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Item 1. Financial Statements

2024-07-24 compared with 2024-04-25 · 150 added, 100 removed, 590 unchanged (30% of the section changed)

3 unchanged sentences

AND SUBSIDIARIES

(In millions, except share information) March 31,

(In millions, except share information) June 30,

2024 December 31,

43 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions, except per share amounts) 2024 2023 2024 2023

7 unchanged sentences

Total operating costs ( 5,086 ) ( 5,501 ) ( 10,323 ) ( 10,827 )

Operating loss ( 38 ) ( 31 )

Operating income (loss) 6 483 ( 32 ) 452

Other income (expense):

4 unchanged sentences

Total other expense ( 12 ) ( 25 ) ( 35 ) ( 50 )

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

Income tax benefit 8 13

Loss from continuing operations ( 53 ) ( 43 )

Income (loss) from continuing operations before income taxes ( 6 ) 458 ( 67 ) 402

Income tax benefit (expense) 15 ( 102 ) 23 ( 89 )

Income (loss) from continuing operations 9 356 ( 44 ) 313

Income from discontinued operations, net of tax — — — 1

Net loss ( 53 ) ( 42 )

Net income (loss) 9 356 ( 44 ) 314

Income attributable to noncontrolling interests ( 7 ) ( 9 ) ( 21 ) ( 24 )

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

Loss per common share attributable to Cliffs shareholders - basic

Net income (loss) attributable to Cliffs shareholders $ 2 $ 347 $ ( 65 ) $ 290

Earnings (loss) per common share attributable to Cliffs shareholders - basic

Continuing operations $ — $ 0.68 $ ( 0.13 ) $ 0.56

1 unchanged sentence

$ — $ 0.68 $ ( 0.13 ) $ 0.56

Loss per common share attributable to Cliffs shareholders - diluted

Earnings (loss) per common share attributable to Cliffs shareholders - diluted

Continuing operations $ — $ 0.67 $ ( 0.13 ) $ 0.56

2 unchanged sentences

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

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE LOSS

STATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

CLEVELAND-CLIFFS INC.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

Net loss $ ( 53 ) $ ( 42 )

Net income (loss) $ 9 $ 356 $ ( 44 ) $ 314

Other comprehensive income (loss):

2 unchanged sentences

Changes in foreign currency translation — — ( 1 ) —

Total other comprehensive loss ( 9 ) ( 179 )

Comprehensive loss ( 62 ) ( 221 )

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

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

Total other comprehensive income (loss) 18 ( 8 ) 9 ( 187 )

Comprehensive income (loss) 27 348 ( 35 ) 127

Comprehensive loss attributable to noncontrolling interests ( 7 ) ( 9 ) ( 21 ) ( 24 )

Comprehensive income (loss) attributable to Cliffs shareholders $ 20 $ 339 $ ( 56 ) $ 103

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

2 unchanged sentences

AND SUBSIDIARIES

Three Months Ended

Six Months Ended

(In millions) 2024 2023

OPERATING ACTIVITIES

Net loss $ ( 53 ) $ ( 42 )

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

Net income (loss) $ ( 44 ) $ 314

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

Depreciation, depletion and amortization 458 489

10 unchanged sentences

Other, net 25 ( 69 )

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

Net cash provided by operating activities 661 848

INVESTING ACTIVITIES

6 unchanged sentences

Repayments of senior notes ( 845 ) —

Borrowings under credit facilities, net 342 307

Borrowings (repayments) under credit facilities, net 370 ( 1,031 )

Debt issuance costs ( 13 ) ( 34 )

Other financing activities ( 22 ) ( 121 )

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

Net cash used by financing activities ( 418 ) ( 530 )

Net increase (decrease) in cash and cash equivalents ( 88 ) 8

17 unchanged sentences

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

Comprehensive income — — — 2 — 18 7 27

Common stock repurchases, net of excise tax ( 7.5 ) — — — ( 125 ) — — ( 125 )

Stock and other incentive plans — — 13 — 1 — — 14

Net contributions to noncontrolling interests — — — — — — 14 14

June 30, 2024 468.0 $ 66 $ 4,864 $ 1,668 $ ( 1,154 ) $ 1,666 $ 262 $ 7,372

(In millions) Number

9 unchanged sentences

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

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

Common stock repurchases ( 6.5 ) — — — ( 95 ) — — ( 95 )

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

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

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

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

4 unchanged sentences

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 loss, 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 income (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.

1 unchanged sentence

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 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.

The results of operations for the three and six months ended June 30, 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.

1 unchanged sentence

NATURE OF BUSINESS

We are the largest flat-rolled steel producer in North America.

Founded in 1847 as a mine operator, we are also the largest manufacturer of iron ore pellets in North America.

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 other markets due to our comprehensive offering of flat-rolled steel products.

We are a leading North America-based steel producer with focus on value-added sheet products, particularly for the automotive industry.

We are also a leading producer of electrical steels referred to as GOES and NOES in the U.S.

We are vertically integrated from the mining of iron ore, production of pellets and direct reduced iron, and processing of ferrous scrap through primary steelmaking and downstream finishing, stamping, tooling, and tubing.

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

8 unchanged sentences

These investments are included within our Steelmaking segment.

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.

Our investment in affiliates of $ 118 million and $ 123 million as of June 30, 2024 and December 31, 2023, respectively, was classified in Other non-current assets.

SIGNIFICANT ACCOUNTING POLICIES

26 unchanged sentences

Allowance for credit losses as of January 1 $ ( 5 ) $ ( 4 )

Increase in allowance — ( 1 )

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

Decrease (increase) in allowance — ( 3 )

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

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

(In millions) March 31,

(In millions) June 30,

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 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.

As of June 30, 2024 and December 31, 2023, we had $ 27 million and $ 21 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of June 30, 2024 and December 31, 2023, we had $ 80 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.

On February 15, 2024, we announced the indefinite idle of our tinplate production plant located in Weirton, West Virginia.

As of June 30, 2024, we have incurred $ 210 million of charges related to the idle and estimate that we will incur an additional $ 2 million in Restructuring and other charges, primarily related to employee related costs which are expected to be incurred by the end of 2024.

The following table represents a reconciliation of our accrued liabilities related to the Weirton Indefinite Idle:

(In millions) Employee- Related Costs Exit Costs Asset Impairment Total

Balance as of December 31, 2023 $ — $ — $ — $ —

Costs incurred 1

Cash payments — ( 2 ) — ( 2 )

Non-cash — — ( 64 ) ( 64 )

Balance as of March 31, 2024 $ 58 $ 46 $ — $ 104

Costs incurred 2

Cash payments ( 8 ) ( 10 ) — ( 18 )

Non-cash — — ( 15 ) ( 15 )

Balance as of June 30, 2024 $ 73 $ 38 $ — $ 111

1 Of the $ 170 million of cost incurred, $ 104 million was recorded in Restructuring and other charges, $ 64 million was recorded in Asset impairments and $ 2 million was recorded in Net periodic benefit credits other than service cost component .

2 Of the $ 40 million of costs incurred, $ 25 million was recorded in Restructuring and other charges and $ 15 million was recorded in Asset impairments.

CASH FLOW INFORMATION

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

Three Months Ended

Six Months Ended

(In millions) 2024 2023

4 unchanged sentences

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

Three Months Ended

Six Months Ended

(In millions) 2024 2023

2 unchanged sentences

Interest paid on debt obligations net of capitalized interest 1

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

1 Capitalized interest was $ 8 million and $ 6 million for the six months ended June 30, 2024 and 2023, respectively.

NOTE 3 - REVENUES

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

3 unchanged sentences

Steel producers

632 796 1,238 1,497

Total Steelmaking 4,915 5,808 9,942 10,934

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

15 unchanged sentences

The operating segment results of our Tubular, Tooling and Stamping, and European Operations that do not constitute reportable segments are combined and disclosed in the Other Businesses category.

Our Steelmaking segment operates as the largest flat-rolled steel producer supported by being the largest iron ore pellet producer as well as a leading prime scrap processor in North America, primarily serving the automotive, distributors and converters, and infrastructure and manufacturing markets.

Our Steelmaking segment operates as a leading North America-based steel producer supported by being the largest iron ore pellet producer as well as a leading prime scrap processor, primarily serving the automotive, distributors and converters, and infrastructure and manufacturing markets.

Our Other Businesses primarily include the operating segments that provide customer solutions with carbon and stainless steel tubing products, advanced-engineered solutions, tool design and build, hot- and cold-stamped steel components, and complex assemblies.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

7 unchanged sentences

Total Adjusted EBITDA $ 323 $ 775 $ 737 $ 1,018

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

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

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

Net loss $ ( 53 ) $ ( 42 )

Net income (loss) $ 9 $ 356 $ ( 44 ) $ 314

Interest expense, net ( 69 ) ( 79 ) ( 133 ) ( 156 )

Income tax benefit 8 13

Income tax benefit (expense) 15 ( 102 ) 23 ( 89 )

Depreciation, depletion and amortization ( 228 ) ( 247 ) ( 458 ) ( 489 )

291 784 524 1,048

EBITDA of noncontrolling interests 1

Weirton indefinite idle 2

( 40 ) — ( 217 ) —

Loss on extinguishment of debt ( 6 ) — ( 27 ) —

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

6 unchanged sentences

Other Businesses 2 2 3 3

Corporate — 1 — 1

Total capital additions $ 189 $ 162 $ 346 $ 290

1 unchanged sentence

The following summarizes our assets by segment:

(In millions) March 31,

(In millions) June 30,

2024 December 31,

7 unchanged sentences

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

(In millions) March 31,

(In millions) June 30,

2024 December 31,

8 unchanged sentences

Property, plant and equipment, net $ 8,728 $ 8,895

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 .

1 Includes right-of-use assets related to finance leases of $ 347 million and $ 306 million as of June 30, 2024 and December 31, 2023, respectively.

We recorded depreciation and depletion expense of $ 227 million and $ 454 million for the three and six months ended June 30, 2024, respectively, and $ 246 million and $ 485 million for the three and six months ended June 30, 2023, respectively.

During the first quarter of 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) March 31,

(In millions) June 30,

2024 December 31,

4 unchanged sentences

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

March 31, 2024

June 30, 2024

December 31, 2023

14 unchanged sentences

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

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

Amortization expense related to intangible assets was $ 3 million for both the three months ended June 30, 2024 and 2023, and $ 7 million for both the six months ended June 30, 2024 and 2023.

Estimated future amortization expense is $ 6 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 March 31, 2024 and 2023.

Income from amortization related to the intangible liabilities was $ 2 million for both the three months ended June 30, 2024 and 2023, and $ 3 million for both the six months ended June 30, 2024 and 2023.

Estimated future income from amortization is $ 2 million for the remainder of 2024 and $ 5 million annually for the years 2025 through 2029.

4 unchanged sentences

Annual Effective

Interest Rate March 31,

Interest Rate June 30,

2024 December 31,

26 unchanged sentences

as borrower under our ABL Facility.

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

3 Our ABL Facility annual effective interest rate was 6.690 % as of June 30, 2024.

7.000% 2032 SENIOR NOTES OFFERING

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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.

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 June 30, 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) March 31,

(In millions) June 30,

Available borrowing base on ABL Facility 1

2 unchanged sentences

Borrowing capacity available $ 3,634

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

1 As of June 30, 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.

1 unchanged sentence

DEBT MATURITIES

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

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at June 30, 2024 (in millions):

2024 2025 2026 2027 2028 Thereafter Total

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

8 unchanged sentences

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.

Based on funding requirements, we made $ 16 million of defined benefit pension contributions for both the three and six months ended June 30, 2024, respectively, and no defined benefit pension contributions for the three and six months ended June 30, 2023.

Based on funding requirements, we made no contributions to our voluntary employee benefit association trust plans for both the three and six months ended June 30, 2024 and 2023.

NOTE 9 - INCOME TAXES

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.

Our income tax benefit for the three and six months ended June 30, 2024 is $ 15 million and $ 23 million, respectively, compared to income tax expense of $ 102 million and $ 89 million for the three and six months ended June 30, 2023, respectively, primarily due to depletion in excess of state income tax expense and the impact of immaterial discrete items relative to changes in pre-tax income.

NOTE 10 - ASSET RETIREMENT OBLIGATIONS

6 unchanged sentences

The following is a summary of our asset retirement obligations:

(In millions) March 31,

(In millions) June 30,

2024 December 31,

2 unchanged sentences

Long-term asset retirement obligations $ 455 $ 444

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

1 Includes $ 266 million and $ 259 million related to our active operations as of June 30, 2024 and December 31, 2023, respectively.

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

4 unchanged sentences

Remediation payments ( 14 ) ( 9 )

Asset retirement obligations as of March 31 $ 510 $ 524

Asset retirement obligations as of June 30 $ 506 $ 525

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.

3 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions) Valuation Hierarchy Classification Carrying

7 unchanged sentences

We may use cash-settled commodity swaps to hedge the market risk associated with the purchase of certain of our raw materials and energy requirements.

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 hedging strategy is to reduce the effect on earnings from the price volatility of these various commodity exposures.

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.

3 unchanged sentences

Notional Amount

Commodity Contracts Unit of Measure Maturity Dates March 31,

Commodity Contracts Unit of Measure Maturity Dates June 30,

2024 December 31,

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.

Natural Gas MMBtu July 2024 - May 2027 158,920,000 168,590,000

Electricity Megawatt hours July 2024 - July 2027 3,527,025 3,501,898

At June 30, 2024, we estimate $ 98 million of net losses related to our hedge contracts will reclassify from Accumulated other comprehensive income into Cost of goods sold during the next 12 months.

These estimates are based on June 30, 2024 fair values, some of which will change before their actual reclassification into Cost of goods sold.

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,

Balance Sheet Location (In millions) June 30,

2024 December 31,

5 unchanged sentences

SHARE REPURCHASE PROGRAM

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.

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.

During the first quarter of 2024, we fully utilized the remaining portion of our prior $ 1 billion share repurchase program, which was approved by our Board of Directors on February 10, 2022.

On April 22, 2024, our Board of Directors authorized a new program to repurchase our 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.

We are not obligated to make any repurchases, 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 six months ended June 30, 2024, we repurchased 7.5 million and 37.9 million common shares, respectively, at a cost of $ 124 million and $ 733 million, respectively, excluding any excise tax due under the Inflation Reduction Act.

During both the three and six months ended June 30, 2023, we repurchased 6.5 million common shares at a cost of $ 94 million.

As of June 30, 2024, there was approximately $ 1.4 billion remaining authorization under our active share repurchase program.

PREFERRED STOCK

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions) 2024 2023 2024 2023

5 unchanged sentences

Beginning balance $ ( 150 ) $ ( 168 ) $ ( 170 ) $ ( 16 )

Other comprehensive loss before reclassifications ( 33 ) ( 177 )

Income tax 8 44

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

Losses (gains) reclassified from AOCI to net loss 1

Income tax expense (benefit) 2

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

Other comprehensive gain (loss) before reclassifications 2 ( 31 ) ( 31 ) ( 208 )

Income tax benefit — 7 8 51

Other comprehensive gain (loss) before reclassifications, net of tax 2 ( 24 ) ( 23 ) ( 157 )

Losses reclassified from AOCI to net income (loss) 1

Income tax benefit 2

( 16 ) ( 13 ) ( 30 ) ( 7 )

Net losses reclassified from AOCI to net income (loss) 45 42 90 23

Ending balance $ ( 103 ) $ ( 150 ) $ ( 103 ) $ ( 150 )

1 unchanged sentence

Beginning balance $ 1,799 $ 1,820 $ 1,827 $ 1,847

Gains reclassified from AOCI to net loss 3

Gains reclassified from AOCI to net income (loss) 3

( 39 ) ( 36 ) ( 77 ) ( 71 )

Income tax expense 2

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

Net gains reclassified from AOCI to net income (loss) ( 29 ) ( 26 ) ( 57 ) ( 53 )

Ending balance $ 1,770 $ 1,794 $ 1,770 $ 1,794

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 benefit in the Statements of Unaudited Condensed Consolidated Operations.

2 Amounts recognized in Income tax benefit (expense) 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.

3 unchanged sentences

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 $ 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.

SunCoke Middletown had income before income taxes of $ 9 million and $ 24 million for the three and six months ended June 30, 2024, respectively, compared to $ 10 million and $ 27 million for the three and six months ended June 30, 2023, respectively, that was included in our consolidated income before income taxes.

Additionally, SunCoke Middletown had cash used for capital expenditures of $ 8 million and $ 12 million for the three and six months ended June 30, 2024, respectively, compared to $ 7 million and $ 12 million for the three and six months ended June 30, 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.

2 unchanged sentences

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

(In millions) March 31,

(In millions) June 30,

2024 December 31,

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In millions, except per share amounts) 2024 2023 2024 2023

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

Income (loss) from continuing operations $ 9 $ 356 $ ( 44 ) $ 313

Income from continuing operations attributable to noncontrolling interests ( 7 ) ( 9 ) ( 21 ) ( 24 )

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

Net income (loss) from continuing operations attributable to Cliffs shareholders 2 347 ( 65 ) 289

Income from discontinued operations, net of tax — — — 1

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

Net income (loss) attributable to Cliffs shareholders $ 2 $ 347 $ ( 65 ) $ 290

Weighted average number of shares:

2 unchanged sentences

Diluted 474 514 483 515

Loss per common share attributable to Cliffs shareholders - basic:

Earnings (loss) per common share attributable to Cliffs shareholders - basic:

Continuing operations $ — $ 0.68 $ ( 0.13 ) $ 0.56

1 unchanged sentence

$ — $ 0.68 $ ( 0.13 ) $ 0.56

Loss per common share attributable to Cliffs shareholders - diluted:

Earnings (loss) per common share attributable to Cliffs shareholders - diluted:

Continuing operations $ — $ 0.67 $ ( 0.13 ) $ 0.56

1 unchanged sentence

$ — $ 0.67 $ ( 0.13 ) $ 0.56

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.

1 Excluded from the diluted EPS calculation are anti-dilutive shares related to employee stock plans.

For the three and six months ended June 30, 2024, 2 million and 2 million shares, respectively, were excluded.

For the three and six months ended June 30, 2023, 3 million and 2 million shares, respectively, were excluded.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

8 unchanged sentences

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.

As of June 30, 2024, we had $ 273 million of surety-backed letters of credit and surety bonds outstanding.

Additionally, as of June 30, 2024, we had $ 46 million of outstanding letters of credit issued under our ABL Facility.

CONTINGENCIES

10 unchanged sentences

The following is a summary of our environmental obligations:

(In millions) March 31,

(In millions) June 30,

2024 December 31,

14 unchanged sentences

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.

The results of certain 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.

14 unchanged sentences

NOTE 18 - SUBSEQUENT EVENTS

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.

We have evaluated subsequent events through the date of financial statement issuance.

On July 14, 2024, we entered into the Arrangement Agreement, pursuant to which we will acquire all of the issued and outstanding common shares of Stelco from the holders thereof.

Under the terms of the Arrangement Agreement, Stelco shareholders will receive CAD $ 60.00 per Stelco common share in cash and a fixed exchange ratio of 0.454 shares of Cliffs common stock per share of Stelco common stock (or CAD $ 10.00 per share as of July 12, 2024), representing a total consideration of CAD $ 70.00 per Stelco share.

The Arrangement Agreement implies a total enterprise value of approximately $ 2.5 billion (CAD $ 3.4 billion) for Stelco as of July 12, 2024.

Completion of the Stelco Acquisition is subject to various customary closing conditions, including, among others, approval by Stelco shareholders and the receipt of required regulatory clearances in both the U.S.

and Canada, and it is possible that factors outside of our control could result in the Stelco Acquisition being completed at a later time or not at all.

The Arrangement Agreement also contains certain termination rights that may be exercised by either us or Stelco.

We expect to complete the Stelco Acquisition in the fourth quarter of 2024 following the satisfaction or waiver of all applicable conditions.

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