Core Insights - Cleveland-Cliffs reported a revenue of $4.63 billion for Q1 2025, marking an 11% decline year-over-year, with an EPS of -$0.92 compared to $0.18 a year ago [1] - The revenue slightly exceeded the Zacks Consensus Estimate of $4.6 billion, resulting in a surprise of +0.71%, while the EPS fell short of the consensus estimate of -$0.78 by -17.95% [1] Financial Performance Metrics - Total steel shipments were reported at 4,140 KTon, surpassing the average estimate of 4,064.01 KTon [4] - The average net selling price per net ton of steel products was $980, slightly below the estimated $985.85 [4] - Steelmaking revenues totaled $4.47 billion, exceeding the estimate of $4.43 billion but reflecting an 11.1% decline year-over-year [4] - Revenues from coated steel were $1.36 billion, compared to the estimate of $1.34 billion, showing a year-over-year decline of 16.1% [4] - Revenues from slab and other steel products were $247 million, below the estimate of $312.45 million, indicating a 26.3% year-over-year decline [4] - Revenues from cold-rolled steel were $591 million, exceeding the estimate of $555.93 million, with a year-over-year decline of 21.1% [4] - Revenues from hot-rolled steel were $1.17 billion, slightly below the estimate of $1.18 billion, reflecting a year-over-year increase of 3.4% [4] Stock Performance - Cleveland-Cliffs shares have returned +6.8% over the past month, compared to the Zacks S&P 500 composite's +11.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

[Definitions](index=3&type=section&id=DEFINITIONS) The report defines key financial, operational, and technical terms and abbreviations used throughout the document - The report provides a list of abbreviations and acronyms used throughout the text, defining key financial and operational terms such as ABL Facility, Adjusted EBITDA, AOCI, BOF, EBITDA, EPS, HBI, HRC, OPEB, SEC, Stelco, and USW[7](index=7&type=chunk)[8](index=8&type=chunk) [Part I - Financial Information](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's analysis of financial condition and results of operations [Item 1. Financial Statements and Supplementary Data](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents unaudited condensed consolidated financial statements and detailed notes for the reporting period [Statements of Unaudited Condensed Consolidated Financial Position](index=4&type=section&id=STATEMENTS%20OF%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20POSITION) The company's total assets and liabilities show slight changes between March 31, 2025, and December 31, 2024 | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Total current assets | $6,964 | $6,907 | | Total non-current assets | $13,872 | $14,070 | | **TOTAL ASSETS** | **$20,836** | **$20,947** | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $3,266 | $3,322 | | Total non-current liabilities | $11,185 | $10,677 | | **TOTAL LIABILITIES** | **$14,352** | **$14,050** | | Total Cliffs shareholders' equity | $6,254 | $6,664 | | Noncontrolling interests | $230 | $233 | | **TOTAL EQUITY** | **$6,484** | **$6,897** | | **TOTAL LIABILITIES AND EQUITY** | **$20,836** | **$20,947** | [Statements of Unaudited Condensed Consolidated Operations](index=6&type=section&id=STATEMENTS%20OF%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20OPERATIONS) The company reported a significant increase in net loss for the first quarter of 2025 compared to the prior year | (In millions, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $4,629 | $5,199 | | Total operating costs | $(5,167) | $(5,237) | | Operating loss | $(538) | $(38) | | Total other expense | $(92) | $(23) | | Loss before income taxes | $(630) | $(61) | | Income tax benefit | $147 | $8 | | Net loss | $(483) | $(53) | | Net income attributable to noncontrolling interests | $(12) | $(14) | | Net loss attributable to Cliffs shareholders | $(495) | $(67) | | Loss per common share attributable to Cliffs shareholders: | | | | Basic | $(1.00) | $(0.14) | | Diluted | $(1.00) | $(0.14) | [Statements of Unaudited Condensed Consolidated Comprehensive Loss](index=7&type=section&id=STATEMENTS%20OF%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20COMPREHENSIVE%20LOSS) Comprehensive loss attributable to shareholders widened significantly in Q1 2025 versus the prior-year period | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net loss | $(483) | $(53) | | Total other comprehensive income (loss) | $75 | $(9) | | Comprehensive loss | $(408) | $(62) | | Comprehensive income attributable to noncontrolling interests | $(12) | $(14) | | Comprehensive loss attributable to Cliffs shareholders | $(420) | $(76) | [Statements of Unaudited Condensed Consolidated Cash Flows](index=8&type=section&id=STATEMENTS%20OF%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20CASH%20FLOWS) Operating activities used cash in Q1 2025, a reversal from the cash provided in the same period of 2024 | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $(351) | $142 | | Net cash used by investing activities | $(145) | $(179) | | Net cash provided (used) by financing activities | $499 | $(131) | | Net increase (decrease) in cash and cash equivalents | $3 | $(168) | | Cash and cash equivalents at end of period | $57 | $30 | [Statements of Unaudited Condensed Consolidated Changes in Equity](index=9&type=section&id=STATEMENTS%20OF%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20CHANGES%20IN%20EQUITY) Total equity decreased in the first quarter of 2025, primarily driven by a comprehensive loss Changes in Equity for Q1 2025 | (In millions) | December 31, 2024 | March 31, 2025 | | :--- | :--- | :--- | | Total Cliffs shareholders' equity | $6,897 | $6,484 | | Comprehensive income (loss) | $(408) | $(408) | | Stock and other incentive plans | $10 | $10 | | Net distributions to noncontrolling interests | $(15) | $(15) | | **Total Equity** | **$6,897** | **$6,484** | Changes in Equity for Q1 2024 | (In millions) | December 31, 2023 | March 31, 2024 | | :--- | :--- | :--- | | Total Cliffs shareholders' equity | $8,122 | $7,442 | | Comprehensive income (loss) | $(62) | $(62) | | Common stock repurchases, net of excise tax | $(615) | $(615) | | Stock and other incentive plans | $5 | $5 | | Net distributions to noncontrolling interests | $(8) | $(8) | | **Total Equity** | **$8,122** | **$7,442** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed explanations of accounting policies and specific financial statement items [Note 1 - Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=NOTE%201%20-%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company is a vertically integrated steel producer focused on the automotive industry and operates in four segments - Cleveland-Cliffs Inc is a leading North America-based steel producer, vertically integrated from iron ore mining to downstream finishing, with a focus on value-added sheet products for the automotive industry[19](index=19&type=chunk) - The company completed the **Stelco Acquisition on November 1, 2024**, expanding its presence in Canada and diversifying its customer base[20](index=20&type=chunk) - The company is organized into four operating segments: **Steelmaking (primary reportable segment)**, Tubular, Tooling and Stamping, and European Operations[21](index=21&type=chunk) [Note 2 - Supplementary Financial Statement Information](index=11&type=section&id=NOTE%202%20-%20SUPPLEMENTARY%20FINANCIAL%20STATEMENT%20INFORMATION) This note provides supplementary details on inventories, capital expenditures, and other cash flow items Inventories | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Finished and semi-finished goods | $2,396 | $2,393 | | Raw materials | $1,974 | $2,208 | | Total product inventories | $4,370 | $4,601 | | Manufacturing supplies and critical spares | $516 | $493 | | **Inventories** | **$4,886** | **$5,094** | Cash Paid for Capital Expenditures | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Capital additions | $129 | $157 | | Less: Non-cash accruals | $(68) | $(45) | | Equipment financed with seller | $16 | — | | Right-of-use assets - finance leases | $29 | $20 | | **Cash paid for capital expenditures including deposits** | **$152** | **$182** | Other Cash Flow Information | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Income taxes paid | $1 | $1 | | Income tax refunds | $(5) | $(2) | | Interest paid on debt obligations net of capitalized interest | $77 | $53 | [Note 3 - Acquisitions](index=11&type=section&id=NOTE%203%20-%20ACQUISITIONS) This note details the financial impact and allocation of the Stelco Acquisition completed in late 2024 - The **Stelco Acquisition was completed on November 1, 2024**, expanding the company's presence in Canada and diversifying its customer base[30](index=30&type=chunk) Total Purchase Consideration | (In millions) | | | :--- | :--- | | Total cash consideration | $2,450 | | Total share exchange consideration | $343 | | Total debt consideration | $415 | | **Total purchase consideration** | **$3,208** | Allocation of Purchase Consideration | (In millions) | Initial Allocation of Consideration | Measurement Period Adjustments | Updated Allocation | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $341 | — | $341 | | Accounts receivable | $104 | — | $104 | | Inventories | $726 | $(7) | $719 | | Other current assets | $107 | $(1) | $106 | | Property, plant and equipment | $1,286 | $(5) | $1,281 | | Intangible assets | $1,025 | — | $1,025 | | Other non-current assets | $250 | — | $250 | | Accounts payable | $(212) | — | $(212) | | Accrued employment costs | $(29) | — | $(29) | | Accrued expenses | $(6) | $(1) | $(7) | | Other current liabilities | $(71) | — | $(71) | | Pension and OPEB liability, non-current | $(14) | — | $(14) | | Deferred income taxes | $(449) | $10 | $(439) | | Asset retirement and environmental obligations | $(20) | — | $(20) | | Other non-current liabilities | $(616) | $5 | $(611) | | Net identifiable assets acquired | $2,422 | $1 | $2,423 | | Goodwill | $786 | $(1) | $785 | | **Total net assets acquired** | **$3,208** | **—** | **$3,208** | Identifiable Intangible Assets | (In millions) | Weighted Average Life (In years) | | :--- | :--- | | Customer relationships | $953 | 15 | | Trade names and trademarks | $72 | 15 | | **Total identifiable intangible assets** | **$1,025** | **15** | Pro Forma Financial Information | (In millions) | Three Months Ended March 31, 2024 | | :--- | :--- | | Revenues | $5,752 | | Net loss attributable to Cliffs shareholders | $(93) | [Note 4 - Revenues](index=14&type=section&id=NOTE%204%20-%20REVENUES) This note disaggregates total revenues by market and product type for the first quarters of 2025 and 2024 Revenues by Market | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Steelmaking: | | | | Direct automotive | $1,297 | $1,617 | | Infrastructure and manufacturing | $1,354 | $1,392 | | Distributors and converters | $1,228 | $1,412 | | Steel producers | $588 | $606 | | Total Steelmaking | $4,467 | $5,027 | | Other Businesses: | | | | Direct automotive | $130 | $140 | | Infrastructure and manufacturing | $10 | $10 | | Distributors and converters | $22 | $22 | | Total Other Businesses | $162 | $172 | | **Total revenues** | **$4,629** | **$5,199** | Revenues by Product | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Steelmaking: | | | | Hot-rolled steel | $1,166 | $1,128 | | Cold-rolled steel | $591 | $749 | | Coated steel | $1,361 | $1,623 | | Stainless and electrical steel | $444 | $461 | | Plate | $247 | $333 | | Slab and other steel products | $247 | $335 | | Other | $411 | $398 | | Total Steelmaking | $4,467 | $5,027 | | Other Businesses: | | | | Other | $162 | $172 | | **Total revenues** | **$4,629** | **$5,199** | [Note 5 - Segment Reporting](index=15&type=section&id=NOTE%205%20-%20SEGMENT%20REPORTING) This note provides a breakdown of financial performance by the company's operating segments - The company's primary reportable segment is **Steelmaking**, which focuses on value-added sheet products for automotive, infrastructure, and manufacturing markets[40](index=40&type=chunk) - Performance is evaluated based on **Adjusted EBITDA**, a non-GAAP measure, used by management and investors to assess operating performance and compare to industry peers[41](index=41&type=chunk) Segment Performance for Q1 2025 | (In millions) | Steelmaking | Other Businesses | Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | | Revenues | $4,495 | $162 | $(28) | $4,629 | | Cost of goods sold | $(4,895) | $(153) | $28 | $(5,020) | | Selling, general and administrative expenses | $(126) | $(7) | — | $(133) | | Net periodic benefit credits other than service cost component | $57 | — | — | $57 | | Excluding depreciation, depletion and amortization | $274 | $8 | — | $282 | | Other segment items | $11 | — | — | $11 | | **Total Adjusted EBITDA** | **$(184)** | **$10** | **—** | **$(174)** | | Interest expense, net | | | | $(140) | | Income tax benefit | | | | $147 | | Depreciation, depletion and amortization | | | | $(282) | | EBITDA from noncontrolling interests | | | | $18 | | Weirton indefinite idle | | | | $(3) | | Idled facilities employment charges | | | | $(41) | | Changes in fair value of derivatives, net | | | | $(9) | | Amortization of inventory step-up | | | | $7 | | Other, net | | | | $(6) | | **Net loss** | | | | **$(483)** | | Capital Additions | $123 | $6 | — | $129 | Segment Performance for Q1 2024 | (In millions) | Steelmaking | Other Businesses | Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | | Revenues | $5,053 | $172 | $(26) | $5,199 | | Cost of goods sold | $(4,785) | $(157) | $28 | $(4,914) | | Selling, general and administrative expenses | $(125) | $(7) | — | $(132) | | Net periodic benefit credits other than service cost component | $60 | — | — | $60 | | Excluding depreciation, depletion and amortization | $222 | $8 | — | $230 | | Other segment items | $(30) | $1 | — | $(29) | | **Total Adjusted EBITDA** | **$395** | **$17** | **$2** | **$414** | | Interest expense, net | | | | $(64) | | Income tax benefit | | | | $8 | | Depreciation, depletion and amortization | | | | $(230) | | EBITDA from noncontrolling interests | | | | $21 | | Weirton indefinite idle | | | | $(177) | | Loss on extinguishment of debt | | | | $(21) | | Other, net | | | | $(4) | | **Net loss** | | | | **$(53)** | | Capital Additions | $156 | $1 | — | $157 | Total Segment Assets | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Steelmaking | $20,200 | $20,327 | | Other Businesses | $636 | $620 | | **Total segment assets** | **$20,836** | **$20,947** | [Note 6 - Property, Plant and Equipment](index=16&type=section&id=NOTE%206%20-%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) This note details the composition of the company's fixed assets and related depreciation expense | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Land, land improvements and mineral rights | $1,452 | $1,451 | | Buildings | $1,104 | $1,104 | | Equipment | $11,185 | $11,119 | | Other | $354 | $349 | | Construction in progress | $759 | $728 | | Total property, plant and equipment | $14,854 | $14,751 | | Allowance for depreciation and depletion | $(5,057) | $(4,809) | | **Property, plant and equipment, net** | **$9,797** | **$9,942** | - Depreciation and depletion expense increased to **$264 million** for the three months ended March 31, 2025, from $227 million in the prior-year period[44](index=44&type=chunk) [Note 7 - Goodwill and Intangible Assets and Liabilities](index=17&type=section&id=NOTE%207%20-%20GOODWILL%20AND%20INTANGIBLE%20ASSETS%20AND%20LIABILITIES) This note outlines the carrying amounts of goodwill and other intangible assets and liabilities Goodwill | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Steelmaking | $1,718 | $1,719 | | Other Businesses | $49 | $49 | | **Total goodwill** | **$1,767** | **$1,768** | - Goodwill in the Steelmaking segment decreased by **$1 million** due to measurement period adjustments related to the Stelco Acquisition[45](index=45&type=chunk) Intangible Assets and Liabilities | (In millions) | March 31, 2025 Gross Amount | March 31, 2025 Accumulated Amortization | March 31, 2025 Net Amount | December 31, 2024 Gross Amount | December 31, 2024 Accumulated Amortization | December 31, 2024 Net Amount | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Intangible assets:** | | | | | | | | Customer relationships | $1,014 | $(51) | $963 | $1,015 | $(34) | $981 | | Developed technology | $60 | $(18) | $42 | $60 | $(17) | $43 | | Trade names and trademarks | $87 | $(9) | $78 | $87 | $(8) | $79 | | Mining permits | $72 | $(29) | $43 | $72 | $(29) | $43 | | Supplier relationships | $29 | $(5) | $24 | $29 | $(5) | $24 | | **Total intangible assets** | **$1,262** | **$(112)** | **$1,150** | **$1,263** | **$(93)** | **$1,170** | | **Intangible liabilities:** | | | | | | | | Above-market supply contracts | $(71) | $31 | $(40) | $(71) | $30 | $(41) | - Amortization expense related to intangible assets was **$19 million** for the three months ended March 31, 2025, compared to $4 million for the same period in 2024[46](index=46&type=chunk) [Note 8 - Debt and Credit Facilities](index=18&type=section&id=NOTE%208%20-%20DEBT%20AND%20CREDIT%20FACILITIES) This note provides a comprehensive overview of the company's outstanding debt and available credit Long-Term Debt | Debt Instrument | Issuer | Annual Effective Interest Rate | March 31, 2025 (In millions) | December 31, 2024 (In millions) | | :--- | :--- | :--- | :--- | :--- | | **Senior Unsecured Notes:** | | | | | | 7.000% 2027 Senior Notes | Cliffs | 9.240% | $73 | $73 | | 7.000% 2027 AK Senior Notes | AK Steel | 9.240% | $56 | $56 | | 5.875% 2027 Senior Notes | Cliffs | 6.490% | $556 | $556 | | 4.625% 2029 Senior Notes | Cliffs | 4.625% | $368 | $368 | | 6.875% 2029 Senior Notes | Cliffs | 6.875% | $900 | $900 | | 6.750% 2030 Senior Notes | Cliffs | 6.750% | $750 | $750 | | 4.875% 2031 Senior Notes | Cliffs | 4.875% | $325 | $325 | | 7.500% 2031 Senior Notes | Cliffs | 7.500% | $850 | — | | 7.000% 2032 Senior Notes | Cliffs | 7.054% | $1,425 | $1,425 | | 7.375% 2033 Senior Notes | Cliffs | 7.375% | $900 | $900 | | 6.250% 2040 Senior Notes | Cliffs | 6.340% | $235 | $235 | | ABL Facility | Cliffs | Variable | $1,255 | $1,560 | | **Total principal amount** | | | **$7,693** | **$7,148** | | Unamortized discounts and issuance costs | | | $(92) | $(83) | | **Total long-term debt** | | | **$7,601** | **$7,065** | - On February 6, 2025, the company issued **$850 million** aggregate principal amount of 7.500% 2031 Senior Notes in a private placement[49](index=49&type=chunk) ABL Facility Availability | (In millions) | March 31, 2025 | | :--- | :--- | | Available borrowing base on ABL Facility | $4,236 | | Borrowings | $(1,255) | | Letter of credit obligations | $(55) | | **Borrowing capacity available** | **$2,926** | Debt Maturities | (In millions) | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Debt Maturities | — | — | $685 | $1,255 | $1,268 | $4,485 | $7,693 | [Note 9 - Pensions and Other Postretirement Benefits](index=19&type=section&id=NOTE%209%20-%20PENSIONS%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) This note details the components of net periodic benefit credits for pension and other postretirement benefit plans Net Periodic Pension Benefit Credits | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Service cost | $7 | $7 | | Interest cost | $53 | $55 | | Expected return on plan assets | $(79) | $(80) | | Amortization: Prior service costs | $4 | $4 | | Amortization: Net actuarial gain | $(2) | — | | **Net periodic benefit credits** | **$(17)** | **$(14)** | Net Periodic OPEB Credits | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Service cost | $2 | $2 | | Interest cost | $14 | $12 | | Expected return on plan assets | $(11) | $(11) | | Termination benefits | — | $2 | | Amortization: Prior service credits | $(3) | $(4) | | Amortization: Net actuarial gain | $(33) | $(38) | | **Net periodic benefit credits** | **$(31)** | **$(37)** | - The company made **$15 million** in defined benefit pension contributions for the three months ended March 31, 2025, compared to a nominal amount in the prior-year period[58](index=58&type=chunk) [Note 10 - Income Taxes](index=21&type=section&id=NOTE%2010%20-%20INCOME%20TAXES) This note explains the significant increase in the company's income tax benefit for the first quarter of 2025 - Income tax benefit increased to **$147 million** for the three months ended March 31, 2025, from $8 million in the prior-year period, primarily due to an increase in Loss before income taxes[59](index=59&type=chunk) [Note 11 - Asset Retirement and Environmental Obligations](index=21&type=section&id=NOTE%2011%20-%20ASSET%20RETIREMENT%20AND%20ENVIRONMENTAL%20OBLIGATIONS) This note provides details on the company's obligations related to asset retirement and environmental remediation Asset Retirement Obligations | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Asset retirement obligations | $525 | $526 | | Less: current portion | $19 | $25 | | **Long-term asset retirement obligations** | **$506** | **$501** | Change in Asset Retirement Obligations | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Asset retirement obligations as of January 1 | $526 | $459 | | Accretion expense | $7 | $5 | | Revision in estimated cash flows | — | $48 | | Remediation payments | $(8) | $(2) | | **Asset retirement obligations as of March 31** | **$525** | **$510** | - Asset retirement obligations increased in Q1 2024 due to the **indefinite idling of the Weirton tinplate production plant**, accelerating timing and refining remediation costs[61](index=61&type=chunk) Environmental Obligations | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Environmental obligations | $113 | $114 | | Less: current portion | $11 | $14 | | **Long-term environmental obligations** | **$102** | **$100** | [Note 12 - Fair Value Measurements](index=22&type=section&id=NOTE%2012%20-%20FAIR%20VALUE%20MEASUREMENTS) This note discloses the fair value of financial instruments and other assets and liabilities Fair Value of Debt | (In millions) | Valuation Hierarchy Classification | March 31, 2025 Carrying Value | March 31, 2025 Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | | Senior notes | Level 1 | $6,346 | $6,240 | $5,505 | $5,496 | | ABL Facility - outstanding balance | Level 2 | $1,255 | $1,255 | $1,560 | $1,560 | | **Total** | | **$7,601** | **$7,495** | **$7,065** | **$7,056** | - The company acquired funding commitments to employee life and health trusts as part of the Stelco Acquisition, recorded as a **Level 3 liability** at fair value using a discounted cash flow model[65](index=65&type=chunk) Change in Fair Value of Funding Commitments | (In millions) | 2025 | | :--- | :--- | | Beginning balance as of January 1 | $(188) | | Change in fair value | $(2) | | Payments | $5 | | **Ending balance as of March 31** | **$(185)** | - Stelco holds an option to purchase a 25% ownership interest in the MinnTac iron ore mine, recorded as a **Level 3 derivative asset** at fair value using the Black-Scholes option pricing model[67](index=67&type=chunk) Change in Fair Value of MinnTac Option | (In millions) | 2025 | | :--- | :--- | | Beginning balance as of January 1 | $95 | | Change in fair value | $(9) | | **Ending balance as of March 31** | **$86** | [Note 13 - Derivative Instruments and Hedging](index=22&type=section&id=NOTE%2013%20-%20DERIVATIVE%20INSTRUMENTS%20AND%20HEDGING) This note describes the company's use of derivative instruments to manage commodity price risk - The company uses cash-settled commodity purchase swaps and sales swaps to hedge market risk associated with purchased raw materials, energy sources, and the sales price of certain steel products[69](index=69&type=chunk) Notional Amounts of Hedge Contracts | Hedge Contract Type | Classification | Unit of Measure | Maturity Dates | March 31, 2025 Notional Amount | December 31, 2024 Notional Amount | | :--- | :--- | :--- | :--- | :--- | :--- | | Natural Gas | Commodity purchase swaps | MMBtu | April 2025 - August 2027 | 120,600,000 | 143,250,000 | | Electricity | Commodity purchase swaps | Megawatt hours | April 2025 - October 2027 | 2,729,940 | 3,224,227 | | HRC | Sales swaps | Metric tons | April 2025 - August 2025 | 395,000 | — | - As of March 31, 2025, the company estimates **$37 million of net gains** and **$8 million of net losses** from hedge contracts will be reclassified from AOCI into Cost of goods sold and Revenues, respectively, within the next 12 months[71](index=71&type=chunk) Fair Value of Derivative Instruments | Balance Sheet Location (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Other current assets | $69 | $5 | | Other non-current assets | $25 | $9 | | Other current liabilities | $(8) | $(41) | | Other non-current liabilities | — | $(6) | [Note 14 - Capital Stock](index=24&type=section&id=NOTE%2014%20-%20CAPITAL%20STOCK) This note provides information on the company's share repurchase activity and share issuances - **No common shares were repurchased** during the three months ended March 31, 2025. In contrast, **30.4 million common shares were repurchased for $608 million** in the prior-year period[74](index=74&type=chunk) - As of March 31, 2025, there was **$1.4 billion remaining authorization** under the active share repurchase program[74](index=74&type=chunk) - As a result of the Stelco Acquisition, the company issued **25.9 million Cliffs treasury shares** at a fair value of $343 million[76](index=76&type=chunk) [Note 15 - Accumulated Other Comprehensive Income](index=25&type=section&id=NOTE%2015%20-%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) This note details the changes in the components of accumulated other comprehensive income (AOCI) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Foreign Currency Translation** | | | | Beginning balance | $(70) | — | | Other comprehensive income (loss) before reclassifications | $1 | $(1) | | Ending balance | $(69) | $(1) | | **Derivative Instruments** | | | | Beginning balance | $(53) | $(170) | | Other comprehensive income (loss) before reclassifications | $101 | $(33) | | Income tax (benefit) | $(24) | $8 | | Other comprehensive income (loss) before reclassifications, net of tax | $77 | $(25) | | Losses reclassified from AOCI to net loss | $32 | $59 | | Income tax benefit | $(8) | $(14) | | Net losses reclassified from AOCI to net loss | $24 | $45 | | Ending balance | $48 | $(150) | | **Pension and OPEB** | | | | Beginning balance | $1,660 | $1,827 | | Gains reclassified from AOCI to net loss | $(35) | $(38) | | Income tax expense | $8 | $10 | | Net gains reclassified from AOCI to net loss | $(27) | $(28) | | Ending balance | $1,633 | $1,799 | | **Total AOCI Ending Balance** | **$1,612** | **$1,648** | [Note 16 - Variable Interest Entities](index=25&type=section&id=NOTE%2016%20-%20VARIABLE%20INTEREST%20ENTITIES) This note explains the consolidation of SunCoke Middletown as a Variable Interest Entity (VIE) - The company consolidates SunCoke Middletown as a Variable Interest Entity (VIE) because it is the primary beneficiary, purchasing all coke and electrical power from its plant under long-term supply agreements through 2032[78](index=78&type=chunk) Assets and Liabilities of Consolidated VIE | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Inventories | $28 | $27 | | Property, plant and equipment, net | $283 | $288 | | Accounts payable | $(12) | $(19) | | Other assets (liabilities), net | $(53) | $(47) | | Noncontrolling interests | $(246) | $(249) | [Note 17 - Earnings Per Share](index=26&type=section&id=NOTE%2017%20-%20EARNINGS%20PER%20SHARE) This note provides the calculation for basic and diluted loss per share attributable to shareholders | (In millions, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net loss | $(483) | $(53) | | Net income attributable to noncontrolling interests | $(12) | $(14) | | **Net loss attributable to Cliffs shareholders** | **$(495)** | **$(67)** | | Weighted average number of shares: Basic | 495 | 492 | | Employee stock plans | — | — | | Diluted | 495 | 492 | | Loss per common share attributable to Cliffs shareholders: Basic | $(1.00) | $(0.14) | | Diluted | $(1.00) | $(0.14) | [Note 18 - Commitments and Contingencies](index=26&type=section&id=NOTE%2018%20-%20COMMITMENTS%20AND%20CONTINGENCIES) This note discusses the company's purchase commitments, letters of credit, and legal and environmental matters - The company has purchase commitments for principal raw materials, energy, and transportation services, some with minimum quantity requirements[81](index=81&type=chunk) - As of March 31, 2025, the company had **$261 million in surety-backed letters of credit and surety bonds** outstanding, plus **$55 million in outstanding letters of credit** under its ABL Facility[82](index=82&type=chunk) - The company is involved in various claims and legal proceedings but does not believe any pending matters will result in a **material adverse effect** on its financial position or results of operations[83](index=83&type=chunk) - Environmental remediation obligations are recognized based on estimates, and the company does not believe there is a reasonable possibility of incurring losses that would **materially exceed accrued amounts**[86](index=86&type=chunk) [Note 19 - Subsequent Events](index=28&type=section&id=NOTE%2019%20-%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date - In the second quarter of 2025, the company decided to **idle its Conshohocken, Riverdale, and Steelton plants** due to financial underperformance, and is assessing the material financial impacts for the remainder of 2025[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial condition, operational results, liquidity, and future outlook [Overview](index=29&type=section&id=OVERVIEW) The company is a leading, vertically integrated steel producer in North America with a focus on the automotive sector - Cleveland-Cliffs is a leading North America-based steel producer, vertically integrated from iron ore mining to downstream finishing, focusing on value-added sheet products for the automotive industry[94](index=94&type=chunk) [Financial Summary](index=29&type=section&id=FINANCIAL%20SUMMARY) The company experienced a significant decline in profitability in the first quarter of 2025 compared to the prior year | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $4,629 million | $5,199 million | | Net Loss | $(483) million | $(53) million | | Adjusted EBITDA | $(174) million | $414 million | | Diluted EPS | $(1.00) | $(0.14) | [Economic Overview](index=29&type=section&id=ECONOMIC%20OVERVIEW) The steel market faced headwinds in Q1 2025, but recent tariffs are expected to provide support - The steel market in Q1 2025 faced unfavorable conditions due to weaker light vehicle production, inconsistent customer buying behavior, and elevated import levels, resulting in a **16% year-over-year decrease** in the average HRC price to **$792 per net ton**[98](index=98&type=chunk) - The HRC price increased to over **$960 per ton in April 2025**, supported by recently announced steel tariffs[98](index=98&type=chunk) - In 2025, the company decided to fully or partially **idle six operations** to optimize its footprint and consume excess pellet inventory, with minimal impact on flat-rolled steel output[99](index=99&type=chunk) - The company expects to benefit from recently implemented **steel and automotive tariffs**, which are seen as critical for addressing global overproduction and unfair trade practices[101](index=101&type=chunk) - North American light vehicle production decreased to approximately **3.8 million units** in Q1 2025 from 4.0 million in Q1 2024, but U.S. light vehicle sales saw a **7% increase** in the seasonally adjusted annualized rate[102](index=102&type=chunk) - The average busheling scrap price was **$471 per long ton** in Q1 2025, and its expected tightening supply bolsters the company's competitive advantage due to its internal iron feedstock sourcing[103](index=103&type=chunk) [Competitive Strengths](index=31&type=section&id=COMPETITIVE%20STRENGTHS) The company's key strengths include vertical integration, a strong union partnership, and a leading automotive market position - The company benefits from a unique **vertically integrated profile**, from mined raw materials to downstream finishing, providing predictable costs and control over its supply chain[104](index=104&type=chunk) - A strong partnership with its unionized workforce, particularly the **USW**, is a critical strength, enabling collaboration against unfairly traded imports and supporting middle-class jobs[105](index=105&type=chunk) - As a leading supplier of high-quality, **automotive-grade steel** in the U.S., the company serves a demanding market that typically generates higher through-the-cycle margins[106](index=106&type=chunk)[107](index=107&type=chunk) - Approximately **30-35% of the company's volumes are sold under fixed price contracts**, which helps mitigate pricing volatility in the steel industry[110](index=110&type=chunk) - The ability to domestically and primarily internally source its primary feedstock (iron ore pellets) provides **stable and predictable costs**, reducing exposure to global market volatility[111](index=111&type=chunk) - The company is a leading producer of **electrical steels (GOES and NOES)** in the U.S., which are critical for grid modernization and EV adoption, and expects strong profitability from this business[113](index=113&type=chunk) - The company is the first and only producer of **Hot Briquetted Iron (HBI)** in the Great Lakes region, which is used to enhance productivity in blast furnaces or as a premium scrap alternative, supporting operational efficiency[114](index=114&type=chunk) [Strategy](index=32&type=section&id=STRATEGY) The company's strategy focuses on maximizing commercial strengths, optimizing its footprint, and maintaining financial flexibility - The company aims to maximize commercial strengths by being a leading supplier to the automotive sector with high-end products and technical expertise, including **MOTOR-MAX® NOES** and **C-STAR™ EV battery protection design**[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) - The conclusion of a five-year contract to supply semi-finished steel slabs in December 2025 presents a significant opportunity to shift sales and product mix to **higher-margin business**[117](index=117&type=chunk) - A **'Buy American' incentive program** was announced for employees to support domestically-built vehicles with Cliffs steel content, aligning with President Trump's vision for U.S. manufacturing[119](index=119&type=chunk) - The company is optimizing its fully-integrated steelmaking footprint by **idling six operations** to streamline and enhance efficiency with minimal impact on flat-rolled steel output[124](index=124&type=chunk) - The company decided to **no longer deploy capital** toward a new electrical distribution transformer production plant due to suggested changes in scope from a project partner[125](index=125&type=chunk) - The **Stelco Acquisition** strengthens the company's cost position, expands its Canadian presence, and diversifies its customer base, with significant identified synergy opportunities[126](index=126&type=chunk)[127](index=127&type=chunk) - New environmental sustainability targets include reducing **Scope 1 and 2 GHG emissions intensity by 30% by 2035**, material upstream **Scope 3 GHG emissions intensity by 20% by 2035**, and achieving **near net zero by 2050**[128](index=128&type=chunk)[131](index=131&type=chunk) - The company aims to maintain financial flexibility by maximizing cash generation, reducing debt, and aligning capital investments, with a priority on **deleveraging the balance sheet**[129](index=129&type=chunk)[130](index=130&type=chunk) [Steelmaking Results](index=34&type=section&id=STEELMAKING%20RESULTS) The Steelmaking segment saw lower revenue and margins in Q1 2025 despite an increase in shipment volumes | | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $4,056 million | $4,629 million | | Gross Margin % | (9)% | 5% | | Adjusted EBITDA % | (4)% | 8% | | Average Selling Price Per Ton of Steel Products | $980 | $1,175 | | Steel Shipments (nt) | 4,140 thousand | 3,940 thousand | Steel Shipments by Product | (In thousands of net tons) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Hot-rolled steel | 1,693 | 1,266 | 34 % | | Cold-rolled steel | 608 | 663 | (8)% | | Coated steel | 1,123 | 1,216 | (8)% | | Stainless and electrical steel | 142 | 145 | (2)% | | Plate | 203 | 201 | 1 % | | Slab and other steel products | 371 | 449 | (17)% | | **Total steel shipments by product** | **4,140** | **3,940** | **5 %** | Steelmaking Revenues by Market | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Direct automotive | $1,297 | $1,617 | (20)% | | Infrastructure and manufacturing | $1,354 | $1,392 | (3)% | | Distributors and converters | $1,228 | $1,412 | (13)% | | Steel producers | $588 | $606 | (3)% | | **Total Steelmaking revenues by market** | **$4,467** | **$5,027** | **(11)%** | - Steelmaking revenues **decreased by 11% year-over-year**, primarily due to a **20% decrease** in direct automotive market revenues and a **13% decrease** in distributors and converters market revenues, partially offset by incremental tons from the Stelco acquisition[134](index=134&type=chunk) - Gross margin **decreased by $670 million (248%) year-over-year**, mainly due to a **$500 million impact** from lower average selling prices and a **$44 million increase** in idled facilities employment charges[135](index=135&type=chunk)[145](index=145&type=chunk) - Adjusted EBITDA from the Steelmaking segment **decreased by $579 million year-over-year**, driven by the decreased gross margin[135](index=135&type=chunk) [Results of Operations](index=35&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated revenues and gross margin declined significantly in Q1 2025 compared to the prior-year period - Consolidated Revenues **decreased by $570 million** and consolidated gross margin **decreased by $676 million** during the three months ended March 31, 2025, compared to the prior-year period[136](index=136&type=chunk) - Restructuring and other charges decreased significantly to **$3 million in Q1 2025 from $104 million in Q1 2024**, primarily related to the indefinite idle of the Weirton tinplate production plant[137](index=137&type=chunk) - **No asset impairment was recorded in Q1 2025**, compared to $64 million in Q1 2024 resulting from the Weirton plant idle[138](index=138&type=chunk) - Consolidated Interest expense, net **increased by $76 million year-over-year** due to an increase in outstanding borrowings[141](index=141&type=chunk) - Consolidated Income tax benefit **increased by $139 million year-over-year**, primarily due to an increase in Loss before income taxes[143](index=143&type=chunk) [Liquidity, Cash Flows and Capital Resources](index=35&type=section&id=LIQUIDITY%2C%20CASH%20FLOWS%20AND%20CAPITAL%20RESOURCES) The company's operating cash flow turned negative in Q1 2025, though total liquidity remains strong - The company's capital allocation strategy focuses on preserving healthy liquidity, strengthening the balance sheet, and creating financial flexibility to manage cyclical demand and commodity price volatility[144](index=144&type=chunk) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash flows provided by (used in): Operating activities | $(351) | $142 | | Cash flows provided by (used in): Investing activities | $(145) | $(179) | | Cash flows provided by (used in): Financing activities | $499 | $(131) | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | **$3** | **$(168)** | | Free cash flow | $(503) | $(40) | - Net cash used by operating activities was **$(351) million in Q1 2025**, a **$493 million decrease year-over-year**, primarily due to lower gross margins and increased accounts receivable, partially offset by inventory reduction and lower incentive compensation[148](index=148&type=chunk) - Cash used for capital expenditures **decreased by $30 million year-over-year** to $152 million in Q1 2025[149](index=149&type=chunk) - The company anticipates total cash used for capital expenditures to be approximately **$650 million** for the next 12 months[150](index=150&type=chunk) - Net cash provided by financing activities was **$499 million in Q1 2025**, compared to $(131) million used in Q1 2024, primarily due to **no common share repurchases in Q1 2025** versus $608 million in Q1 2024[151](index=151&type=chunk) - Total liquidity, comprising cash and cash equivalents and availability under the ABL Facility, was **$3.0 billion** as of March 31, 2025[152](index=152&type=chunk) - The company has approximately **$3.3 billion of secured debt capacity**[155](index=155&type=chunk) [Non-GAAP Financial Measures](index=37&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section provides reconciliations of non-GAAP measures like Adjusted EBITDA and free cash flow to their GAAP equivalents - **Adjusted EBITDA** is a non-GAAP measure used by management, investors, and lenders to assess operating performance, compare to industry peers, and evaluate the business's earnings power and ability to service debt and fund capital expenditures[159](index=159&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net loss | $(483) | $(53) | | Less: Interest expense, net | $(140) | $(64) | | Less: Income tax benefit | $147 | $8 | | Less: Depreciation, depletion and amortization | $(282) | $(230) | | **Total EBITDA** | **$(208)** | **$233** | | Less: EBITDA of noncontrolling interests | $18 | $21 | | Less: Weirton indefinite idle | $(3) | $(177) | | Less: Idled facilities employment charges | $(41) | — | | Less: Changes in fair value of derivatives, net | $(9) | — | | Less: Amortization of inventory step-up | $7 | — | | Less: Loss on extinguishment of debt | — | $(21) | | Less: Other, net | $(6) | $(4) | | **Total Adjusted EBITDA** | **$(174)** | **$414** | Adjusted EBITDA by Segment | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Steelmaking | $(184) | $395 | | Other Businesses | $10 | $17 | | Intersegment Eliminations | — | $2 | | **Total Adjusted EBITDA** | **$(174)** | **$414** | - **Free cash flow**, a non-GAAP measure defined as operating cash flow less purchase of property, plant and equipment, is used to assess cash generation available for debt service, strategic initiatives, or other financing activities[161](index=161&type=chunk) Reconciliation of Net Cash from Operating Activities to Free Cash Flow | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $(351) | $142 | | Purchase of property, plant and equipment | $(152) | $(182) | | **Free cash flow** | **$(503)** | **$(40)** | [Information About Our Guarantors and the Issuer of Our Guaranteed Securities](index=40&type=section&id=INFORMATION%20ABOUT%20OUR%20GUARANTORS%20AND%20THE%20ISSUER%20OF%20OUR%20GUARANTEED%20SECURITIES) This section provides summarized financial information for the issuer and guarantors of the company's senior notes - Certain subsidiaries (Guarantor subsidiaries) fully and unconditionally guarantee obligations under various senior notes issued by Cleveland-Cliffs Inc. on a senior unsecured basis[163](index=163&type=chunk) Summarized Balance Sheet Information | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current assets | $6,642 | $6,463 | | Non-current assets | $11,769 | $11,856 | | Current liabilities | $(3,887) | $(4,121) | | Non-current liabilities | $(9,641) | $(9,241) | Summarized Statement of Operations Information | (In millions) | Three Months Ended March 31, 2025 | | :--- | :--- | | Revenues | $4,176 | | Cost of goods sold | $(4,548) | | Net loss | $(409) | | Net loss attributable to Cliffs shareholders | $(409) | Intercompany Balances | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Balances with non-Guarantor subsidiaries: Accounts receivable, net | $755 | $755 | | Balances with non-Guarantor subsidiaries: Accounts payable | $(1,037) | $(1,279) | | Balances with other related parties: Accounts receivable, net | $9 | $9 | | Balances with other related parties: Accounts payable | $(13) | $(20) | [Market Risks](index=42&type=section&id=MARKET%20RISKS) The company is exposed to market risks from commodity prices, goodwill impairment, foreign currency, and interest rates - The company is exposed to price fluctuations in raw materials (e.g., natural gas, electricity, scrap, coal, zinc, chrome, nickel) and sales prices of steel products (primarily HRC)[172](index=172&type=chunk) - Strategies to manage price risk include improving energy efficiency, identifying alternative providers, utilizing lowest cost alternative fuels, and making forward physical purchases[173](index=173&type=chunk) - The company uses cash-settled commodity price swaps to hedge natural gas and electricity requirements and sales swaps to manage HRC price fluctuations[176](index=176&type=chunk)[177](index=177&type=chunk) Sensitivity Analysis of Hedge Contracts | Contract Type (In millions) | 10% Change | 25% Change | | :--- | :--- | :--- | | Natural gas | $54 | $135 | | Electricity | $14 | $35 | | HRC | $33 | $83 | - Goodwill impairment testing requires significant judgment and assumptions, which are sensitive to changes in the business climate, commodity prices, and general economic conditions[181](index=181&type=chunk) - The company is subject to foreign currency exchange rate risk, primarily from its Canadian operations and an intercompany note denominated in Canadian dollars; a **1% change in the CAD exchange rate** would result in a **$9 million change** in currency exchange income (expense)[185](index=185&type=chunk) - Interest payable on senior notes is fixed, but the ABL Facility has a variable rate; a **100 basis point increase** in ABL interest rates would increase annual interest expense by **$13 million** based on Q1 2025 borrowing levels[186](index=186&type=chunk) [Forward-Looking Statements](index=44&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section cautions that statements about future expectations are subject to various risks and uncertainties - Forward-looking statements are subject to uncertainties and factors that are difficult to predict and may cause actual results to differ materially from expectations[188](index=188&type=chunk) - Key risks include continued volatility of steel, scrap, and iron ore market prices; uncertainties in the highly competitive and cyclical steel industry; potential weaknesses in global economic conditions; impacts of governmental regulation and trade policies; and the ability to maintain adequate liquidity and manage indebtedness[188](index=188&type=chunk)[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section refers to the "Market Risks" discussion within Item 2 for detailed information on market risk exposures - Information regarding market risk is presented under the caption "Market Risks" within Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, and in the Annual Report on Form 10-K for the year ended December 31, 2024[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting - Management, including the President and CEO and CFO, concluded that the company's disclosure controls and procedures were **effective as of March 31, 2025**[194](index=194&type=chunk) - There was **no change** in the company's internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or is reasonably likely to materially affect, internal control over financial reporting[195](index=195&type=chunk) [Part II - Other Information](index=47&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, share repurchases, and other required disclosures [Item 1. Legal Proceedings](index=47&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section details ongoing legal proceedings and asserts that no material adverse effect is anticipated - The Fifth Circuit Court of Appeals **affirmed the dismissal** of JSW Steel's antitrust complaint against Cleveland-Cliffs and other defendants on March 17, 2025[197](index=197&type=chunk) - U.S. Steel and Nippon Steel filed a lawsuit alleging unlawful agreement to oppose U.S. Steel's sale to any buyer other than Cliffs, monopolization, and racketeering; Cleveland-Cliffs is **vigorously defending against these claims**[198](index=198&type=chunk) - The company discloses environmental proceedings with a **$1 million threshold for materiality** and believes that current accruals are adequate, not expecting a material adverse effect[199](index=199&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to the comprehensive risk factors detailed in the company's 2024 Annual Report - Readers are urged to carefully consider the significant risks impacting the business, as detailed in Part I, Item 1A. "Risk Factors" of the **Annual Report on Form 10-K for the year ended December 31, 2024**[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section provides information on common share repurchases, noting no activity under the public program in Q1 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | January 1 - 31, 2025 | 254,691 | $9.50 | — | $1,375,931,379 | | February 1 - 28, 2025 | 312 | $10.55 | — | $1,375,931,379 | | March 1 - 31, 2025 | 77 | $11.48 | — | $1,375,931,379 | | **Total** | **255,080** | **$9.50** | **—** | | - **No common shares were repurchased** under the publicly announced share repurchase program during the three months ended March 31, 2025[204](index=204&type=chunk) - As of March 31, 2025, approximately **$1.376 billion remained authorized** under the active share repurchase program[202](index=202&type=chunk)[204](index=204&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section affirms the company's commitment to employee safety and references detailed disclosures in Exhibit 95 - The company is committed to protecting the occupational health and well-being of its employees, striving for **zero injuries and incidents** through proactive prevention, standards, and intensive training[205](index=205&type=chunk) - Mine safety results for each mine location are included in **Exhibit 95** of this Quarterly Report on Form 10-Q, as required by the Dodd-Frank Act[206](index=206&type=chunk) [Item 5. Other Information](index=48&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a **Rule 10b5-1 trading arrangement** or non-Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025[207](index=207&type=chunk) [Item 6. Exhibits](index=49&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Quarterly Report on Form 10-Q - The report includes various exhibits, such as the Indenture for the 7.500% Senior Guaranteed Notes due 2031, equity and incentive compensation plan documents, the schedule of the obligated group, certifications, and Mine Safety Disclosures[209](index=209&type=chunk) [Signatures](index=50&type=section&id=SIGNATURES) The report is duly signed by the company's authorized officer - The report was signed on **May 8, 2025**, by Kimberly A. Floriani, Senior Vice President, Controller & Chief Accounting Officer of Cleveland-Cliffs Inc[211](index=211&type=chunk)

Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA loss of $174 million for Q1 2025, reflecting the lagged impact of low steel prices and underperforming non-core assets [30][4] - Total shipments in Q1 were 4.14 million tons, consistent with guidance to exceed 4 million tons, aided by a full quarter contribution from Stelco [30] - Price realization for Q1 was $980 per net ton, a slight improvement from Q4's $970, but still weighed down by lower realizations in cold rolled products [30] Business Line Data and Key Metrics Changes - The automotive segment remains a high-margin business, with expectations of an annual EBITDA benefit of $250 million to $500 million starting in the second half of 2025 [10] - The company is idling several non-core assets, which is expected to lead to a $50 per ton year-over-year reduction in costs for 2025 [31][12] Market Data and Key Metrics Changes - In 2024, only 50% of cars sold in the U.S. were domestically produced, highlighting the need for reshoring automotive production [6] - The company is seeing a shift of automotive production back to the U.S., which is expected to benefit its steel supply business significantly [9][61] Company Strategy and Development Direction - The company is focused on returning to profitability and free cash flow generation by addressing three key issues: underperformance in automotive markets, loss-making operations, and a burdensome slab supply contract [5][19] - Strategic actions include idling non-core assets and optimizing the operating footprint to enhance cost competitiveness [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved pricing and a more consistent business environment starting in April and May 2025 [4] - The company anticipates significant EBITDA improvement in the second half of 2025 and a reset higher in 2026 as various strategic initiatives take effect [31][38] Other Important Information - The company has reduced its 2025 capital expenditure guidance from $700 million to $625 million, primarily due to idling non-core assets [35][107] - The company maintains a healthy liquidity position with approximately $3 billion in available liquidity and $3.3 billion in secured capacity [36] Q&A Session Summary Question: Timing for achieving $300 million savings - Management indicated that the full impact of the $300 million savings will start to materialize in the second half of 2025, primarily from the Cleveland Dearborn switch [40][42] Question: Cost and ASP expectations for Q2 - Costs are expected to increase by about $5 per ton from Q1 to Q2, while ASP is projected to rise by approximately $40 per ton [62][63] Question: Impact of steel tariffs on Stelco - Management clarified that the tariffs do not change the strategic plan for Stelco, which is focused on serving the Canadian market [49][50] Question: Domestic auto production assumptions - Management expects an increase in domestic auto production, which will benefit the company significantly, regardless of overall car sales in North America [57][61] Question: Updates on asset sales - The company has received unsolicited inquiries for non-core assets, which could potentially bring several billion dollars in value [68][69] Question: CapEx and project updates - The company is lowering its CapEx guidance and expects significant reductions in future years, particularly related to strategic projects [107][108]

Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA loss of $174 million for Q1 2025, reflecting a challenging pricing environment and underperformance of non-core assets [30] - Total shipments in Q1 were 4.14 million tons, consistent with guidance to exceed 4 million tons, aided by a full quarter contribution from Stelco [30] - Price realization for Q1 was $980 per net ton, a slight improvement from Q4's $970, but still weighed down by lower realizations in cold rolled products [30] Business Line Data and Key Metrics Changes - The automotive sector remains a high-margin business for the company, with expectations of an annual EBITDA benefit of $250 million to $500 million starting in the second half of 2025 [10] - The company is idling several non-core assets, which is expected to generate annual savings of over $300 million [18] - The idling of loss-making operations is aimed at optimizing the operating footprint and improving profitability [11][12] Market Data and Key Metrics Changes - In 2024, only 50% of cars sold in the U.S. were domestically produced, highlighting the need for reshoring automotive production [6] - The company is seeing a shift of automotive production back to the U.S., with key customers increasing domestic manufacturing [9] - The domestic flat rolled prices have increased, while the company's realized prices under a Brazilian price-linked slab contract have declined, leading to negative margins [21] Company Strategy and Development Direction - The company is focused on returning to consistent profitability and free cash flow generation through operational changes and strategic initiatives [5] - The strategic repositioning of Stelco as a Canadian supplier is expected to provide more business opportunities for U.S. mills [24] - The company is actively engaging with automotive clients to secure longer-term steel supply contracts as they increase domestic production [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved pricing and operational efficiencies in the second half of 2025, with expectations for a reset in financial results in 2026 [31] - The company is committed to reducing costs and optimizing operations to remain competitive in the U.S. steel market [11][36] - Management highlighted the importance of enforcing trade laws to protect against unfair competition from dumped steel imports [36] Other Important Information - The company has reduced its 2025 capital expenditure guidance from $700 million to $625 million, primarily due to idled assets and canceled projects [34] - The company maintains a healthy liquidity position with approximately $3 billion in available liquidity and $3.3 billion in secured capacity [35] - Management indicated that cash charges related to idling operations would be minimal, with expected non-cash accounting charges of around $300 million in Q2 [87] Q&A Session Summary Question: Timing for achieving $300 million savings - Management indicated that the full impact of the $300 million savings would start to materialize in the second half of 2025, primarily from the Cleveland Dearborn switch and other operational changes [42][43] Question: Impact of steel tariffs on Stelco - Management clarified that the acquisition of Stelco was planned to redirect sales to the Canadian market, and the Section 232 tariffs would not change their strategy [50][51] Question: Assumptions around domestic auto production increase - Management expressed confidence that the overall number of cars produced in the U.S. would increase, benefiting steel suppliers like the company [60] Question: Updates on asset sales and debt covenants - Management confirmed that unsolicited inquiries for non-core assets have been received, with potential sales bringing several billion dollars in value, which would be used for debt reduction [69][70] Question: CapEx and blast furnace reline updates - Management stated that CapEx guidance has been lowered and that blast furnace relines are planned for 2027, with ongoing reliance on blast furnaces for production [105][95]

Core Viewpoint - Cleveland-Cliffs Inc. reported a significant loss in Q1 2025, with a net loss of $495 million or $1.00 per share, which is a substantial increase from a loss of $67 million or $0.14 per share in the same quarter last year [1] Financial Performance - Revenues decreased by approximately 11% year-over-year to $4,629 million, although this figure exceeded the Zacks Consensus Estimate of $4,596.6 million [2] - Steelmaking revenues were reported at $4,467 million, down around 11% year-over-year, missing the estimate of $4,495 million [2] - The average net selling price per net ton of steel products was $980, reflecting a decline of about 17% year-over-year, which also fell short of the estimate of $986 [3] - External sales volumes for steel products increased by roughly 5% year-over-year to approximately 4.14 million net tons, surpassing the estimate of 4.06 million net tons [3] Financial Position - The company ended the quarter with cash and cash equivalents of $57 million, up around 6% from the previous quarter [4] - Long-term debt rose approximately 8% sequentially to $7,601 million [4] - Net cash used by operating activities was reported at $351 million for the quarter [4] Outlook - Cleveland-Cliffs anticipates a reduction of about $50 per net ton in steel unit costs for 2025 compared to 2024, an increase from the earlier expectation of a $40 reduction, primarily due to the idling of underperforming assets [5] - Projected capital expenditures are now around $625 million, down from the previous estimate of $700 million [6] - The forecast for selling, general, and administrative expenses has been revised to approximately $600 million from around $625 million [6] - Depreciation, depletion, and amortization expenses are projected at roughly $1.1 billion [6] Price Performance - Cleveland-Cliffs shares have declined by 51.3% over the past year, compared to a 36.8% decline in the Zacks Steel Producers industry [7] Zacks Rank & Comparisons - The company currently holds a Zacks Rank of 3 (Hold) [8] - Other better-ranked stocks in the Basic Materials sector include Hawkins, Inc. (HWKN), Avino Silver & Gold Mines Ltd. (ASM), and Contango Ore, Inc. (CTGO), each with a Zacks Rank of 1 (Strong Buy) [8]

Group 1 - Cleveland-Cliffs reported a quarterly loss of $0.92 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.78, and a decline from earnings of $0.18 per share a year ago, representing an earnings surprise of -17.95% [1] - The company posted revenues of $4.63 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.71%, but down from $5.2 billion in the same quarter last year [2] - Cleveland-Cliffs shares have declined approximately 8.4% since the beginning of the year, compared to a decline of -4.7% for the S&P 500 [3] Group 2 - The earnings outlook for Cleveland-Cliffs is mixed, with the current consensus EPS estimate for the coming quarter at -$0.20 on revenues of $5.07 billion, and -$0.88 on revenues of $20.02 billion for the current fiscal year [7] - The Steel - Producers industry, to which Cleveland-Cliffs belongs, is currently ranked in the top 21% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

CLEVELAND-CLIFFS INC. First-Quarter 2025 Earnings Presentation May 7, 2025 © 2025 Cleveland-Cliffs Inc. All Rights Reserved. FORWARD-LOOKING STATEMENTS This presentation contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements other than historical facts, including, without limitation, statements regarding our current expectations, estimates and projections about our industry or our businesses, are forward-looking statements. We cauti ...

NEWS RELEASE Cleveland-Cliffs Reports First-Quarter 2025 Results CLEVELAND—May 7, 2025—Cleveland-Cliffs Inc. (NYSE: CLF) today reported first-quarter results for the period ended March 31, 2025. First-Quarter Consolidated Results First-quarter 2025 consolidated revenues were $4.6 billion, compared to $4.3 billion in the fourth quarter of 2024. For the first quarter of 2025, the Company recorded a GAAP net loss of $483 million, or $1.00 per diluted share, with an adjusted net loss of $456 million, or $0.92 p ...

Core Viewpoint - Cleveland-Cliffs Inc. (CLF) is expected to report first-quarter 2025 results on May 7, with anticipated challenges due to lower year-over-year steel prices despite cost-cutting measures and increased volumes [1][5][9]. Revenue Estimates - The Zacks Consensus Estimate for CLF's first-quarter consolidated revenues is $4,596.6 million, indicating an 11.6% year-over-year decline [4]. Performance Factors - CLF is likely to face headwinds from weaker steel prices, with benchmark hot-rolled coil (HRC) prices dropping over 40% last year, closing near $700 per short ton from $1,200 per short ton at the beginning of 2024 [5][6]. - The average net selling price per net ton of steel products is estimated at $986, reflecting a 16.1% year-over-year decrease [8]. Cost Management - The company is expected to benefit from reduced steelmaking unit costs, with a sequential decline of approximately $15 per ton in the fourth quarter of 2024 and an anticipated reduction of about $40 per net ton in 2025 compared to 2024 [9]. Volume Growth - CLF is projected to have experienced higher sales volumes in the March quarter, estimated at 4.06 million net tons, suggesting a 3% year-over-year increase, driven by automotive demand and contributions from the Stelco acquisition [10]. Earnings Prediction - The Earnings ESP for CLF is -25.19%, with the consensus estimate indicating a loss of 67 cents for the first quarter, suggesting a low probability of an earnings beat [11][12].

Core Viewpoint - Cleveland-Cliffs (CLF) is expected to report a quarterly loss of $0.67 per share, reflecting a significant year-over-year decline of 472.2%, with anticipated revenues of $4.6 billion, down 11.6% from the previous year [1]. Earnings Projections - Over the last 30 days, the consensus EPS estimate has been revised downward by 59.1%, indicating a significant reassessment by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - Analysts estimate 'Revenues- Other Businesses' will reach $164.80 million, representing a year-over-year decline of 4.2% [5]. - 'Revenues- Steelmaking' is projected to be $4.43 billion, indicating an 11.9% decrease from the same quarter last year [5]. - The average prediction for 'Revenues- Steelmaking- Coated steel' is $1.34 billion, reflecting a 17.4% year-over-year decline [5]. - 'Revenues- Steelmaking- Slab and other steel products' is estimated at $312.45 million, down 6.7% from the prior year [6]. Sales Volumes - Analysts predict 'External Sales Volumes- Steel Products' will reach 4,064.01 tons, compared to 3,940 tons in the same quarter last year [6]. - The 'Average net selling price per net ton of steel products' is expected to be $985.85, down from $1,175 in the same quarter last year [7]. - 'Volumes - Steelmaking - Coated steel' is projected at 1,084.44 tons, compared to 1,216 tons in the previous year [7]. - 'Volumes - Steelmaking - Slab and other steel products' is expected to be 422.79 tons, down from 449 tons year-over-year [8]. - 'Volumes - Steelmaking - Plate' is projected at 201.33 tons, slightly up from 201 tons in the previous year [8]. - 'Volumes - Steelmaking - Cold-rolled steel' is expected to be 541.11 tons, down from 663 tons in the same quarter last year [9]. - 'Volumes - Steelmaking - Hot-rolled steel' is forecasted to reach 1,651.52 tons, compared to 1,266 tons in the same quarter last year [9]. - 'Volumes - Steelmaking - Stainless and electrical steel' is estimated at 151.36 tons, slightly up from 145 tons in the previous year [10]. Stock Performance - Over the past month, shares of Cleveland-Cliffs have returned +27.6%, outperforming the Zacks S&P 500 composite's +0.4% change [10]. - Currently, CLF holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [11].