Cliffs(CLF) - 2024 Q4 - Annual Report

Financial Performance - Total revenues for 2024 were $19,185 million, a decrease of 12.8$21,996 million in 2023[446]. - Operating loss for 2024 was $756 million, compared to an operating income of$677 million in 2023[446]. - Net loss attributable to Cliffs shareholders for 2024 was $754 million, compared to a net income of$399 million in 2023[446]. - Cash and cash equivalents decreased to $54 million in 2024 from$198 million in 2023[445]. - Total assets increased to $20,947 million in 2024, up from$17,537 million in 2023[445]. - Long-term debt rose significantly to $7,065 million in 2024, compared to$3,137 million in 2023[445]. - Inventories increased to $5,094 million in 2024, up from$4,460 million in 2023[445]. - The company experienced a significant increase in goodwill, rising to $1,768 million in 2024 from$1,005 million in 2023[445]. - Net income for 2024 was a loss of $708 million, compared to a profit of$450 million in 2023 and $1,376 million in 2022[448]. - Comprehensive income attributable to Cliffs shareholders decreased to a loss of$874 million in 2024 from a profit of $226 million in 2023[448]. - Net cash provided by operating activities significantly dropped to$105 million in 2024 from $2,267 million in 2023[450]. Acquisition and Investments - The Stelco Acquisition was completed in Q4 2024, but it may be less accretive than expected, potentially impacting earnings per share and share price[206]. - The acquisition of Stelco was completed on November 1, 2024, with Stelco shareholders receiving CAD$60.00 in cash and 0.454 shares of Cliffs common stock per share[456]. - The Stelco Acquisition completed on November 1, 2024, involved total purchase consideration of $3,208 million, including$2,450 million in cash and $343 million in share exchange[511]. - The goodwill resulting from the Stelco Acquisition was$786 million, reflecting growth opportunities and potential synergies within the Steelmaking segment[513]. - The company incurred $63 million in transaction costs related to the Stelco Acquisition in 2024, impacting the pro forma net loss[515]. Operational Risks - The company faces potential disruptions in operations due to reliance on third-party suppliers for critical raw materials and production inputs, which could lead to increased costs[184]. - The company’s sales and competitive position depend on the ability to transport products to customers at competitive rates, with disruptions in transportation services potentially affecting operations[186]. - The company is exposed to fluctuations in energy and raw material costs, which can significantly impact production costs and profitability[185]. - The company’s operations are vulnerable to various risks, including natural disasters, equipment failures, and supply chain disruptions, which could adversely affect production and revenues[191]. - The company relies on IT systems for business operations, and disruptions or failures in these systems could negatively impact financial performance and operations[196]. - The company may face significant expenditures due to ongoing lawsuits and claims, which could adversely affect financial condition and liquidity[182]. - The company’s ability to implement capital projects on time and within budget is subject to various risks, including supply chain issues and labor-related factors[190]. - The company anticipates potential labor shortages in critical operational positions, which could adversely affect production[226]. - The company is subject to risks related to labor agreements, with several agreements expiring in 2025, creating uncertainty in labor costs[220]. - The company faces risks related to cybersecurity incidents that could disrupt business processes and adversely affect financial condition and cash flows[199]. - The company may not have adequate insurance coverage for certain business risks, which could lead to material adverse effects on financial condition and cash flows[208]. - The company is exposed to regulatory risks related to decarbonization initiatives, which could impose significant costs and impact competitiveness[210]. Environmental and Sustainability Initiatives - The company is engaged in major initiatives at its Butler and Middletown facilities to leverage DOE funding for capital projects aimed at increasing competitiveness and reducing GHG emissions[190]. - The company is investigating investments in renewable and clean energy initiatives, including projects funded by the DOE to reduce GHG emissions at its facilities[211]. - The company has expressed interest in utilizing clean hydrogen from nearby hydrogen hubs, with successful trials conducted at its Indiana Harbor facility[211]. Financial Liabilities and Debt Management - The company reported total long-term debt of$7,065 million as of December 31, 2024, an increase from $3,137 million in 2023[533]. - The total debt maturities as of December 31, 2024, amount to$7.148 billion, with significant maturities in 2027 ($1.560 billion) and 2028 ($1.268 billion)[568]. - The company issued an additional $600 million of 7.000$900 million aggregate principal amount of 6.875% 2029 Senior Notes, which were issued at par, to finance part of the Stelco Acquisition[541]. - The 6.875% 2029 Senior Notes bear interest at 6.875% per annum, payable semi-annually, and mature on November 1, 2029[542]. - Cleveland-Cliffs Inc. also issued $900 million aggregate principal amount of 7.375$4.75 billion of aggregate lending commitments into a $4.25 billion tranche and a$500 million tranche[561]. Pension and Employee Benefits - The defined benefit pension plans' benefit obligations decreased from $4.571 billion in 2023 to$4.248 billion in 2024, while the OPEB plans' obligations increased from $1.036 billion to$1.147 billion[574]. - The company reported a net periodic benefit credit of $59 million for pension benefits and$152 million for OPEB plans in 2024[576]. - The actuarial loss on pension benefits was $165 million in 2024, compared to an actuarial gain of$116 million in 2023[577]. - The funded status of the defined benefit pension plans showed a deficit of $11 million in 2024, improving from a deficit of$289 million in 2023[574]. - The company expects pension benefit payments of $472 million and OPEB payments of$116 million in 2025[580]. - The discount rate for pension benefits increased from 5.12% in 2023 to 5.55% in 2024, while the OPEB discount rate rose from 5.15% to 5.59%[582]. - The expected return on plan assets for pension benefits is 7.85% in 2024, up from 7.66% in 2023[584]. - The health care cost trend rate for the next year is assumed to be 11.43%, significantly higher than the 5.49% in 2023[584]. - The asset allocation for pension assets in 2024 includes 32.7% in equity securities and 38.9% in fixed income[587]. - The total fair value of pension assets increased from $4,282 million in 2023 to$4,237 million in 2024[591]. - The ending balance of pension assets decreased to $692 million in 2024 from$770 million in 2023, reflecting sales and actual returns on plan assets[592]. - The actual return on pension assets relating to assets still held at the reporting date was $18 million in 2024, compared to a loss of$16 million in 2023[592].