Cleveland-Cliffs (CLF) 25 Apr 232023 Q1 Earnings call transcript

This is Daryl, and I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs' First Quarter 2023 Earnings Conference Call. [Operator Instructions]. The company reminds you that certain comments made on today's call will include predictive statements that are intended to be made as forward-looking within the safe harbor protection of the Private Securities Litigation Reform Act of 1995.

Although the company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially. which cause on differ and Forms filed the could forth are news that the with reports on in XX-K SEC, factors results materially to set releases company's Important website. available are and XX-Q

items. company is excluding the is at for being found for website Reconciliation the of and -- At certain will it The available the and available yesterday. Today's conference release, call, purposes being will be G also results can call the conclusion also in special also which broadcast discuss clevelandcliffs.com. published archived was Regulation replay. on be earnings

At I time, Goncalves, Financial introduce Celso Officer. Executive Vice this like and Chief would President to

good everyone. Daryl, and you, Thank morning,

flow and stage by higher delivered importantly, year declined EBITDA the year. ton and tons, We in million. QX QX, the Our adjusted costs much around we materialize $XX. important last volumes generation a X.X in doubled cash and QX indicated selling volumes. would results rise for quarter. the previous metrics: the in realized and expect the another costs steel marked our We guided ton per in per which we We EBITDA to selling highly X we a as our unit XXXX, rebound million X by from profitability that and $X,XXX. set outperformed trough would Most around X We price $X,XXX strong to quarters on effectively unit further of decline with most around implied price, the $XX QX said from they we profitable of free to

because to demand. strong in capital free working flow invested QX we was largely cash lower, due

QX higher be free but massive in up, will tons. further any be in higher much and should we lower, flow build higher continue, expect will we so but so cash receivables pricing working amount inventory As and EBITDA of this far trend much to outpace capital. the went and volumes coming QX, CapEx In saw

XX% increase EBITDA normalized maintenance unit driven steel Adjusted costs, costs entirely almost repair in by of function QX quarter, input lower previous the higher $XXX and spend, from a production. million, reduced and was a

of higher the we was any year. net Our previous behavior of tons robust, quarter, QX X.X than did quarter of demand maintenance million and highest XXXX not steel XXX,XXX service for have tons XXXX. buying volume last was making roughly did we outages shipment center QX since QX of like has improved, Automotive shipment significant much our

ton our our X from expectations now X with A barely price pricing selling than in are tonnage force, came net here of results more is half months. in meaningfully Due $X,XXX QX mix higher in lags, sales full due value-added the flat-rolled of ahead per index reflected generally lags to results. index-linked recent automotive. QX improvement will beyond. was which to higher of in This and little in in to rise these QX our and benefit varying

several successful few in spot implementing the price over months. We past have increases been

our in the renewal fixed price cycle. increases April We continued contracts have also achieved for X

propel our improved these realizations together, Taken QX. will prices in

due their addition, continue forward. downward should trend that the unit our drove cost In QX costs same lower, to going factors

capacity and performance We into will the we levels. our full, book expect order as that remains at volume run also strong carry over configured QX our

the to $XXX around we QX, contributing of month As receivables, cash million flow quarter-over-quarter. built volumes March, improved particularly pricing lower in free in and the in

April. projects year ramp we a received flow $XXX in up cash peak As QX, million from tax after This carryover refunds quarter of performance as to have will represent come for in, significantly our we XXXX. particularly million tax in refund during million this in already maintenance of QX. received CapEx our the receipts to CapEx these $XXX $XX here expect Furthermore, receipt QX some due comes

than QX, each lower should be CapEx and QX QX So QX.

our lowered year sustaining by $XXX have full we projects. fact, to total reflecting CapEx to expected In million, range primarily $XXX $XX million million,

to which on X off used at rates. We X-year inverted currently tightest now we above the weeks of ago, This $XXX million, was advantage which the comparable basis much of offering rates ever. notes down for XXX a completed bond lower only capital higher and unsecured proceeds the any are ABL, Touching priced treasury. notes, to took curve longer-term is yield the priced structure. issue of off pay pricing on spread short-term points these our unsecured our high-yield

using time in some with rise the source We this rates, an case. our comfortable have longer fund as effective given nearly it free was the rapid no Fed for ABL been but is of the liquidity money,

terming ABL with of balance So some bonds longer-term a no-brainer. out this was

a same the the effectively these In whatever result flexibility for us fact, gives liquidity coupon the or may additional ABL. The opportunities notes on market as as come rate is on new also conditions provided interest up. more the all-in

and have being free in This intend and we debt this bonds. allocation on not billion share shorter-term generate this to debt expect to cash $X our We prepayable toward notes callable $X.X flow longer-term in capital opportunistic change using continued another with the continue year does of swap We said, over repayment priorities. ABL buybacks. debt the billion still robust

in be For balance. main will then our the continue will redeeming has secured XXXX off for notes. paid the target that debt When priority reduction down full, to driving we been ABL now,

back the our some strategy As they $X aggressive billion. as can buy until even buybacks, to achieve are market. we've amounts assuming plan open conditions market this that bonds shown long-dated remain them allocation since debt noncallable around And opportunistically in capital now, should net we bond We with point gets past to we year. prepayable continue are meaningful this down unsecured in our at in the also effectively

to it With that, I will over turn remarks. for his Lourenco

everyone. Celso, and you, Thank good morning,

since from company X reduced steel ago. rates factors, steel producers. levels domestic combined QX in X more to clients behavior with increase order the we most automotive of were our becoming the have a the quarter, years center and order buyers past buying with Also, normal forced their release These flat-rolled the back levels. to strongest During seen imports came service consistent

spot but In in ultimately other built forcing which response back prices is believe addition, factors and steel companies that used the were in inventories are scrap driven down, increases, implement scrap by what the in We were have index we price all excess these pricing drawn higher still favor and sustainable levels. acceptable our several war to to metallics higher. Ukraine ultimately to of

been North continue prime coming and years core scrap annual second in is is year's over metallic metallic and the that movement to the an at the of need conviction supply and tons the year of unless and in to tighten a our strategy. prime else, back currently. Our metallics. this the market and of rebar outlier prime you be will Last a XX than nothing country's shortage scrap in scrap only scrap scrap proving producer are prime million And has half shortage There position. is America you less of strange

our results chain. coke very in parties. blast HBI X integral to per We part production million an feed and own reduce in-house year limited COX supply sell our furnaces availability primarily is Cleveland-Cliffs to of internal own to use of HBI to and at our that third rate HBI of tons Our emissions,

avenue Russia year Ukraine. last these another other through and new scrap and invasion Prime scrap way, years shrinking will illegal, furnace the imports metallics. electric more the over XX heavily sources be is XXXX. cannot but coming online, back with and transshipment, feedstock the prime remains require has United the moving for byproduct which largest Russian will take that way, XX alleviate in will the we, supply as We anticipate million manufacturing after year time. were States imported significant have bringing they arc the by of country, been help one that to that is up for countries import Because a metallics demand should levels the The this get until Ukraine, is, they manufacturing unless offshore. manufacturing, at years, all coming scrap a of need. by rerouting than over for country Said been a disrupted. situation, More tons prime supply This of of

address the would ore. be The scrap alternative shortage metallics to additional iron requires production, that but

iron pellets North producer ore plays our America, favor. in of As into the this right largest

changing For fast. plentiful the majority cheap of is with flat-rolled This steel production the decades, last of EAFs X situation prime historical scrap. advantage took and

production from our plays favor automotive in flat-rolled into EAFs market. also the Greenfield

start-ups our our are the quarters few a too in customer them. choice capabilities This been major challenge EAF some and of clients. for As price automotive automotive demonstrating supplier metallurgical X and the for R&D the us is fact, along annual with States. have from big service increases also That why main in automotive remains the reasons Cleveland-Cliffs helped one each the industry all our of to achieve United now,

Some this price results our April show are they as will in increase of QX only X. effective

our for Our all steel our were biggest the and the as highest quarterly shops why to running we number customers company our direct they tons first shipment automotive been This strong years full ever and prices. at shipments X.X in was steelmaking X the our of quarter capacity. at have reason in a of million higher are

facility our to some production Shore North at the at earlier mining month. higher of swing led Our levels iron of have steel pelletizing ore partial and restart this operations

of year. recall, As since North you Shore has totally idle the last may been spring

operate as this to we time continue expect to still our full swing this North do that at And facility Shore in not will time, any We year. treat operation.

rates averaging seasonally automotive American SAAR of million chain of XXXX. appetite averaged improvement combination in the United issues is easing annual XX.X The units XX.X sales all their units million during new during States remarkable the growing called of about Out for adjusted cars. and QX, massive of after uptick demand a a in supply consumers' usually the

roughly vehicles automotive for North the with flat-rolled do this is on the XX.X for one nearly XXXX and bring. of steel light in As with such, ton Cleveland-Cliffs math you our steel, representing years, equaling builds of X half can best automotive million will additional car the in volume America market the X of forecast

and sales will U.S. production how auto demand in seeing favor. The view been of on have the our are steel in further shift increases our we confirmation

with market lagging in steel construction the has For couple nonresidential last outperformer behind. years, significantly automotive the been the of

few not interest the the going Cleveland-Cliffs automotive signs you the big that to over their point said, in past chain all rate outperformer. of the given being non-res. of as the Marathon in end Federal supply massive hike issues a player with As result reaching has been backlog created is forward, and know, Reserve years That a

At the The will well. drive a Cleveland-Cliffs of is EVs. agnostic States. electric internal in acquired that XXXX. X% proposal every compared forth new month, very March whether said, since And vehicles XXXX AK in X that efforts have be to in Cleveland-Cliffs, types, a Biden's demand as -- cars of materializes United we from I'm over clients that to are sector, vehicles. we we ready today to sold automotive years structural about we States research or the reset the in This out demand and XXXX. the clear-cut earlier whatever our engine XXXX are EV in innovation accommodate any dedicated only includes in know is our center ways X in large-scale electric President the from for improvements that administration combustion be United or adoption Steel to this projection XXXX, put sorry, the both coming steel That leader push that toward latest supplying conventional in

of to also reached supplier a due our Cleveland-Cliffs. simply, as steel goals our unique Put U.S. and automotive the due States of cannot be in the technical United capabilities, to government these without size

United an and Motors. from includes supply for whether at cages, exposed this oriented at ICE of fast a our the to steels battery or part vehicles are EVs a integral slow it body of electrical support happens of We regardless in This transition pace. structural States, parts,

operating million we have by Regarding call NOES, capacity oriented from to this existing production deployed demand $XX the new customer another our of start as Ohio increase to Zanesville, already facility we of XX,XXX CapEx in year. customers, responding this annualized. We third into our tons electrical capacity and growing quarter our steels, should NOES

A and with and supplier from the will country. But each reminder, the to one these in That's producer huge. new sole our perfect electrical to a will of have any products the our entrants Then process. and clients. the a products first is market market as the steels these That's both our technology manufacturing have qualify this Steel. of well-established to products not The then is learn case. grain-oriented the Also producer for GOES, NOES in originally AK ARMCO, Cleveland-Cliffs

all in the We are of already house these with clients.

we open A we our Q&A. couple published things sustainability more before month, XXXX this for Earlier report.

that of This decision to XX% We X the our were increased below are metal was to XXXX, we injection in utilization in use possible furnaces. pleased Direct for by our our was and XXXX accomplishment HBI our XXXX. and by to X target greenhouse blast our stretching as gas already early Scope build of Reduction target report absolute our amounts reduction, our helped in emissions in blast our the Plant. through natural of made scrap emissions of state-of-the-art of BOFs furnaces, massive gas made in That primarily hot of compared our aggressive when

X and COX to metric of percentile our emissions operations tons ton worldwide compares of ton from steelmaking metric global average of XXXX per extremely in We puts of integrated and third per also metric intensity Cleveland-Cliffs in number tons BOF was Scope that COX of the favorably down X furnace emissions steel. This to of reported the steel. blast our X.XX and

reduction customer metrological quality Because In high needs to make route, and reduce is IRR the and pursuing low-emission particularly capture to less of the order numbers, to technologies, to carbon blast hydrogen. in potentially emerging carbon we storage intensive. base, these [indiscernible] and projects it already we further are by we iron remain committed continue our furnace work automotive and of still will requirements making

on things to you As will continue these fronts, informed. keep progress we

for With that, Daryl to I'll it turn questions. over

[Operator Instructions].

first questions the Chieng Emily Goldman Our with of from come line Sachs.

My the the later growth XX,XXX-ton electrical market. and the year? understand electrical grain-oriented what just and perhaps steel what's the here Cliffs electrical outlook. I will markets follow of capacity a bit and more capacity to first size Could talk around investment is steel after wanted about to you little happening. production up steel nongrain-oriented And perhaps have this

adoption Look, Emily. with are steels the point first this electrical electric of vehicles. of Sure. of associated pace oriented all, at totally the

massive million, have We steels. not the MOTOR-MAX this way, product and in investment, by already high-end developed was been deployed type the MOTOR-MAX a a investment. that to This oriented is has the of We're applications $XX special which, called electrical for Pennsylvania grain-oriented for And capacity to plant, time we we'll produce of take being another XX,XXX of Butler, freeing tons our NOES, care of care that because at and will take steels up both basically that. today, more in electrical the produce do Butler. talking

that So XX,XXX what around when you is our capacity XXX,XXX moving Butler. we notice at production are tons is significant

So we growth. to are more really growing our supply ability

to goes at intend GOES laminations is and into and And of transformers of are, the into, grid we the it these suppliers grid, because the pun the transformers. it utilized production are for goes into this sole related point, materials. no everywhere core

the be going grow monies So as from coming. there invested up to that in are to to continue free in to capital grid and coming charging stations also production are the be is will of that of growth. improvement We're improvement have and the to legislation of deployed monies deployed the

point. what at So have that's we pace the growth much pretty market for I And at the we are this rightsized the point. think of of this

if That's very a the cost follow-up, I Understood. And there. around may, outlook helpful. just

of ton XQ And further driving mentioned you numbers any down the on about think what moving us land? a where you remind could XQ Celso, dollar those think you've costs numbers Do the in as ton I help also previously, XQ. have talked frame per basis? there And to cost us a terms pieces decrease $XX in those was and in a I profile. reductions

it, of by, in the costs cost ton quarters. X And call decreased $XX a $XXX a the already We've reduction $XX ton Emily. is down for $XX guided just sure. more QX we quarter. Yes, than

continues to further expect inventory here QX. you the As cost in can out, come reduction

costs a ton hard won't still quarter, as it, this here coming Now working be here we're $XX in Call to a the to reduction magnitude was great bring but for $XX as QX. QX, it down.

from Securities. with Our next Lucas Riley B. Pipes questions the come of line

assumption. also assume the this capital steel kind And would move intensity the -- also My First on up electrical was wondered pipeline maybe of project side. you Lourenco, I question after frame could I if is year year. really up I the wrong yes, maybe this a color opportunities and for somewhat, what potential would that's would you on capital competition. And for your but after intensity appreciate growth the look like

said in down. first all, understand. are both I a very historical participate That's he that we for Butler always of And basically the first Lucas, and to closed. slated shutdown Actually, electrical to AK put and helpful the go steels CEO shut me to Newport, to I would before ahead just process would in allow nothing notice days happened X Steel, -- Steel if like meeting there and of Roger position that meeting to in Washington, represent the AK of very happen, in kind a AK then acquired Steel I to When was Zanesville would be in we on I everybody slated March back execute XXXX, that I perspective. for was D.C. be speak. happen.

the imported Korea, We're short, and States. slaughtered story at We're coarse from production that mainly bring backdoor electrical United from Taiwan we to back Mexico -- time. able and able to steel using that. long to We're by lamination the So and to able being stop production coming shut Canada Japan. steel of down steels

no Lucas, of this electrical market our line way is point, the we At a that in most steels we business. profitable longer So are very fixed losing money.

the with pace our are we of the with the fact capacity happy are very So demand. we that growing own

to We the of run demand. are going ahead not

easy my participate market. that competition product. It's a the complicated to Be it's not try in this guest, We an are market. aware will

the this lot come to back a of that us. know to we fail attempts business So and will

not right at deploy So priority the capital. time, will we now. a It's right

what with are We happy we have.

expansion in we now. good that more for goals Zanesville, for deployed NOES with shape happy are out are the We free in up that of Butler, will we

the more then second pricing is second And the a bit my wondered you on near question if quarter helpful. little outlook. on Very comment I also could term.

successfully, April very spot fixed moved on prices year-to-date. the nicely the and very was contracts mentioned up obviously reset You batch then

would if wondered I whole side on So what the package on could the in like you pricing comment QX? look

as the automotive because, that's the in concerned, as far for you price. other our and us is great business but as contracts automotive is particularly is clients, Cleveland-Cliffs Lucas, outlook with big know, fixed

spot when the price selling the So I'm making $X,XXX, this I'm picture. give to underlying in -- hot-rolled market to is you if up, and just

will the If don't But So price $X,XXX Long underlying the for $X,XXX. story X,XXX, go number down, a hot-rolled it is short, the that's matter bank. our where will down, the of of lot or price -- automotive if with my XX% underlying is. is $X,XXX, are price it my selling prices up price business I'm up, contacts stay my spot take for to was underlying also automotive in the then doesn't and $X,XXX. slice clients market lot the business where a quarter the

are So good are we we protected because very in of very, market. important that the part feeling about very a

something on Celso, you that? to want do complement

numbers that importantly, in largely November, by lags slab off those experienced call some ton QX it, all in from and QX, a ton, pricing. those HRC Relative Yes. to we pricing that then Sure. fall Lucas, as QX we environment compared in add well. index pricing, December, $XXX most that's price to QX, QX. higher a to than to average $XXX more And the selling sub-XXX driven increase expect just to higher

in So price. jump that's sales big why you see the

and super appreciate Really continued color luck. of Terrific. This best is helpful. your

Carlos come of Morgan De questions Stanley. the Alba next Our line from with

Yes.

CapEx CapEx, running of it's of million, a -- $XXX CapEx questions. One how used we forward should below due to depreciation, given going on $XXX $XXX the we on million the is Just closer lot is reference a think about a million. for couple which sustaining time that

useful the you So do how -- your flows. depreciation keep for cash will you many that equipment? So very be jeopardizing this see years how the projection do below without you threshold CapEx for of think of can

Yes.

give good acquired color a short it's said. to Just have good term not depreciation because we good what you you it's is a the average, in on remember, when but reference just reference a why the deploy assets, were they capital as time a The to during costs more the accounting that. paying are than that depreciation. still and for in we're we doing lower We mistreated. had that's our higher just the production And because

it's complement. your So year, with when ever we what's the happen spend back Celso and and that probably back last end to spent have we depreciation happening year, number. to now already we'll already know money back of But the not go year in what going stuff have I we are if that don't we are next to wants done, again. we happened this going to

Yes. Sure. Carlos.

CapEx, included you if lot a that us. that So spent $XXX but behind over we cycle XXXX, in of think million now is maintenance repairs, of

sustaining XXXX at So the level. and level for $XXX million least is new XXXX that

then you we $XXX Now But comfortable that, future, it to XXXX when like in that the beyond, again. with. 'XX, is and what we're and and some that 'XX increase you could here number additional foreseeable and a relines can million things have see for get

relining, have here just it you Celso, the to is when just next in All mentioned, us right. for And record? the

XXXX Yes, at

if the my the line what should to question, renegotiation April? contracts. conditions Okay. that in more with The supply is we -- market? going auto in the second Is sector, may, How think demand October prices. necessarily to auto not I HRC be And spot for we that resetting for of saw auto then on that? Or the about subject

each gave major the took buy of has HRC picture automotive. sell that based option clients The that, Yes. it. our one people from on of to calls out no taken in the one I spot been

it steel now ever. we car already the is game in relationship believe never at core I I automotive were of why manufacturers company's we true It's -- are that demand of are the big suppliers iron of supply throughout consolidated between the the happening X thing. a this went that changer. Yes, acquire mills steel in with relationship several are able States. of now. ore we down That's happened actually and the from that a companies steel -- a history So United in know changer, it's and to type company, game are we business others small automotive a

That party is over.

Now will support to we continue industry. the automotive

will provide capabilities technical need. them continue We to that the they

We to but the will to to last normally X cars be as want of for negotiation. continue cycles They develop products we the on next-generation the behalf rewarded we need that get do, through our paid. understood shareholders, of we

we'll I'll when when river. Not It's too shoes early. So October there comes, talk again. my yet. to get the get I off

come with Curt next Our questions of line the Suisse. from Credit Woodworth

Yes.

I million. with longer-term $XXX respect around projections, guess to the CapEx So the

CCS investments well some hydrogen, postulated which on reduction significant of about some talked also potential numbers iron capital. as fairly the in those as being things You via of are

how little a preliminary, I of business us insight fit the give it you into model? maybe be your can hydrogen or but what be could of around economics may So bit . CCS that? into And some realize could

Yes.

project per carbon showing could available high participation tax of to return to government, not be very only are rate a First CCS of with also ton but develop the based project money $XX particularly is indications of of capture. on that internal up credit the

pretty It's deployment short-term of So this pretty Curt. capital, is not Carlos meaningful, a -- significant.

these now, but right that the is with. numbers about we there executing So working are are really urgent nothing

hydrogen, we As are ready. far as

we is up reaching already use Well, to to built the then We're gas. we ready XX%, direct plant. starting We that that gas XX% it. can to reduction we with pipeline pipe go just Why and use are natural that to can in hydrogen the feed X% X%, a need connect natural that? with hydrogen plant hydrogen. We

ready. are We we hydrogen. So just the need

also one, can have are and groups and with hydrogen to technology furnace. working hydrogen create into different that a bring We Cleveland because several plentiful natural the hubs actually to injecting blast cheap but of we gas several, not Toledo

the here that States, one amounts Russia. in the that only in United in that think country that's does we the use it's other world I

of they industry Brazil, throughout world, So we so this don't steel natural have do. Europe, have Japan, And plentiful, available, entire gas the suppliers automotive other the don't for they Korea, cheap, the technique.

So like the Russians.

-- world, the we So only are we ones. the in civilized

inject far a as we lot car already lot natural lot gas. a greener the than European, Japanese, are Koreans So greener than greater we than is as manufacturing, the a the because

hydrogen, As enrich gas to with soon green. as going be we're really natural we

promoting we So producing We're we press of were and -- massive -- release names. with are brand not amounts automotive steel. producing

supplying produce. the are We that the car massive manufacturers tons

We we are in quarter statements. don't massive seeing every we haven't why releases. press seen produce release brand a that financial press That's numbers because and the you our see names

market. Okay. guess, And I second question metallic then, just That's helpful. on the

kind your strategy? ore. are fitting leverage scrap X potentially You million of reline see up increase large I demand tons captive you ore about that in HBI deal. unique how talked in and either see in is Burns -- Or in? for about, guys you guess having you the further in scope you metallic forward up Harbor And metallic what to your position? is your Would you -- going the look of free do to I kind iron said market? for position 'XX, from strategy talked I did metallic further guess, the would consolidation leverage XX up do that that more capital a prime years, a What You XX, would potential, think you FPT spend? you to today. obviously, of And

now situation own our comfortable very and with our Michigan using for Minnesota in resources I'm use. look, finite our Curt, that. right We like

no. the AK another going HBI Nashwauk, against the HBI were ask when stuff, Why with producing plant, plate. if the to specifications. to my that me automotive. to are serious No, answer has really build they you good. if building rebar, if beams, get company? flange HBI in that compete is producing that So answer the considering I'm wide That's acquired other in they support built you trying Are business departed thought flat-rolled steel all supply but we're plant horse to is of I I no. barn I Steel. Good the mini-mills doesn't high But still actually,

my metallic I'll keep So for ourselves.

FPT to do buyer is of the closed scrap in country, this loops. will the biggest prime continue

with We have. happy only grow what ourselves are We well. as we FPT continue to for

else So side, be and looking. in Cleveland-Cliffs all it's It's self-centered. outside all everybody will closing

Our line of come Timna Wolfe from Tanners the Research. questions with next

a Wanted the bit ask my about question. mix in little first to

that see you that that saw of biggest HRC. based coded. know couldn't detail the was the the movement provided, a in driver I market. big But of improved I actually So I Lourenco volumes off big automotive mentioned the in move

wondering, this I'm that should a in we year? there balance the of up kind is that mix So more year? later the for for maybe just of cadence is Or expect the the ramps

and we Look, when structure, said, basically Like cages, things sell EVs, and with like going allocate easier you up hot you done for you producing grow fill are lines galvanized hot-rolled gain strength, and more it's high automotive easier that, you grow rolled. your to and it's of galvanizing as where value-added low Yes. well. then exposed your you're to for shipping parts utilization high I alloys did shipments, to

value-added all up galvanized where governance. is the filling of our on. growth assessment So with came that That's after capacity high of your

my to other full I at these its And to call going to question, continue going out. the think Nucor on Okay. volumes, produce through run you're of said levels to just have was manage companies think it the rest year, to I they're and planning that mentioned

there. your just So wanted . latest thinking

our running We clients. automotive to supply are out full

that of delayed and clients I cars one right, our more prepared like called to the getting my this recession the the been remarks, most more continue to with as more And to see automotive of build with capacity Fed time. the the we we And ones to be continue are the in our rest sold. are As will end -- the that has from Marathon, to benefit will allocated that. going cars other And market. hiking

We and our clients loop are closed developing also other markets. in with appliance major programs

we So these to to continuing deliver are folks. more

with for good along all positive shape in growth is with from coming the the balance that's we're -- So tags year it because very automotive. My of the in demand perspective that.

guidance the credits question a the and you high I out quarter gave you last pretty if last run then And net $XXX on it. million, was just Got for could, periodic of is rate. started benefit

So just be still should any using you value... if that updated guidance if have wondering we

you repeat more question I . sorry, I one can Timna, time? I'm the missed. think

Yes. problem. No Yes.

on $XXX kind question, periodic first the just credits, million. $XX XXXX So have my the was but benefit I of a in on notes, quarter a for guess, last accounting call, the the I net already on guided -- million

that So still value modeling just that's sure to trying right for the make purposes.

around, call million. $XXX it's interest on million Timna, after consider costs, I still Celso. It's that's missing you. and service you're cost which piece. it, to Got Yes, $XXX that you are COGS, think

next come Gresser the Our from questions line BNP Tristan with of Paribas.

Just capital have left. It's allocation. on one

you $X prepared debt billion you understood I point I some think net flagged in if year, this a that correctly. target at to your remarks, expect reach

strategy So that? electrical capacity, after with fine what's the fine market, with metallics your there talked I about you you strong supply well. you the your as the think but steel

free more will point net point? valid? Or more tilted you there shareholder are -- it but coming? have Is towards returns needs, below decarbonization -- some investment be debt-to-EBITDA reach generation that the reference cash will after is still also And flow that we after flagged You onetime?

We didn't flag we said that flagged. we anything that

are to about cash down the this and projects are everything for debt of flow that So We this and target that record. to our conflicting correct net your are we billion $X getting to talked let's year. have the multiyear, going year

take we the So that thing that only you notice, said Tristan. please, do, will

still what this year. year, debt later we to going We get are That's to net $X billion this at said.

don't carbon Indiana in Harbor The is of XXXX. project hydrogen have project because The still The relining future. is hydrogen. we future capture is

We XXXX. are in

net So we're to billion year. get $X this time, flagged debt, that one we to going more

you're else to home, Claus $X with Before came I be going to for you, What debt. billion net can your Santa do Tristan?

Sorry, that milestone, what's question -- clear if What's I to then my after strategy? you thinking? the you wasn't get

Your clear. was question

understanding was Your wrong.

I've get corrected we assessment. So that's your see. after But will $X we billion, why to

is as of But buy can as on at the usually, to I'm to to stock opens, myself my I whereas stock. tend the I'm CEO, be to the stock opens. soon companies that We as window happen point, a this the price as might in point. going lot stock haven't the you said anything not exchange But about shareholders. return earlier, to increase going as return shareholders window tell sale buying at I it. soon

because sale. In on a sale that business, quarter it's on York It's months, not. is long believe because They our So people minute. understand don't term, term. X New long it's a it's

Okay, Tristan?

Our next questions Citi. come from the line of Alex Hacking with

up to I follow guidance. just cost wanted the on

the should understand $XX cost And well. now changed $XX at be the quarter guess the I cost it's flow of forecast. and $XX forecast? in in I last had also, in think, to in decreases to expecting I extremely into XQ. think then you quarter to quarter And and still we as another potentially we're fourth XQ guided in decreases maybe the looking, XQ. third difficult what I

Yes. that Sure. it's because down Alex, drill on let's important.

up guide, prices, So gave $XXX. scrap gone have since around we that example, for

$XX like So executed And in QX, we cost $XX. we guided things change, said, and right? to I reduction

we, pull in call forward saying, you as to further QX, and we cost is another bridge largely by beyond the is see $XX But now So $XX in will I'm driven that And it, reductions as well. $XX guided there's that there. of a And little bit between $XX scrap. said, to QX, change had $XX.

have seeing another I'm $XX to here $XX cost QX, reductions, going So it, in is call to even QX $XX. also further though

said, It's nail So cost it's just to meaningful still significant timing, hard like it's reduction. the down. you

on a think the saw that end by and strong reflects of and moving the forecast. appreciate extremely target to guess outside restocking? was the to is of underlying side, Metallic auto. we that understand Is really destocking? And you part color, there I also in do any shipment then I the driven year and think weakness last obviously, is Okay. Or of just at you and there I quarter demand auto where is this just -- the is any hard true

end Alex, been now in buying the push that of is higher them produce dealers, more. build to to fluctuations seeing users, case, at coming are is where it continue back than coming level. lots steel the for the these are be, buy has not the all into Automotive our consumer we particularly the It's cars continues SAAR but sell cars. from to continue cars to and we it continue automotive. They cars. from In OEM a time. They to should to long

be So demand if greedy. would this centers at quarter And that of see levels if coming the inventory. speak, car I it's automotive of to basically, more. service different pace X but is pace. will at week start they this point. don't a next they their our are north change continuing tons when we is buy million not they operate in something will exclusively to just are case. rest anticipating Fed bad, It's will and say, to manufacturers centers buy left All in Service behind continue probably low I am now not the right strong supported by great

appreciate I always. the Okay. color as

question next come of the Bank. Deutsche with line Our Sean is from Wondrack

opportunities, to it's or about question. and the solar next tangential you within of first you're we do opportunities look few the in sort could wind that some Just When you think energy even other infrastructure or pursuing, charging forward whether of years? any green see

Reduction in at investment coming that are is support We development clients of and more the sell very bill these -- we money them. we in coming of point, Act demand -- Yes. more to it the the still But will from will infrastructure inflation seeing beginning this submarket, areas. is this this is very and believe submarket. from Look, and at

stations will up I very electrical for in for move and charging that normal that, steels, stations because opportunities sell. is carbon like that the obviously, of produce capital thing steel that us, for the grain-oriented because the of types pick only charging consume states steam only on more steels, deployment faster and not also believe steel but are electrical starting we quickly create One will other to steel, not

are points these right that the mainly of increased So we see best consumption now.

And That's as reduction. of understanding, laid lot M&A organic there opportunity done your on That or improvement down or a of you little appetite out definitely a while. for you've and Is remains priorities just debt, M&A then good call? for you've the a favoring helpful. any been top aside, still you've out are paying debt job

the you $X $XX XXXX Net is buying don't billion all maker in company one see maker the buy billion going and to steel iron or XXXX and other revenues in then another revenues small steel ore opportunity. in time. because M&A And a from in

life will you never saw So future. probably your in never and in the

opportunity. is So M&A

last the I did And on this see any with years. opportunity point, greenfield any any X this time don't the call commit at time in or growth M&A. during So I not

no real for us. there So is opportunity greenfield

debt. good shareholders. can And pay money all That's something with we're commitment down paying you for get we down it's debt, this the do us, a For point. once for us the to as at going

very It's Okay. clear.

over There questions. like back to further no I'd you. hand are the call to

for All appreciate for interest us being right. gentlemen, Ladies and hour. We in Cleveland-Cliffs. with thanks the last the

and keep deliver committed to deliver. the posted, great have continue to results will Thanks again, day. are to continue We we'll a we and you

appreciate We does This today's conclude your teleconference. you. Thank participation.

your may time. rest You disconnect of day. the your lines at this Enjoy