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Item 1. Financial Statements

2024-04-25 compared with 2023-10-25 · 165 added, 224 removed, 525 unchanged (43% of the section changed)

3 unchanged sentences

AND SUBSIDIARIES

(In millions, except share information) September 30,

(In millions, except share information) March 31,

2024 December 31,

8 unchanged sentences

Goodwill 1,005 1,005

Pension and OPEB, asset 392 356

Pension and OPEB assets 344 329

Other non-current assets 647 672

9 unchanged sentences

Long-term debt 3,664 3,137

Pension liability, non-current 456 473

OPEB liability, non-current 563 585

Pension and OPEB liabilities 791 821

Deferred income taxes 628 639

12 unchanged sentences

Total Cliffs shareholders' equity 7,201 7,887

Noncontrolling interest 244 251

Noncontrolling interests 241 235

TOTAL EQUITY 7,442 8,122

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share amounts) 2024 2023

3 unchanged sentences

Selling, general and administrative expenses ( 132 ) ( 127 )

Restructuring and other charges ( 104 ) —

Asset impairments ( 64 ) —

Miscellaneous – net ( 23 ) ( 3 )

Total operating costs ( 5,237 ) ( 5,326 )

Operating income 325 187 777 2,121

Operating loss ( 38 ) ( 31 )

Other income (expense):

Interest expense, net ( 64 ) ( 77 )

Gain (loss) on extinguishment of debt — 4 — ( 76 )

Loss on extinguishment of debt ( 21 ) —

Net periodic benefit credits other than service cost component 60 50

Other non-operating income (expense) ( 2 ) ( 1 ) 4 ( 6 )

Other non-operating income 2 2

Total other expense ( 23 ) ( 25 )

Income from continuing operations before income taxes 303 175 705 1,982

Income tax expense ( 29 ) ( 10 ) ( 118 ) ( 404 )

Income from continuing operations 274 165 587 1,578

Loss from continuing operations before income taxes ( 61 ) ( 56 )

Income tax benefit 8 13

Loss from continuing operations ( 53 ) ( 43 )

Income from discontinued operations, net of tax — 1

Net income 275 165 589 1,580

Income attributable to noncontrolling interest ( 11 ) ( 13 ) ( 35 ) ( 31 )

Net income attributable to Cliffs shareholders $ 264 $ 152 $ 554 $ 1,549

Earnings per common share attributable to Cliffs shareholders - basic

Net loss ( 53 ) ( 42 )

Income attributable to noncontrolling interests ( 14 ) ( 15 )

Net loss attributable to Cliffs shareholders $ ( 67 ) $ ( 57 )

Loss per common share attributable to Cliffs shareholders - basic

Continuing operations $ ( 0.14 ) $ ( 0.11 )

1 unchanged sentence

$ ( 0.14 ) $ ( 0.11 )

Earnings per common share attributable to Cliffs shareholders - diluted

Loss per common share attributable to Cliffs shareholders - diluted

Continuing operations $ ( 0.14 ) $ ( 0.11 )

2 unchanged sentences

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE INCOME

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE LOSS

CLEVELAND-CLIFFS INC.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

Net income $ 275 $ 165 $ 589 $ 1,580

Net loss $ ( 53 ) $ ( 42 )

Other comprehensive income (loss):

2 unchanged sentences

Changes in foreign currency translation ( 1 ) —

Total other comprehensive income (loss) 4 152 ( 183 ) 192

Comprehensive income 279 317 406 1,772

Total other comprehensive loss ( 9 ) ( 179 )

Comprehensive loss ( 62 ) ( 221 )

Comprehensive income attributable to noncontrolling interests ( 14 ) ( 15 )

Comprehensive income attributable to Cliffs shareholders $ 268 $ 304 $ 371 $ 1,741

Comprehensive loss attributable to Cliffs shareholders $ ( 76 ) $ ( 236 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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AND SUBSIDIARIES

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2024 2023

OPERATING ACTIVITIES

Net income $ 589 $ 1,580

Adjustments to reconcile net income to net cash provided by operating activities:

Net loss $ ( 53 ) $ ( 42 )

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

Depreciation, depletion and amortization 230 242

Deferred income taxes 132 210

Restructuring and other charges 104 —

Asset impairments 64 —

Pension and OPEB credits ( 51 ) ( 40 )

Loss on extinguishment of debt 21 —

Impairment of long-lived assets — 29

Changes in operating assets and liabilities:

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Other, net 21 ( 79 )

Net cash provided by operating activities 1,615 1,934

Net cash provided (used) by operating activities 142 ( 39 )

INVESTING ACTIVITIES

Purchase of property, plant and equipment ( 182 ) ( 188 )

Acquisition of FPT, net of cash acquired — ( 31 )

Other investing activities 3 3

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Repayments of senior notes ( 652 ) —

Borrowings under credit facilities 3,004 4,650

Repayments under credit facilities ( 4,543 ) ( 4,169 )

Borrowings under credit facilities, net 342 307

Debt issuance costs ( 13 ) —

Other financing activities ( 25 ) ( 50 )

Net cash used by financing activities ( 1,140 ) ( 1,199 )

Net increase in cash and cash equivalents 5 8

Net cash provided (used) by financing activities ( 131 ) 257

Net increase (decrease) in cash and cash equivalents ( 168 ) 33

Cash and cash equivalents at beginning of period 198 26

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Comprehensive income (loss) — — — ( 67 ) — ( 9 ) 14 ( 62 )

Stock and other incentive plans 1.8 — ( 39 ) — 30 — — ( 9 )

Net distributions to noncontrolling interests — — — — — — ( 19 ) ( 19 )

March 31, 2023 515.1 $ 66 $ 4,832 $ 1,277 $ ( 280 ) $ 1,651 $ 247 $ 7,793

Comprehensive income (loss) — — — 347 — ( 8 ) 9 348

Stock and other incentive plans 0.1 — 9 — 3 — — 12

Common stock repurchases, net of excise tax ( 30.4 ) — — — ( 615 ) — — ( 615 )

Net distributions to noncontrolling interests — — — — — — ( 14 ) ( 14 )

June 30, 2023 508.7 $ 66 $ 4,841 $ 1,624 $ ( 372 ) $ 1,643 $ 242 $ 8,044

Comprehensive income — — — 264 — 4 11 279

Stock and other incentive plans 1.0 — ( 10 ) — 15 — — 5

Common stock repurchases, net of excise tax ( 3.9 ) — — — ( 59 ) — — ( 59 )

Net distributions to noncontrolling interests — — — — — — ( 8 ) ( 8 )

September 30, 2023 504.8 $ 66 $ 4,850 $ 1,888 $ ( 431 ) $ 1,647 $ 244 $ 8,264

March 31, 2024 475.5 $ 66 $ 4,851 $ 1,666 $ ( 1,030 ) $ 1,648 $ 241 $ 7,442

(In millions) Number

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of Shares Retained

Earnings (Deficit) Common

Earnings Common

Treasury AOCI Non-controlling Interests Total

December 31, 2022 513.3 $ 66 $ 4,871 $ 1,334 $ ( 310 ) $ 1,830 $ 251 $ 8,042

Comprehensive income — — — 801 — 97 13 911

Redemption of convertible debt 24.2 3 ( 28 ) — — — — ( 25 )

Stock and other incentive plans 1.3 — ( 16 ) — 11 — — ( 5 )

Common stock repurchases ( 1.0 ) — — — ( 19 ) — — ( 19 )

Net distributions to noncontrolling interests — — — — — — ( 28 ) ( 28 )

March 31, 2022 524.7 $ 66 $ 4,848 $ 800 $ ( 90 ) $ 715 $ 269 $ 6,608

Comprehensive income (loss) — — — ( 57 ) — ( 179 ) 15 ( 221 )

Stock and other incentive plans 1.8 — ( 39 ) — 30 — — ( 9 )

Common stock repurchases ( 7.5 ) — — — ( 157 ) — — ( 157 )

Net distributions to noncontrolling interests — — — — — — ( 19 ) ( 19 )

June 30, 2022 517.3 $ 66 $ 4,855 $ 1,396 $ ( 246 ) $ 658 $ 265 $ 6,994

Comprehensive income — — — 152 — 152 13 317

Stock and other incentive plans — — 9 — — — — 9

Common stock repurchases ( 2.0 ) — — — ( 34 ) — — ( 34 )

Net distributions to noncontrolling interests — — — — — — ( 18 ) ( 18 )

September 30, 2022 515.3 $ 66 $ 4,864 $ 1,548 $ ( 280 ) $ 810 $ 260 $ 7,268

March 31, 2023 515.1 $ 66 $ 4,832 $ 1,277 $ ( 280 ) $ 1,651 $ 247 $ 7,793

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BUSINESS, CONSOLIDATION AND PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC rules and regulations and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive income, cash flows and changes in equity for the periods presented.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with SEC rules and regulations and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations, comprehensive loss, cash flows and changes in equity for the periods presented.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

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however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or any other future period.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2023 and March 31, 2023.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or any other future period.

Certain prior period amounts have been reclassified to conform with the current year presentation.

NATURE OF BUSINESS

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We are vertically integrated from mined raw materials, direct reduced iron and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and tubing.

We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of markets due to our comprehensive offering of flat-rolled steel products.

We are the largest supplier of steel to the automotive industry in North America and serve a diverse range of other markets due to our comprehensive offering of flat-rolled steel products.

Headquartered in Cleveland, Ohio, we employ approximately 28,000 people across our operations in the United States and Canada.

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These investments are included within our Steelmaking segment.

We review an investment for impairment when circumstances indicate that a loss in value below its carrying amount is other than temporary.

Our investment in affiliates of $ 131 million and $ 133 million as of September 30, 2023 and December 31, 2022, respectively, was classified in Other non-current assets.

Our investment in affiliates of $ 118 million and $ 123 million as of March 31, 2024 and December 31, 2023, respectively, was classified in Other non-current assets.

SIGNIFICANT ACCOUNTING POLICIES

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RECENT ACCOUNTING PRONOUNCEMENTS AND LEGISLATION

In August 2022, the U.S.

government signed the Inflation Reduction Act into law.

The Inflation Reduction Act introduced, among other legislation, a 1% excise tax on the fair market value of stock repurchases net of the fair market value of stock issuances during the tax year.

The excise tax is effective on net stock repurchases that occur after December 31, 2022.

The tax is recorded in equity as a cost of common shares in treasury.

In September 2022, the FASB issued ASU No.

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Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for further information.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This guidance requires additional annual and interim disclosures for reportable segments.

This new standard does not affect the recognition, measurement or financial statement presentation.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This guidance requires additional annual and interim disclosures for income taxes.

This new standard does not affect the recognition, measurement or financial statement presentation.

The amendments are effective for fiscal years beginning after December 15, 2024.

NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

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Increase in allowance — ( 1 )

Allowance for credit losses as of September 30 $ ( 7 ) $ ( 5 )

Allowance for credit losses as of March 31 $ ( 5 ) $ ( 5 )

The following table presents the detail of our Inventories on the Statements of Unaudited Condensed Consolidated Financial Position:

(In millions) September 30,

(In millions) March 31,

2024 December 31,

11 unchanged sentences

Supply chain finance programs that extend terms or provide us an economic benefit are classified as short-term financings.

As of September 30, 2023 and December 31, 2022, we had $ 21 million and $ 19 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of September 30, 2023 and December 31, 2022, we had $ 90 million and $ 112 million, respectively, classified as Accounts payable.

As of March 31, 2024 and December 31, 2023, we had $ 25 million and $ 21 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of March 31, 2024 and December 31, 2023, we had $ 89 million and $ 91 million, respectively, classified as Accounts payable.

WEIRTON INDEFINITE IDLE

During the first quarter of 2024, we announced the indefinite idle of our tinplate production plant located in Weirton, West Virginia.

As a result of the announcement of the indefinite idle, we recorded Restructuring and other charges of $ 104 million for severance, other employee-related benefits and asset retirement obligation charges and Asset impairments of $ 64 million during the three months ended March 31, 2024.

CASH FLOW INFORMATION

A reconciliation of capital additions to cash paid for capital expenditures is as follows:

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2024 2023

1 unchanged sentence

Non-cash accruals ( 45 ) ( 76 )

Equipment financed with seller 47 —

Right-of-use assets - finance leases 20 16

1 unchanged sentence

Cash payments (receipts) for income taxes and interest are as follows:

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2024 2023

2 unchanged sentences

Interest paid on debt obligations net of capitalized interest 1

1 Capitalized interest was $ 8 million and $ 7 million for the nine months ended September 30, 2023 and 2022, respectively.

1 Capitalized interest was $ 4 million and $ 3 million for the three months ended March 31, 2024 and 2023, respectively.

NOTE 3 - REVENUES

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

Automotive $ 1,958 $ 1,734 $ 5,808 $ 4,985

Direct automotive $ 1,617 $ 1,870

Infrastructure and manufacturing 1,392 1,297

1 unchanged sentence

Steel producers

737 847 2,234 2,740

Total Steelmaking 5,027 5,126

Other Businesses:

Automotive 133 113 415 359

Direct automotive 140 139

Infrastructure and manufacturing 10 10

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

18 unchanged sentences

All intersegment transactions were eliminated in consolidation.

We allocate Corporate Selling, general and administrative expenses to our operating segments.

We evaluate performance on an operating segment basis, as well as a consolidated basis, based on Adjusted EBITDA, which is a non-GAAP measure.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

7 unchanged sentences

Total Adjusted EBITDA $ 414 $ 243

The following table provides a reconciliation of our consolidated Net income to total Adjusted EBITDA:

The following table provides a reconciliation of our consolidated Net loss to total Adjusted EBITDA:

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

Net income $ 275 $ 165 $ 589 $ 1,580

Net loss $ ( 53 ) $ ( 42 )

Interest expense, net ( 64 ) ( 77 )

Income tax expense ( 29 ) ( 10 ) ( 118 ) ( 404 )

Income tax benefit 8 13

Depreciation, depletion and amortization ( 230 ) ( 242 )

623 476 1,671 2,977

EBITDA of noncontrolling interests 1

Gain (loss) on extinguishment of debt — 4 — ( 76 )

Asset impairment — — — ( 29 )

Weirton indefinite idle 2

Loss on extinguishment of debt ( 21 ) —

Other, net ( 4 ) ( 2 )

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EBITDA of noncontrolling interests $ 21 $ 23

The following summarizes our assets by segment:

(In millions) September 30,

2023 December 31,

Steelmaking $ 17,481 $ 18,070

Other Businesses 819 836

Intersegment eliminations ( 531 ) ( 521 )

Total segment assets 17,769 18,385

Corporate 290 370

Total assets $ 18,059 $ 18,755

2 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for further information.

The following table summarizes our depreciation, depletion and amortization and capital additions by segment:

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

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Other Businesses 1 1

Corporate 1 1 2 3

Total capital additions $ 157 $ 128

1 Refer to NOTE 2 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION for additional information.

The following summarizes our assets by segment:

(In millions) March 31,

2024 December 31,

Steelmaking $ 16,738 $ 16,880

Other Businesses 658 657

Intersegment eliminations ( 505 ) ( 507 )

Total segment assets 16,891 17,030

Corporate 345 507

Total assets $ 17,236 $ 17,537

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

The following table indicates the carrying value of each of the major classes of our depreciable assets:

(In millions) September 30,

(In millions) March 31,

2024 December 31,

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Property, plant and equipment, net $ 8,771 $ 8,895

1 Includes right-of-use assets related to finance leases of $ 485 million and $ 408 million as of September 30, 2023 and December 31, 2022, respectively.

We recorded depreciation and depletion expense of $ 247 million and $ 732 million for the three and nine months ended September 30, 2023, respectively, and $ 235 million and $ 782 million for the three and nine months ended September 30, 2022, respectively.

Depreciation and depletion expense for the nine months ended September 30, 2022 includes $ 23 million of accelerated depreciation related to the decision to indefinitely idle the coke facility at Middletown Works and $ 68 million of accelerated depreciation related to the indefinite idle of the Indiana Harbor #4 blast furnace.

1 Includes right-of-use assets related to finance leases of $ 315 million and $ 306 million as of March 31, 2024 and December 31, 2023, respectively.

We recorded depreciation and depletion expense of $ 227 million and $ 239 million for the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, we announced the indefinite idle of our Weirton tinplate production plant, which resulted in a $ 46 million impairment charge to Property, plant and equipment, net .

NOTE 6 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES

The following is a summary of Goodwill by segment:

(In millions) September 30,

(In millions) March 31,

2024 December 31,

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The following is a summary of our intangible assets and liabilities:

September 30, 2023

March 31, 2024

December 31, 2023

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Amortization of all intangible liabilities is recognized in Cost of goods sold .

Amortization expense related to intangible assets was $ 3 million for both the three months ended September 30, 2023 and 2022, and $ 10 million for both the nine months ended September 30, 2023 and 2022.

Amortization expense related to intangible assets was $ 4 million for both the three months ended March 31, 2024 and 2023.

Estimated future amortization expense is $ 9 million for the remainder of 2024 and $ 13 million annually for the years 2025 through 2029.

Income from amortization related to the intangible liabilities was $ 1 million for both the three months ended September 30, 2023 and 2022, and $ 4 million for both the nine months ended September 30, 2023 and 2022.

Income from amortization related to the intangible liabilities was $ 1 million for both the three months ended March 31, 2024 and 2023.

Estimated future income from amortization is $ 4 million for the remainder of 2024 and $ 5 million annually for the years 2025 through 2029.

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Annual Effective

Interest Rate September 30,

Interest Rate March 31,

2024 December 31,

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Cliffs 7.000 % 825 —

6.250 % 2040 Senior Notes

Cliffs 6.340 % 235 235

ABL Facility Cliffs 2

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as borrower under our ABL Facility.

3 Our ABL Facility annual effective interest rate was 7.148 % and 5.602 %, respectively, as of September 30, 2023 and December 31, 2022.

3 Our ABL Facility annual effective interest rate was 6.776 % as of March 31, 2024.

7.000% 2032 SENIOR NOTES OFFERING

On April 14, 2023, we entered into an indenture among Cliffs, the guarantors party thereto and U.S.

On March 18, 2024, we entered into an indenture among Cliffs, the guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee, relating to the issuance of $ 825 million aggregate principal amount of our 7.000 % 2032 Senior Notes, which were issued at par.

The 7.000 % 2032 Senior Notes were issued in a private placement transaction exempt from the registration requirements of the Securities Act.

The 6.750% 2030 Senior Notes bear interest at a rate of 6.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on October 15, 2023.

The 6.750% 2030 Senior Notes mature on April 15, 2030.

The 7.000% 2032 Senior Notes bear interest at a rate of 7.000 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2024.

The 7.000% 2032 Senior Notes mature on March 15, 2032.

The 7.000% 2032 Senior Notes are unsecured senior obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness.

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The 7.000% 2032 Senior Notes may be redeemed, in whole or in part, at any time at our option not less than 10 days nor more than 60 days after prior notice is sent to the holders of the 7.000% 2032 Senior Notes.

The 6.750% 2030 Senior Notes are redeemable prior to April 15, 2026, at a redemption price equal to 100 % of the principal amount thereof plus a "make-whole" premium set forth in the indenture.

We may also redeem up to 35 % of the aggregate principal amount of the 6.750% 2030 Senior Notes prior to April 15, 2026 at a redemption price equal to 106.750 % of the principal amount thereof with the net cash proceeds of one or more equity offerings.

The 6.750% 2030 Senior Notes are redeemable beginning on April 15, 2026, at a redemption price equal to 103.375 % of the principal amount thereof, decreasing to 101.688 % on April 15, 2027, and are redeemable at par beginning on April 15, 2028.

In each case, we pay the applicable redemption and "make-whole" premiums plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The 7.000% 2032 Senior Notes are redeemable prior to March 15, 2027, at a redemption price equal to 100 % of the principal amount thereof plus a "make-whole" premium set forth in the indenture.

We may also redeem up to 35 % of the aggregate principal amount of the 7.000% 2032 Senior Notes prior to March 15, 2027, at a redemption price equal to 107.000 % of the principal amount thereof with the net cash proceeds of one or more equity offerings.

The 7.000% 2032 Senior Notes are redeemable beginning on March 15, 2027, at a redemption price equal to 103.500 % of the principal amount thereof, decreasing to 101.750 % on March 15, 2028, and are redeemable at par beginning on March 15, 2029.

In each case, we pay the applicable redemption or "make-whole" premiums plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

In addition, if a change in control triggering event, as defined in the indenture, occurs with respect to the 7.000% 2032 Senior Notes, we will be required to offer to repurchase the notes at a purchase price equal to 101 % of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

1 unchanged sentence

however, there are no financial covenants.

On June 9, 2023, we entered into the Fourth ABL Amendment to our ABL Facility to, among other things, increase the amount of tranche A revolver commitments available thereunder by an additional $ 250 million to an aggregate principal amount of $ 4.75 billion and extend the maturity date of all commitments under the ABL Facility from March 13, 2025 to June 9, 2028.

The Fourth ABL Amendment removed the LIBOR option for variable rate loans due to its cessation and replaced it with a SOFR option.

Borrowings under the ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a SOFR rate, in each

case, plus an applicable tiered margin.

The base rate is equal to the greater of the federal funds rate plus 0.5 % or the term SOFR plus 1.25 %.

As of September 30, 2023, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

DEBT EXTINGUISHMENTS

On March 18, 2024, we used a portion of the net proceeds from the 7.000% 2032 Senior Notes issuance to repurchase $ 640 million in aggregate principal amount of our 6.750% 2026 Senior Secured Notes pursuant to a tender offer.

On April 3, 2024, we redeemed the remaining $ 189 million in aggregate principal amount of our then-outstanding 6.750% 2026 Senior Secured Notes with the remaining portion of the net proceeds from the 7.000% 2032 Senior Notes issuance and available liquidity.

As of March 31, 2024, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

The following represents a summary of our borrowing capacity under the ABL Facility:

(In millions) September 30,

(In millions) March 31,

Available borrowing base on ABL Facility 1

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Borrowing capacity available $ 4,000

1 As of September 30, 2023, the ABL Facility has a maximum available borrowing base of $ 4.75 billion.

1 As of March 31, 2024, the ABL Facility has a maximum available borrowing base of $ 4.75 billion.

The borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.

2 We issued standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, workers' compensation, operating agreements, employee severance, environmental obligations, and insurance.

2 We issued standby letters of credit with certain financial institutions in order to support business obligations, including, but not limited to, operating agreements, employee severance, environmental obligations, workers' compensation and insurance obligations.

DEBT MATURITIES

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at September 30, 2023 (in millions):

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at March 31, 2024 (in millions):

2024 2025 2026 2027 2028 Thereafter Total

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

2 unchanged sentences

Expected return on plan assets ( 11 ) ( 11 )

Termination benefits 1

Amortization:

Prior service costs (credits) ( 4 ) 1 ( 12 ) 1

Prior service credits ( 4 ) ( 4 )

Net actuarial gain ( 38 ) ( 36 )

Net periodic benefit costs (credits) $ ( 33 ) $ 18 $ ( 98 ) $ 54

Based on funding requirements, we made nominal defined benefit pension contributions for the three and nine months ended September 30, 2023.

Based on funding requirements, we made $ 1 million of defined benefit pension contributions for both the three and nine months ended September 30, 2022.

Based on funding requirements, we made no contributions to our VEBA trust plans for the three and nine months ended September 30, 2023.

We made contributions of $ 24 million and $ 80 million to our VEBA trust plans for the three and nine months ended September 30, 2022, respectively.

Net periodic benefit credits $ ( 37 ) $ ( 33 )

1 The termination benefits relate to the announcement of the indefinite idle of our Weirton tinplate production plant.

Based on funding requirements, we made nominal defined benefit pension contributions for both the three months ended March 31, 2024 and 2023.

Based on funding requirements, we made no contributions to our voluntary employee benefit association trust plans for both the three months ended March 31, 2024 and 2023.

NOTE 9 - INCOME TAXES

Our 2023 estimated annual effective tax rate before discrete items as of September 30, 2023 is 19 %.

The estimated annual effective tax rate is less than the U.S.

statutory rate of 21 %, as state income tax expense is less than the percentage depletion in excess of cost depletion.

The 2022 estimated annual effective tax rate before discrete items as of September 30, 2022 was 20 %.

For the nine months ended September 30, 2023, income tax expense includes $ 18 million of discrete benefit, as compared to $ 3 million of discrete expense for the nine months ended September 30, 2022.

Our effective tax rate for the three months ended March 31, 2024 is 13 %, compared to 23 % for the three months ended March 31, 2023.

The change in the effective tax rate, as compared to the prior comparable period, is primarily related to depletion in excess of state income tax expense and the impact of immaterial discrete items relative to pre-tax income.

NOTE 10 - ASSET RETIREMENT OBLIGATIONS

3 unchanged sentences

For indefinitely idled or closed mines, the accretion of the liability is recognized over the anticipated timing of remediation.

As the majority of our asset retirement obligations at our steelmaking operations have indeterminate settlement dates, asset retirement obligations have been recorded at present values using estimated ranges of the economic lives of the underlying assets.

Asset retirement obligations at our active steelmaking operations primarily include the closure and post-closure care for on-site landfills and other waste containment facilities.

Asset retirement obligations have been recorded at present values using settlement dates based on when we expect these facilities to reach capacity and close.

The following is a summary of our asset retirement obligations:

(In millions) September 30,

(In millions) March 31,

2024 December 31,

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Long-term asset retirement obligations $ 449 $ 444

1 Includes $ 275 million and $ 277 million related to our active operations as of September 30, 2023 and December 31, 2022, respectively.

The following is a roll forward of our asset retirement obligation liability:

1 Includes $ 263 million and $ 259 million related to our active operations as of March 31, 2024 and December 31, 2023, respectively.

The following is a roll-forward of our asset retirement obligations:

(In millions) 2024 2023

Asset retirement obligation as of January 1 $ 520 $ 449

Asset retirement obligations as of January 1 $ 459 $ 520

Accretion expense 5 8

Reclassification from environmental obligations — 63

Revision in estimated cash flows 48 —

Remediation payments ( 2 ) ( 4 )

Asset retirement obligation as of September 30 $ 522 $ 522

Asset retirement obligations as of March 31 $ 510 $ 524

During the first quarter of 2024, we announced the indefinite idle of our Weirton tinplate production plant, resulting in an increase to our asset retirement obligations as a result of acceleration of the timing and refinement in the cost of required remediation.

NOTE 11 - FAIR VALUE MEASUREMENTS

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A summary of the carrying value and fair value of other financial instruments were as follows:

September 30, 2023 December 31, 2022

(In millions) Classification Carrying

March 31, 2024 December 31, 2023

(In millions) Valuation Hierarchy Classification Carrying

Value Carrying

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Total $ 3,664 $ 3,665 $ 3,137 $ 3,118

The valuation of financial assets classified in Level 2 were determined using a market approach based upon quoted prices for similar assets in active markets or other inputs that were observable.

The valuation of the financial asset classified in Level 2 was determined using a market approach based upon quoted prices for similar assets in active markets or other inputs that were observable.

NOTE 12 - DERIVATIVE INSTRUMENTS AND HEDGING

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Our hedging strategy is to reduce the effect on earnings from the price volatility of these various commodity exposures, including timing differences between when we incur raw material commodity costs and when we receive sales surcharges from our customers based on those raw materials.

Our commodity contracts are designated as cash flow hedges for accounting purposes, and we record the gains and losses for the derivatives in Accumulated other comprehensive income until we reclassify them into Cost of goods sold when we recognize the

associated underlying operating costs.

Refer to NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE INCOME for further information.

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Notional Amount

Commodity Contracts Unit of Measure Maturity Dates September 30,

Commodity Contracts Unit of Measure Maturity Dates March 31,

2024 December 31,

Natural Gas MMBtu October 2023 - August 2026 170,485,000 127,790,000

Electricity Megawatt hours October 2023 - October 2026 3,002,720 432,043

The following table presents the fair value of our cash flow hedges and the classification in the Statements of Unaudited Condensed Consolidated Financial Position:

Balance Sheet Location (In millions) September 30,

Natural Gas MMBtu April 2024 - November 2026 167,430,000 168,590,000

Electricity Megawatt hours April 2024 - April 2027 3,634,635 3,501,898

As of March 31, 2024, we expect to reclassify $ 149 million of net losses related to our hedge contracts from Accumulated other comprehensive income into Cost of goods sold during the next 12 months.

The following table presents the fair value of our outstanding cash flow hedges and the classification in the Statements of Unaudited Condensed Consolidated Financial Position:

Balance Sheet Location (In millions) March 31,

2024 December 31,

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On February 10, 2022, our Board of Directors authorized a program to repurchase outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $ 1 billion.

We are not obligated to make any purchases and the program may be suspended or discontinued at any time.

The share repurchase program does not have a specific expiration date.

During the three and nine months ended September 30, 2023, we repurchased 3.9 million and 10.4 million common shares, respectively, at a cost of $ 58 million and $ 152 million in the aggregate, respectively, excluding excise tax due under the Inflation Reduction Act.

During the three and nine months ended September 30, 2022, we repurchased 2.0 million and 10.5 million common shares, respectively, at a cost of $ 34 million and $ 210 million in the aggregate, respectively.

As of September 30, 2023, there was $ 608 million remaining under the authorization.

As of March 31, 2024, we have fully utilized the $ 1 billion share repurchase authorization.

During the three months ended March 31, 2024, we repurchased 30.4 million common shares at a cost of $ 608 million, excluding any excise tax due under the Inflation Reduction Act.

During the three months ended March 31, 2023, we had no share buybacks.

PREFERRED STOCK

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NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables reflect the changes in Accumulated other comprehensive income related to Cliffs shareholders’ equity:

The components of Accumulated other comprehensive income within Cliffs shareholders’ equity and related tax effects allocated to each are shown below:

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023

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Beginning balance $ ( 170 ) $ ( 16 )

Other comprehensive income (loss) before reclassifications ( 21 ) 154 ( 229 ) 292

Other comprehensive loss before reclassifications ( 33 ) ( 177 )

Income tax 8 44

Other comprehensive income (loss) before reclassifications, net of tax ( 16 ) 116 ( 173 ) 223

Losses (gains) reclassified from AOCI to net income 1

63 ( 74 ) 93 ( 158 )

Other comprehensive loss before reclassifications, net of tax ( 25 ) ( 133 )

Losses (gains) reclassified from AOCI to net loss 1

Income tax expense (benefit) 2

( 16 ) 19 ( 23 ) 37

Net losses (gains) reclassified from AOCI to net income 47 ( 55 ) 70 ( 121 )

Net losses (gains) reclassified from AOCI to net loss 45 ( 19 )

Ending balance $ ( 150 ) $ ( 168 )

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Beginning balance $ 1,827 $ 1,847

Other comprehensive income before reclassifications — 119 — 119

Income tax — ( 28 ) — ( 28 )

Other comprehensive income before reclassifications, net of tax — 91 — 91

Losses (gains) reclassified from AOCI to net income 3

( 35 ) 3 ( 106 ) 4

Income tax expense (benefit) 2

Gains reclassified from AOCI to net loss 3

( 38 ) ( 35 )

Net losses (gains) reclassified from AOCI to net income ( 27 ) 2 ( 80 ) 3

Income tax expense 2

Net gains reclassified from AOCI to net loss ( 28 ) ( 27 )

Ending balance $ 1,799 $ 1,820

1 unchanged sentence

1 Amounts recognized in Cost of goods sold in the Statements of Unaudited Condensed Consolidated Operations.

2 Amounts recognized in Income tax expense in the Statements of Unaudited Condensed Consolidated Operations.

2 Amounts recognized in Income tax benefit in the Statements of Unaudited Condensed Consolidated Operations.

3 Amounts recognized in Net periodic benefit credits other than service cost component in the Statements of Unaudited Condensed Consolidated Operations.

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We consolidate SunCoke Middletown as a VIE because we are the primary beneficiary despite having no ownership interest in SunCoke Middletown.

SunCoke Middletown had income before income taxes of $ 13 million and $ 40 million for the three and nine months ended September 30, 2023, respectively, compared to $ 14 million and $ 36 million for the three and nine months ended September 30, 2022, respectively, that was included in our consolidated income before income taxes.

Additionally, SunCoke Middletown had cash used for capital expenditures of $ 21 million for the nine months ended September 30, 2023, compared to $ 11 million for the nine months ended September 30, 2022, that was included in our consolidated Purchase of property, plant and equipment on the Statements of Unaudited Condensed Consolidated Cash Flows.

SunCoke Middletown had income before income taxes of $ 15 million and $ 17 million for the three months ended March 31, 2024 and 2023, respectively, that was included in our consolidated income before income taxes.

Additionally, SunCoke Middletown had cash used for capital expenditures of $ 4 million and $ 5 million for the three months ended March 31, 2024 and 2023, respectively.

Cash used for capital expenditures are included in our consolidated Purchase of property, plant and equipment on the Statements of Unaudited Condensed Consolidated Cash Flows.

The assets of the consolidated VIE can only be used to settle the obligations of the consolidated VIE and not obligations of the Company.

1 unchanged sentence

The Statements of Unaudited Condensed Consolidated Financial Position includes the following amounts for SunCoke Middletown:

(In millions) September 30,

(In millions) March 31,

2024 December 31,

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Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share amounts) 2024 2023

Income from continuing operations $ 274 $ 165 $ 587 $ 1,578

Income from continuing operations attributable to noncontrolling interest ( 11 ) ( 13 ) ( 35 ) ( 31 )

Net income from continuing operations attributable to Cliffs shareholders 263 152 552 1,547

Loss from continuing operations $ ( 53 ) $ ( 43 )

Income from continuing operations attributable to noncontrolling interests ( 14 ) ( 15 )

Net loss from continuing operations attributable to Cliffs shareholders ( 67 ) ( 58 )

Income from discontinued operations, net of tax — 1

Net income attributable to Cliffs shareholders $ 264 $ 152 $ 554 $ 1,549

Net loss attributable to Cliffs shareholders $ ( 67 ) $ ( 57 )

Weighted average number of shares:

Basic 492 515

Convertible senior notes — — — 2

Employee stock plans 1

Diluted 492 515

Earnings per common share attributable to Cliffs shareholders - basic:

Loss per common share attributable to Cliffs shareholders - basic:

Continuing operations $ ( 0.14 ) $ ( 0.11 )

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$ ( 0.14 ) $ ( 0.11 )

Earnings per common share attributable to Cliffs shareholders - diluted:

Loss per common share attributable to Cliffs shareholders - diluted:

Continuing operations $ ( 0.14 ) $ ( 0.11 )

1 unchanged sentence

$ ( 0.14 ) $ ( 0.11 )

1 For the three months ended March 31, 2024 and 2023, we had 2 million and 1 million shares, respectively, related to employee stock plans that were excluded from the diluted EPS calculation as they were anti-dilutive.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

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We also purchase certain transportation services under multi-year contracts with minimum quantity requirements.

OTHER COMMERCIAL COMMITMENTS

We use surety bonds and letters of credit to provide financial assurance for certain obligations and statutory requirements.

As of March 31, 2024, we had $ 258 million of surety-backed letters of credit and surety bonds outstanding.

Additionally, as of March 31, 2024, we had $ 56 million of outstanding letters of credit issued under our ABL Facility.

CONTINGENCIES

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The following is a summary of our environmental obligations:

(In millions) September 30,

(In millions) March 31,

2024 December 31,

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However, since we recognize amounts in the consolidated financial statements in accordance with GAAP that exclude potential losses that are not probable or that may not be currently estimable, the ultimate costs of these environmental matters may be higher than the liabilities we currently have recorded in our consolidated financial statements.

Pursuant to RCRA, which governs the treatment, handling and disposal of hazardous waste, the EPA and authorized state environmental agencies may conduct inspections of RCRA-regulated facilities to identify areas where there have been releases of hazardous waste or hazardous constituents into the environment and may order the facilities to take corrective action to remediate such releases.

Pursuant to the Resource Conservation and Recovery Act, which governs the treatment, handling and disposal of hazardous waste, the EPA and authorized state environmental agencies may conduct inspections of Resource Conservation and Recovery Act-regulated facilities to identify areas where there have been releases of hazardous waste or hazardous constituents into the environment and may order the facilities to take corrective action to remediate such releases.

Likewise, the EPA or the states may require closure or post-closure care of residual, industrial and hazardous waste management units.

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While we cannot predict the future actions of these regulators, it is possible that they may identify conditions in future inspections of these facilities that they believe require corrective action.

Pursuant to CERCLA, the EPA and state environmental authorities have conducted site investigations at some of our facilities and other third-party facilities, portions of which previously may have been used for disposal of materials that are currently regulated.

Pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the EPA and state environmental authorities have conducted site investigations at some of our facilities and other third-party facilities, portions of which previously may have been used for disposal of materials that are currently regulated.

The results of these investigations are still pending, and we could be directed to spend funds for remedial activities at the former disposal areas.

Because of the uncertain status of these investigations, however, we cannot reasonably predict whether or when such spending might be required or its magnitude.

BURNS HARBOR WATER ISSUES

In August 2019, ArcelorMittal Burns Harbor LLC (n/k/a Cleveland-Cliffs Burns Harbor LLC) suffered a loss of the blast furnace cooling water recycle system, which led to the discharge of cyanide and ammonia in excess of the Burns Harbor plant's NPDES permit limits.

Since that time, the facility has taken numerous steps to prevent recurrence and maintain compliance with its NPDES permit.

We engaged in settlement discussions with the U.S.

Department of Justice, the EPA and the State of Indiana to resolve any alleged violations of environmental laws or regulations arising out of the August 2019 event.

Later stages of the settlement discussions included the Environmental Law and Policy Center (ELPC) and Hoosier Environmental Council (HEC), which had filed a lawsuit on December 20, 2019 in the U.S.

District Court for the Northern District of Indiana alleging violations resulting from the August 2019 event and other Clean Water Act claims.

On February 14, 2022, the United States and the State of Indiana filed a complaint and a proposed consent decree, and on April 21, 2022, the United States, with the consent of all of the parties, filed a motion seeking final approval of the consent decree from the court.

The consent decree was approved by the court with an effective date of May 6, 2022.

The consent decree requires specified enhancements to the mill's wastewater treatment systems and required us to pay a $ 3 million civil penalty, along with other terms and conditions.

Other parties to the consent decree include the United States, the State of Indiana, ELPC and HEC.

The ELPC/HEC civil litigation was dismissed with prejudice on May 12, 2022.

In addition, ArcelorMittal Burns Harbor LLC was served with a subpoena on December 5, 2019, from the United States District Court for the Northern District of Indiana, relating to the August 2019 event and has responded to the subpoena requests, including follow-up requests.

With the resolution of monetary sanctions and injunctive relief requirements under the consent decree, we do not believe that the costs to resolve any other third-party claims, including potential natural resource damages

claims, that may arise out of the August 2019 event are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or cash flows.

In addition to the foregoing matters, we are or may be involved in proceedings with various regulatory authorities that may require us to pay fines, comply with more rigorous standards or other requirements or incur capital and operating expenses for environmental compliance.

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NOTE 18 - SUBSEQUENT EVENTS

On October 6, 2023, we entered into a membership interest purchase agreement for the sale of the legal entities owning, among other things, our closed coal mines in Pennsylvania.

As a result of the sale, we anticipate a gain of approximately $ 60 million to be recorded during the fourth quarter of 2023.

Effective April 22, 2024, our Board of Directors authorized a new program to repurchase outstanding common shares in the open market or in privately negotiated transactions, which may include purchases pursuant to Rule 10b5-1 plans or accelerated share repurchases, up to a maximum of $ 1.5 billion.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements