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- **Automotive Steel Growth**: Secured multi-year contracts with major OEMs, driving Q3 auto shipments to highest since Q1 2024. 9 operational plants position Cliffs to capitalize on U.S. automotive recovery.
- **Rare Earth Opportunity**: Identified potential rare earth deposits in Michigan and Minnesota, aligning with national security goals to reduce foreign dependency.
- **Financial Strength**: Adjusted EBITDA up 52% QoQ to $143M, supported by $300M annualized cost savings. Debt refinancing extends maturity to 2029.
- **Strategic Shift**: Deprioritizing non-core assets (e.g., Toledo plant) in favor of MOU with global steelmaker. Slab contract expiration enables internal production for automotive growth.
- **Defense Contract**: $400M DLA contract for GOES reinforces Cliffs' role as sole U.S. supplier of critical defense materials.


**【CEO Summary Section】**
- **Automotive Steel Recovery**: Q3 marked the best auto steel shipment quarter since Q1 2024, driven by multi-year contracts with major OEMs (Ford, GM, Stellantis) covering 2027-2028. These agreements reflect a strategic shift by automakers to domestic steel to avoid tariffs and supply chain risks.
- **Capacity Utilization**: 9 automotive-grade galvanized steel plants (e.g., Spartan, Dearborn, Middletown) are operational, with capacity to expand production as demand grows. Cleveland-Cliffs is uniquely positioned to meet U.S. automotive demand, unlike competitors with delayed capacity builds.
- **Rare Earth Initiative**: Identified potential rare earth mineralization at sites in Michigan and Minnesota. This aligns with national security goals to reduce reliance on foreign critical materials.
- **Canada Challenges**: Stelco's Canadian operations remain underperforming due to lack of government action against dumped steel imports. Management expects U.S. automotive steel to remain resilient despite Canadian market headwinds.
- **Strategic Partnerships**: Entered MOU with a global steelmaker to leverage U.S. footprint for their North American production. This could lead to asset optimization and reduced focus on non-core assets like Toledo's direct reduction plant.

**【CFO Financial Commentary】**
- **Q3 Financials**: Adjusted EBITDA of $143M (52% QoQ increase), driven by higher automotive mix (30% of shipments) and pricing ($1,032/ton). Unit costs improved due to footprint optimization, with $300M annualized savings on track.
- **Cost Management**: Reduced 2025 CapEx to $525M (from $700M) and SG&A to $550M (from $625M). Debt refinancing extended maturity runway to March 2029, providing flexibility for asset sales proceeds deployment.
- **Contract Transition**: Slab contract with Brazilian index expires Dec 2022, enabling internal production for growing automotive demand. Proceeds from asset sales (e.g., Florida assets to SA Recycling) will reduce debt.

**【Q&A Highlights】**
- **Rare Earth Timeline**: Initial geological assessments ongoing; no timeline for feasibility studies disclosed. Focus on Michigan and Minnesota sites due to proximity to existing infrastructure.
- **Asset Sales Progress**: Sold Florida assets for undisclosed sum; Toledo direct reduction plant remains under consideration but deprioritized due to MOU negotiations. Remaining FPT assets have multiple interested buyers.
- **Cost Reduction Momentum**: Unit costs expected to decline $50/ton YoY in 2025, building on $80/ton reduction in 2023 and $30/ton in 2024. Q4 costs similar to Q3, with no immediate further reductions expected.
- **Electrical Steel Contract**: $400M 5-year DLA contract for grain-oriented electrical steel (GOES) to support U.S. strategic reserves. This underscores Cliffs' position as sole U.S. supplier of critical defense materials.


Cleveland-Cliffs Inc. (CLF) Q3 2025 Earnings Call Transcript

- **Q2 EBITDA Surges**: $271 million improvement, driven by 150,000 ton volume increase and $15/ton cost savings.
- **Tariff-Driven Growth**: 50% tariffs on Canadian steel and Brazilian pig iron support domestic production, with automotive sector poised to rebound post-Fed rate cuts.
- **Stainless Steel Expansion**: $150M investment in premium automotive steel production, targeting quick ROI.
- **Cost Efficiency**: On track for $50/ton reduction, with Q3/Q4 further declines; coke contract expirations and lower coal prices driving savings.
- **Debt Reduction Focus**: $2.7B liquidity, exploring noncore asset sales to accelerate deleveraging.

**【CEO Summary Section】**
- **Q2 Performance Highlight**: Adjusted EBITDA improved by $271 million from Q1, driven by 150,000 ton increase in shipment volumes and operational efficiency gains. Unit costs decreased by $15 per ton against expectations of a $5 increase.
- **Tariff Impact**: Section 232 tariffs (25% initially, increased to 50%) are supporting domestic steel, with flat-rolled steel and light vehicle imports hitting multiyear lows. Cliffs emphasizes no exemptions for imported steel or pig iron.
- **Stainless Steel Expansion**: $150 million investment in a bright annealing line at Coshocton Works to produce premium automotive and appliance steel, expected to deliver quick ROI.
- **Automotive Growth**: Underutilized automotive steel capacity ready to ramp up as OEMs shift production to the U.S. Post-Fed rate cut, consumer-friendly financing could boost demand.
- **Canadian Market Challenges**: Stelco faces excessive imported steel in Canada, but internal coke production from Hamilton plant supports cost synergies. Advocates for stronger trade protections in Canada.

**【CFO Financial Commentary】**
- **Q2 Financials**: GAAP net income of $271 million, with average selling price at $1,015/ton (+$35/ton YoY). Post-Arcelor slab agreement expiration in Dec, EBITDA could gain $125 million/Q2.
- **Cost Efficiency**: Unit cost reduction of $15/ton vs. expected increase, driven by coke contract expirations and lower coal prices. Full-year target: $50/ton reduction, with Q3/Q4 further declines.
- **Balance Sheet Strength**: $2.7 billion liquidity, no near-term maturities. Capital allocation focused on debt reduction, with JPMorgan exploring noncore asset sales to unlock value.
- **Working Capital**: Inventory reductions (esp. raw materials) generated significant cash, with further reductions expected in H2.

**【Q&A Key Highlights】**
- **Cost Reduction Cadence**: Q3 unit cost to decrease by $20/ton, Q4 with additional reductions. Full-year $50/ton target remains on track.
- **CapEx Outlook**: No reline in 2026; Middletown Works project pivoting to AI-driven blast furnace optimization with DOE support.
- **Free Cash Flow**: Q2 outflow of $67 million due to working capital release; expect H2 to generate positive FCF, accelerating debt paydown.
- **Volume Expectations**: Q3 shipments ~4.3 million tons, flat vs. Q2. Automotive growth dependent on OEM production shifts and Fed rate cuts.
- **Noncore Assets**: Exploring sales of idled facilities (e.g., Riverdale, Steelton) for data center development, with proceeds targeting debt reduction.
- **Canada Concerns**: Stelco volumes unaffected by Canadian economic slowdown, but imported steel penetration remains high. Advocating for Canadian trade protections.


Cleveland-Cliffs Inc. (CLF) Q2 2025 Earnings Call Transcript

- **$300M annual savings** from idling 5 non-core assets to materialize in H2 2025
- **$250-500M EBITDA boost** from automotive reshoring by 2026
- **$500M annual benefit** from terminating slab contract in Dec 2025
- **$50/ton unit cost reduction** target for 2025
- **$3B liquidity** supports debt reduction plans
- **GOES demand resilient** despite Weirton plant cancellation

**【CEO Opening Remarks】**
- Q1 2025 EBITDA loss of $174 million due to underperforming non-core assets and lagged impact of low steel prices. Key issues include:
  1. Weak automotive end market share
  2. Loss-making non-core operations (Minorca mine, Steelton, Conshohocken)
  3. Unfavorable slab supply contract with ArcelorMittal/Nippon Steel Calvert
- Actions taken:
  - Idled 5 non-core assets (Minorca, Hibbing Taconite, Dearborn Hot End, Steelton, Conshohocken)
  - Restarting Cleveland #6 blast furnace
  - Expected $300M annual savings by Q2 2025
- Automotive recovery: 2026 EBITDA benefit of $250-500M from reshored production
- Slab contract termination in Dec 2025 to add $500M annual EBITDA

**【CFO Financial Update】**
- Q1 GAAP net loss of $174M vs. guidance
- Unit cost increase of $15/ton due to non-core asset underperformance
- 2025 unit cost reduction target raised to $50/ton (from $40/ton)
- 2025 CapEx reduced to $625M (from $700M) due to idling assets
- $3B available liquidity and $3.3B secured credit
- 2026+ EBITDA reset with idled assets removed

**【Q&A Highlights】**
- Cost savings timing: Full $300M impact in H2 2025
- Q2 2025 price realization up $40/ton vs. Q1
- Asset sales potential: Multiple billion-dollar inbound offers
- GOES demand remains strong despite Weirton plant cancellation
- 2027 blast furnace reline instead of 2026
- Section 232 enforcement critical to domestic competitiveness

Cleveland-Cliffs Inc. (CLF) Q1 2025 Earnings Call Transcript

- **Demand Recovery**: Lead times up to 7 weeks, signaling strong 2025 start with automotive and steel price rebounds.
- **Tariff Benefits**: 25% import tariffs expected to boost margins and protect against unfair competition, benefiting Stelco and downstream products.
- **Cost Reduction**: Unit costs down $30/ton in 2024, with further $40/ton cuts planned, enhancing profitability.
- **Financial Strength**: $3 billion liquidity and debt reduction plans support long-term growth amid market recovery.

**【CEO Summary Section】**
- **Market Recovery and Demand**: Order book and lead times improved significantly, with hot-rolled steel lead times increasing from 3 to 7 weeks. Automotive demand recovery and rising steel prices indicate a strong start to 2025.
- **Trade Policy Impact**: Applauded the 25% steel import tariffs, viewing them as critical to addressing unfair competition and protecting domestic producers. Tariffs expected to benefit downstream products and Stelco operations.
- **Stelco Integration**: Acquired Stelco's synergies set to deliver $120 million annually, with operational cost reductions and improved order flow optimization. Canadian dollar weakness further enhances cost advantages.
- **Operational Resilience**: Maintained financial flexibility with oversubscribed senior notes issuance. Focused on cost management and supply chain security, leveraging iron ore-based operations for stability.

**【CFO Financial Commentary】**
- **Q4 2024 Results**: Adjusted EBITDA loss of $81 million due to weak automotive demand and lagged pricing. 2024 unit steel costs decreased by $30/ton, with further $40/ton reduction expected in 2025.
- **Cost Efficiency**: SG&A expenses down 16% year-over-year. Liquidity remains strong at $3 billion, with plans to reduce leverage through free cash flow utilization.
- **2025 Outlook**: Anticipated EBITDA improvement driven by rising HRC prices and Stelco's 2.6 million tons additional production. Lower capital expenditures and no catch-up CapEx needed post-acquisition.

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