's the million job. Butler, million, it's for money. believe a giving lot the are that us of end the are of $XXX are so they very for due formality. $XX a of million going money that the doing seriously. But tax At and to end And this day, a take they

ones talking We really in they're are what to are them important are report what doing part process, having trade the analysts, research about. educate of they government the Instead the we know learning the process, or And ability the in most in the reading in is what the work. on that only they we from having the do. from the press

Alexander Hacking

Okay.

Lourenco Goncalves

that don't Yes, know that what you in talking includes the you're about. ground

that. about me, Alex. You're But just right that's

next. yes, next? So what's What's

Alexander Hacking

like the reach without project But -- it really It the would whatever be it's Let's the until award. that still even melt that you would economics say reason, you for can't like that that say wasn't with sounds ahead sounds move compelling Or furnace in you a point? electric of awarded. the is money circumstance?

Lourenco Goncalves

on will And projections the case the confident a It's money well changer. without. that It's it's DOE, real money very Alex, a it's coming with a But I'm the very, from spent. course, the we, I no-brainer. return with of compelling money. of and investment, get game run very

steel $XXX That's more liquid costs produce the ton. than reducing to We are to per significant. going our super be same by ton of

without still okay, want ROI terms we is with the working the the project. And but is other things, grant in far, money. government our to yes, I and what believe unbelievable. with with based And together doing that so get the deserve is on that we ROI the together So workforce, the of, grant Cleveland-Cliffs among working

Alexander Hacking

that per provide ton. that technology number that I really I because $XXX And massive the finally, obviously earlier. a EBITDA just the shifting the mean in is you uplift, guess like mentioned I direct would from savings mean right,

Lourenco Goncalves

Exactly right.

Alexander Hacking

apples An apples to comparison.

Lourenco Goncalves

decarbonizing. for EAFs. when Exactly he XXX is a steel said, down money Kosice respect. minister Slovakia, unemployment. about, go? a replace there to are right. shut conversation I was of of granted you is And Minister, metallurgists, so that. know had of you the massive know economy BOFs doing will don't that with Europe be that the -- and able not all personnel technology. that's producing X/X be The to the consequence produced today said GBP put that So do kinds your down discuss million talking I yes, let the due what of I unfortunately, with furnaces easy that. When produce furnace be doing Because It blast and and U.K. of and with Mr. to was EAFs shut just and then blast all I you're I'm would like

picture. the understand where to to big So see is. We got cost we've got

and realize we that China and doing industry by way an so steel it be a and picture end the here ton things Cleveland-Cliffs. the you you a you enemy and lot ago, United at per then cost lot that $XX up education bidding. And we per saved years cutting engineering States. here to China. to is of yes, believe the and you technology see do are created of world, $XX a to you And then takes of that got lot tomorrow, today is big and And what in of If envy the the decimate X you ton was with create

found cabinet members we are administration, and we We of happy happy the very willing counterparty are that. a in that several with Biden

Operator

Paribas. Gresser Our with the line next Tristan BNP question of from is

Tristan Gresser

split net first follow-up question. my what gross of $X.X elements the 'XX. a on sense Just That's a normalized a and gross XXXX, give closer please on in the maybe Would project us maybe basis, billion? project. to Can CapEx CapEx 'XX, decarbonization basis, a it but be on the look not 'XX, on like the CapEx would you Middletown

Lourenco Goncalves

please. Celso that. Celso, I'll let take

Celso Goncalves

impact to the no million. Middletown the about million. there's abundantly in DOE about $XXX down, to from want if to And of XXXX. just everything said, is that $XXX spend CapEx these break XXXX, related XXXX, be I in like starts Tristan, sure. Cliffs the everything in And total projects CapEx Yes, clear, portion to you is

we of about said you the don't about go billion. $X.X and why in market. steps $X gross 'XX, that's And even then $XXX million up when the crack Middletown to 'XX, billion total So I above to

the that's of breakdown So next couple years. for the

Tristan Gresser

The number, billion, net All right. $X.X right? that's a reline And helpful. and That's the grant. so the removing

Celso Goncalves

Yes. Correct.

Tristan Gresser

into second the question, the the carbon footprint, the as given should cost can for as but of way the we then you mentioned translate premiums, benefits also benefits. that forward selling project rest Middletown think And the

that I think you mentioned XXXX. was in the there reline past next in a Burns Harbor at

way? make melting convert So case, sense you basically, decide kind of that's unit to setups. gradually your footprint this And should if the DRI funding doesn't this this available, BF to it go would to be more

Lourenco Goncalves

absolutely on are, biggest is that piece very Middletown just coke numbers started where And in cost cost is to But piece savings a let's question. it's good I of us Yes, in of for the our this the go reasons studying we first that SunCoke. by our The contract problem my you. Middletown we That have project gave why in place. horrible. punitive with the one is very contract

So change no to that going situation what. matter is

not that by we penalized are have. SunCoke horrible be contract going that ourselves keeping We to with

of And improving things. Middletown, we come to But Burns to it's of to have like, SunCoke. been -- clear Harbor, that the plant the go Burns is because or coke are in example, a other numbers as switch at response going a as the you. because to that, produce reasonable with not production we have water. footprint. lowest company the to hell our mentioned that, a project is numbers are entire because When ability grant. a cost I among lot, But high Harbor like our for contract the is in direction plant mainly, cost. the our to to for So we the we going I'm go get there that

the And we we we of quickly. But technology. go with direct direct implementing new to the a I to our the reduction will Burns Harbor in Toledo. dominate be we easily see company plant like So did don't so plant us Middletown with are now first able we know course, new our our in Middletown going reduction to with configuration plant, because in were that that,

be but a be it's know next, I would their next there's who continue So in if possibility, if in first, have we and and will we route a who don't are of to that's priorities going terms the our case.

Tristan Gresser

can there the very second bit Maybe situation could upstream, the is facility Maybe slab All agreement. ramping right. a year. That's clear. at you if question. The little discuss its final a Calvert, supply one you go with up have

Is or to options? So I supply? other Calvert contract is, solution already have think discussion negotiation. upstream slab you that or the what is with let's topic for up say, well, Do a are go but year, of the decide renewal next some

some share helpful. would thoughts that could you if be on that, So

Lourenco Goncalves

going. has -- started. And I the course, I is going negotiation you Yes. how negotiation the be. just give will The you can't outcome tell not will to you what I'm details of But give of

deal to better closed. Cleveland-Cliffs. contract XXXX, have close might a The contract with and a we for is much or and in contract us contract. last Either end for puzzle was acquire we And the We no good. December us that good contract be better USA, up was one will the of of No good. piece ArcelorMittal for is the

happened XXXX. negotiation September that So

it's somewhere we're to prepared So like be at ago. I contract, can without that to and almost knew X the still we any going friends, with if friends we Otherwise, improves, it's walking expiration continue have us work to but now situation contract our was And deal. time the of okay. else. without be slab to middle. be that We they'll contract. Cleveland-Cliffs ArcelorMittal I was And That's into. exactly that years where find

Operator

America. from Our Winder Bank next of is Lawson the of question with line

Lawson Winder

ship at up? And Zanesville. to like about would Has ramping NOES started I the how customers? that is expansion that to ask to

Lourenco Goncalves

electrical of by is that steels, modest created small investing always electrical believe have accomplished. our amount Zanesville more vehicles. in in of relatively a money we non-oriented particularly And for expansion NOES The motors CapEx. increase in would We we capacity in operation for used mission and

So executed we're good. planned. The project was as

We steels. oriented selling are electrical

develop and already we for fine and to mainly -- our We NOES. beyond are that intention our applications with expand no continue with have to clients we we automotive with have what

Lawson Winder

per Okay. price I base about you the at can short And $XXX set that also ask ton.

pricing indicating $XXX Are range. And are your prices still you ton reporters the the two? price that lower pricing the in mean next guys what's on over month in I short or realizing thinking So per XXXs.

Lourenco Goncalves

announced increase. are increase public I never and our price predictions get we on We price working give price. to that

right announced direction. We are meantime, selling in we We're that are. we price increase In that our actually for matter, still was for everything alignment. not growing $XXX, the in the and

the price of to would question different out you clients the in trade a -- what other press. hit. So every I'm reads answer that everybody your world said sorry, we world And pricing line points. other yes. But clients, live other is came particularly with comes And to single you competitors in a of like that competition, just

when happen. service terms a effective. lot think do what's that only particularly weight be we inventory because suggest can in to more or end latter done, Ozempic, not be expect I lose these buying on they of the of the for -- depleted will XXXs, the But $XXX. their right, right quarter. But get happened changing you, But always we to like are there? always the No. So telling we're bible. are it's that part And would will they we're diet see Rob? that XXXs that It inventory. yes, With low an at I of the the was to right. selling want easier I'm their now during sell and easy environment. take completely for to they centers before things the going are that -- to that, to more prices All is that And day, Mounjaro seems

Operator

to that's Would like correct. you closing Yes, some comments? make

Lourenco Goncalves

Mounjaro, Ozempic. Done.

centers pair You'll inventory. to carry as supposed lose service But far are weight with exercise. as with that and inventory

inventory, a for up disgrace. are yourself you carry service don't a you center, setting For

Good talk to now. So everybody. soon. my Thank Bye but you be luck. I'll you, guest.

Operator

joining for us conclude This call. today's Thank you everyone today. will

may disconnect lines You this your at Thank participation. you time. for your

Cleveland-Cliffs (CLF) 23 Apr 242024 Q1 Earnings call transcript