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Item 2. Management’s Discussion and Analysis

2024-11-05 compared with 2024-07-24 · 162 added, 147 removed, 428 unchanged (42% of the section changed)

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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.

Unless otherwise noted, discussion of our business and results of operations in this Quarterly Report on Form 10-Q refers to our continuing operations on a stand-alone basis without giving effect to the pending Stelco Acquisition.

Headquartered in Cleveland, Ohio, with the closing of the Stelco Acquisition, we employ approximately 30,000 people across our operations in the United States and Canada.

FINANCIAL SUMMARY

The following is a summary of our consolidated results for the three and six months ended June 30, 2024 and 2023 (in millions, except for diluted EPS):

The following is a summary of our consolidated results for the three and nine months ended September 30, 2024 and 2023 (in millions, except for diluted EPS):

Total Revenue Net Income (Loss) Adjusted EBITDA Diluted EPS

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STEEL MARKET OVERVIEW

Steel market conditions in the first half of 2024 have been driven by continued strength in light vehicle production but also inconsistent service center buying behavior and higher import levels.

The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $782 per net ton for the second quarter of 2024, 27% lower than the second quarter of 2023, and ended the quarter near multi-year low prices.

Import levels were elevated in the first half of 2024 as HRC pricing spreads between the U.S.

and other regions started increasing in the fourth quarter of 2023.

Steel demand from service centers remained inconsistent during the second quarter of 2024, as service center inventory levels were reduced to 1.8 months on hand as the HRC price declined, after ending 2023 at 2.2 months of inventory on hand.

Additionally, service centers remain hesitant to carry inventory as interest rates remain elevated.

Looking forward, we expect domestic steel demand to grow as automotive production continues to remain strong, steel imports are now unattractive, other end-user demand is healthy, and incremental steel demand stimulated by recent government legislation and manufacturing on-shoring is realized.

The Infrastructure and Jobs Act, the CHIPS Act and the Inflation Reduction Act should provide meaningful support for overall domestic steel demand throughout the remainder of 2024 and in the coming years.

Steel market conditions in 2024 have been driven by weaker than anticipated light vehicle production, lower demand and higher import levels.

The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $677 per net ton for the third quarter of 2024, 14% lower than the third quarter of 2023, and the lowest quarterly average per net ton since the second quarter of 2020.

Import levels have been elevated in 2024, which has contributed to downward pressure on HRC pricing.

Looking forward, we expect domestic steel demand to grow as interest rates have started to decline, steel imports are currently unattractive, other end-user demand is healthy, and incremental steel demand stimulated by recent government legislation and manufacturing on-shoring is realized.

The Infrastructure and Jobs Act, the CHIPS Act and the Inflation Reduction Act should provide meaningful support for overall domestic steel demand for years to come.

Our extensive portfolio of products should result in increased steel demand from most of our end markets.

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Additionally, the on-shoring of manufacturing in the U.S.

should reduce the risk of supply chain issues in the future.

should prompt more domestic steel demand as well as reduce the risk of supply chain issues in the future.

OTHER KEY DRIVERS

The largest market for our steel products is the automotive industry in North America, which makes light vehicle production a key driver of demand.

During the second quarter of 2024, North American light vehicle production was approximately 4.2 million units, up from 3.9 million units in the first quarter of 2024.

Full-year 2024 North American light vehicle production is estimated to be 15.8 million units, which would be the highest level since 2019.

North American light vehicle production in 2025 and beyond is expected to continue to increase from 2024 levels and is estimated to exceed 16.0 million units annually by 2026, implying continued strong demand for years to come.

During the second quarter of 2024, light vehicle sales in the U.S.

saw an average seasonally adjusted annualized rate of 15.6 million units sold, an increase from 15.4 million units sold rate in the first quarter of 2024.

Light vehicle production in 2024 has fallen well below expectations.

Full-year 2024 North American light vehicle production is estimated to be 15.5 million units, a significant decrease from original estimates of 16.3 million units, and a decrease from 15.7 million units in 2023.

During the third quarter of 2024, North American light vehicle production was approximately 3.8

million units, down from 4.1 million units in the second quarter of 2024.

During the third quarter of 2024, light vehicle sales in the U.S.

saw an average seasonally adjusted annualized rate of 15.6 million units sold, the same rate as the second quarter of 2024.

North American light vehicle production in 2025 and beyond is expected to remain above 15 million units annually.

Additionally, the average age of light vehicles on the road in the U.S.

is at an all-time high of 12.6 years, which should support demand as older vehicles need to be replaced.

As the leading supplier of automotive-grade steel in the U.S., we expect to benefit from increased vehicle production over the coming years.

Since 2021, the price for busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., has continued to average well above the prior annual ten-year average of approximately $400 per long ton.

The busheling price averaged $429 per long ton during the second quarter of 2024.

We also expect declining interest rates to increase demand for vehicles in the United States as buyers have been cautious due to elevated interest rates.

As the leading supplier of automotive-grade steel in the U.S., we expect to benefit from healthy vehicle production levels over the coming years.

Since 2021, the price for busheling scrap, a necessary input for flat-rolled steel production in EAFs in the U.S., has continued to average above the prior annual ten-year average of approximately $400 per long ton.

The busheling price averaged $408 per long ton during the third quarter of 2024 and has averaged $434 per long ton through the first nine months of 2024.

We expect the supply of busheling scrap to further tighten due to decreasing prime scrap generation from original equipment manufacturers and the growth of EAF capacity in the U.S., reduced metallics import availability, and a push for expanded scrap use globally.

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bolster our competitive advantage, as we source the majority of our iron feedstock from our stable-cost mining and pelletizing operations in Minnesota and Michigan.

As for iron ore, the Platts 62% price averaged $112 per metric ton in the second quarter of 2024, which is 17% higher than the prior annual ten-year average.

While higher iron ore prices play a role in increased steel prices, we also directly benefit from higher iron ore prices for the portion of iron ore pellets we sell to third parties.

As for iron ore, the Platts 62% price averaged $100 per metric ton in the third quarter of 2024, which is 5% higher than the prior annual ten-year average.

While higher iron ore prices play a role in increased global steel prices, we also directly benefit from higher iron ore prices for the portion of iron ore pellets we sell to third parties.

OTHER FACTORS

On July 10, 2024, the United States and Mexico announced key measures to protect the North American steel markets from unfair trade.

Both countries are expected to implement policies to jointly prevent tariff evasion on steel being exported from Mexico to the United States.

It will be required that steel imported from Mexico must be melted and poured in Mexico, Canada or the United States to be eligible for Section 232 exemptions.

Both countries are expected to implement policies to jointly curb tariff evasion on steel being exported from Mexico to the United States.

If implemented as announced, it will be required that steel imported from Mexico must be melted and poured in Mexico, Canada or the United States to be eligible for Section 232 exemptions.

This will effectively put a 25% tariff on any steel that is transshipped through Mexico that originated in China or other countries outside of North America.

We believe it is vital all members adhere to the USMCA and view this as a positive development to ensuring fair trade in the North American steel market.

We believe it is vital that all members adhere to the USMCA and view this as a positive development to ensuring fair trade in the North American steel market.

On April 4, 2024, the DOE issued its final transformer efficiency standards rule that will provide for the continued utilization of GOES in virtually all of our distribution transformer end markets.

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During 2023, we significantly reduced costs compared to the prior year, as we had higher production volume and normalized repair and maintenance spending, and inflationary pressures on input and energy costs eased.

We expect to continue to reduce costs in 2024, as we have worked through higher cost inventory, production volumes should remain similar, and reductions in even lower natural gas prices and coal and alloy costs should mitigate any inflationary cost increases.

We expect that full-year 2024 costs will be reduced year-over-year, compared to 2023, as we have worked through higher cost inventory and lower natural gas, coal and alloy costs should mitigate any inflationary cost increases.

COMPETITIVE STRENGTHS

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Due to its demanding nature, the automotive steel business typically generates higher through-the-cycle margins, making it a desirable end market.

Demand for our automotive-grade steel is expected to remain strong in the coming years as a result of a healthy unemployment rate, pent-up automotive demand arising out of supply chain issues and the replacement of older vehicles.

Demand for our automotive-grade steel is expected to be healthy in the coming years as a result of a low unemployment rate, declining interest rates and the replacement of older vehicles.

Our footprint provides us with a competitive advantage in supplying automotive and other highly demanding end markets, as we are able to produce a wide range of high-quality products.

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

Infrastructure and Jobs Act provides funding to be used for the modernization of the electrical grid and the infrastructure needed to allow for increased EV adoption, both of which require electrical steels.

The Infrastructure and Jobs Act provides funding to be used for the modernization of the electrical grid and the infrastructure needed to allow for increased EV adoption, both of which require electrical steels.

Because of these incentives and our current customer base, our electrical steel business is expected to continue to achieve strong profitability in the coming years.

We are the first and the only producer of HBI in the Great Lakes region.

Construction of our Toledo direct reduction plant was completed in the fourth quarter of 2020 and reached full run-rate nameplate annual capacity of 1.9 million metric tons during the middle of 2021.

From this modern plant, we produce a high-quality, low-cost and low-carbon intensive HBI product that can be used in our blast furnaces as a productivity enhancer, or in our BOFs and EAFs as a premium scrap alternative.

From our Toledo, Ohio facility, we produce a high-quality, low-cost and low-carbon intensive HBI product that can be used in our blast furnaces as a productivity enhancer, or in our BOFs and EAFs as a premium scrap alternative.

We use HBI to stretch our hot metal production, lowering carbon intensity and reliance on coke.

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We are a leading supplier to the automotive sector, where our portfolio of high-end products delivers a broad range of differentiated solutions for this highly sought after customer base.

As a result of our exposure to these high-end markets, we have the highest fixed price contractual volumes in our industry.

Approximately 40-45% of our volumes are sold under these contracts.

These contracts reduce volatility and allow for more predictable through-the-cycle margins.

In addition to our fixed price contracts, we also sell significant volumes under index-linked contracts.

Our unique capabilities, driven by our portfolio of assets and technical expertise, give us an advantage in our flat-rolled product offering.

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Our ability to optimize use of these raw materials in our blast furnaces and BOFs ultimately boosts liquid steel output, reduces coke needs and lowers carbon emissions from our operations.

As a result of successful operational improvements, we announced the indefinite idle of the Indiana Harbor #4 blast furnace in the first quarter of 2022.

The indefinite idle reduced our operational blast furnaces from eight to seven.

As a result of successful operational improvements, we announced the indefinite idle of the Indiana Harbor #4

blast furnace in the first quarter of 2022.

This indefinite idle reduced our operational blast furnaces from eight to seven.

Our strategic use of HBI in our blast furnaces and maximizing scrap usage in our BOFs has allowed us to achieve the same steel production with one less blast furnace in our footprint.

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With our strong balance sheet, proven ability to integrate acquired assets and capture synergies, along with our powerful partnership with our union and non-union employees, we are confident in our ability to identify and execute value-enhancing mergers and acquisitions.

We have remained active in our opportunistic pursuit of value-enhancing mergers and acquisitions and recently announced that we entered into the Arrangement Agreement to acquire Stelco.

On July 15, 2024, we announced that we had entered into the Arrangement Agreement pursuant to which we plan to acquire Stelco.

On July 15, 2024, we announced that we had entered into the Arrangement Agreement to acquire Stelco.

The Stelco Acquisition confirms our commitment and leadership in integrated steel production in North America and is expected to strengthen our cost position by incorporating one of the lowest cost flat-rolled steelmaking assets in North America within our footprint.

The Stelco Acquisition has the full endorsement of the USW and, when complete, will bring an additional 1,800 USW-represented employees into our workforce.

When complete, the Stelco Acquisition will expand our existing footprint in Canada and diversify our customer base across service centers, construction and other industrial end markets with higher volumes of spot sales.

As a result of the Stelco Acquisition, our exposure to the North American spot market is expected to double, giving us further insight into spot market dynamics and diversifying our customer base further toward spot customers.

We expect the Stelco Acquisition to close in the fourth quarter of 2024, subject to approval by Stelco shareholders and other customary closing conditions.

The Stelco Acquisition has the full endorsement of the USW and brings an additional 1,800 USW-represented employees into our workforce.

The Stelco Acquisition expands our existing presence in Canada and diversifies our customer base across service centers, construction and other industrial end markets with higher volumes of spot sales.

On September 16, 2024, we announced that the holders of common shares of Stelco voted in favor of, and overwhelmingly approved, the special resolution regarding the Stelco Acquisition at a special meeting of shareholders.

The special resolution received support of 99.97% of the total votes cast.

On October 8, 2024, we announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with the Stelco Acquisition.

As a result, we cleared U.S.

Department of Justice antitrust review for the Stelco Acquisition.

On October 9, 2024, we announced that we received a “no-action letter” from the Canadian Competition Bureau, confirming that the Commissioner of Competition does not intend to challenge the Stelco Acquisition.

On October 30, 2024, we announced that we received regulatory and program approvals under the Investment Canada Act and Strategic Innovation Fund, the final approvals needed to complete the Stelco Acquisition.

Subsequently, we completed the Stelco Acquisition on November 1, 2024.

Going forward, we will continue to be opportunistic in our pursuit of assets that would grow our business and offer opportunities to generate significant synergies.

Our strong partnership with our union-represented employees was crucial in prior mergers and acquisitions as well as our recently announced entry into the Arrangement Agreement pursuant to which we will acquire Stelco.

Our strong partnership with our union-represented employees was crucial in prior mergers and acquisitions as well as with the Stelco Acquisition.

We remain the only domestic steel company in recent years to successfully acquire steel producing assets with USW-represented employees.

EXPLORE ATTRACTIVE DOWNSTREAM OPPORTUNITIES

On July 22, 2024, we announced our investment plan for our new electrical distribution transformer production plant at our recently indefinitely idled Weirton, West Virginia facility.

We intend to invest approximately $150 million to repurpose a warehouse to commence production of three-phase distribution transformers used in electric power distribution transformers.

On July 22, 2024, we announced our investment plan for our new electrical distribution transformer production plant near our indefinitely idled Weirton, West Virginia facility.

We intend to invest approximately $150 million to repurpose a warehouse to commence production of distribution transformers used in electric power distribution.

We expect to receive $50 million in support from the West Virginia Economic Development Authority in relation to the project, which reduces our net capital investment to approximately $100 million.

Our Weirton facility benefits from the ability to use existing building assets, infrastructure and re-employment opportunities for members of the workforce that were previously employed at our indefinitely idled Weirton tinplate mill.

Our planned Weirton distribution transformer production plant benefits from the ability to use existing building assets, infrastructure and re-employment opportunities for members of the workforce that were previously employed at our indefinitely idled Weirton tinplate mill.

This project is also expected to increase demand for American-made GOES produced at our Butler Works steel mill as well as for our carbon and stainless steel products used in the manufacturing of distribution transformers.

We believe that distribution transformers are critical to America’s electrical infrastructure maintenance and expansion, and we look to benefit from a market that is undersupplied in the United States and currently experiencing extended lead times with a strong demand outlook.

This project is expected to take approximately 18 months to complete.

This project is expected to be completed in the first half of 2026.

ADVANCE OUR PARTICIPATION IN THE GREEN ECONOMY

We are seeking to expand our customer base with the desirable EV market.

At this time, we believe the North American automotive industry is at a structural inflection point, with the adoption of electrical motors in passenger vehicles.

As this market grows, it will require more advanced steel applications to meet the needs of EV producers and consumers.

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Our future GHG emissions reductions are expected to be primarily driven by the use of direct reduced iron in electric melting furnaces, direct reduced iron in blast furnaces, the stretching of hot metal with additional scrap, enhancing productivity out of fewer blast furnaces, implementing hydrogen use where possible, adopting carbon capture and utilization, procuring more clean energy, electrification of process equipment and operating with higher energy efficiency.

In March 2024, we were selected by the DOE for award negotiations to receive up to $575 million in total funding for two projects to accelerate industrial decarbonization initiatives.

If awarded, we would receive up to a $500 million federal investment to replace our existing blast furnace at Middletown Works with a 2.5 million ton per annum hydrogen-ready direct reduced iron plant and two 120 megawatt electric melting furnaces to feed molten iron to the existing infrastructure already on site, including the BOF, caster, hot strip mill and various finishing facilities.

In March 2024, we were selected by the DOE's OCED for award negotiations to receive up to $575 million in total funding for two projects to accelerate industrial decarbonization initiatives.

If fully awarded, we would receive up to a $500 million federal investment to replace our existing blast furnace at Middletown Works with a 2.5 million ton per annum hydrogen-ready direct reduced iron plant and two 120 megawatt electric melting furnaces to feed molten iron to the existing infrastructure already on site, including the BOF, caster, hot strip mill and various finishing facilities.

The project is designed so that Middletown Works would maintain its existing raw steel production capacity of approximately 3 million net tons per year and would no longer use coke for iron production.

We expect that the process would dramatically reduce carbon emissions intensity with no impact to product quality or capability and would consolidate Middletown Works as the most advanced, lowest GHG emitting integrated iron and steel facility in the world.

Additionally, if awarded, we would receive up to $75 million at our Butler Works facility to replace two of our existing natural gas fired high temperature slab reheat furnaces with four electrified induction slab reheat furnaces, to bring optimum efficiency to our production of electrical steel.

Following negotiations, in the third quarter of 2024, the OCED awarded us $9.5 million to begin Phase 1 of the Middletown project, with the remaining award being subject to future award negotiations at the end of each project phase.

The Middletown project is expected to be completed by 2029.

Additionally, if fully awarded, we would receive up to $75 million at our Butler Works facility to replace two of our existing natural gas fired high temperature slab reheat furnaces with four electrified induction slab reheat furnaces, to bring optimum efficiency to our production of electrical steel.

This project would lower carbon emissions, substantially reduce energy costs and improve slab quality.

Following negotiations, in the third quarter of 2024, the OCED awarded us $19 million to begin Phase 1 of the Butler project, with the remaining award being subject to future award negotiations at the end of each project phase.

The Butler project is expected to be completed by 2029.

As a result of both of these projects, we would anticipate generating in excess of $500 million in annual cost savings and yield improvements.

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Since the acquisition of our steelmaking assets in 2020, we have demonstrated our ability to generate healthy free cash flow and use it to reduce substantial amounts of debt, return capital to shareholders through share repurchases and make investments to both improve and grow our business.

During the second quarter of 2024, we returned $124 million of capital to shareholders via share repurchases under our current $1.5 billion share repurchase program that was effective April 22, 2024.

We also reduced the principal amount of our outstanding long-term debt by $157 million in the second quarter of 2024.

We have a track record of demonstrating that we can quickly deleverage our balance sheet and have also historically shown our ability to take advantage of volatility in the debt markets and repurchase notes at a discount.

We expect to continue to use the financial levers available to us to both opportunistically reduce our debt and return capital to shareholders throughout the remainder of 2024 and beyond.

At the end of the second quarter of 2024, our net debt to trailing-twelve months Adjusted EBITDA leverage ratio was 2.1x, which provides us flexibility to execute additional attractive strategic, operational or financial opportunities we identify.

It is also important for us to maintain sufficient liquidity, which was $3.7 billion as of June 30, 2024.

On March 18, 2024, we issued $825 million aggregate principal amount of our 7.000% 2032 Senior Notes at par and used a portion of the net proceeds from the 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.

This transaction extended our debt maturity profile and removed our final tranche of secured notes.

We expect to continue to generate healthy free cash flow in the coming years and intend to utilize it to deleverage our balance sheet following the closing of the Stelco Acquisition.

We also maintain a long maturity runway with our outstanding debt, with our nearest maturity coming in 2027, supporting our flexibility to navigate varied economic environments for extended periods of time.

STEELMAKING RESULTS

The following is a summary of our Steelmaking segment operating results for the three and six months ended June 30, 2024 and 2023 (dollars in millions, except for average selling price, and shipments in thousands of net tons):

The following is a summary of our Steelmaking segment operating results for the three and nine months ended September 30, 2024 and 2023 (dollars in millions, except for average selling price, and shipments in thousands of net tons):

Total Revenue Gross Margin Adjusted EBITDA Steel Shipments (nt)

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands of net tons) 2024 2023 % Change 2024 2023 % Change

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 % Change 2024 2023 % Change

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Total Steelmaking revenues by market $ 4,419 $ 5,443 (19) % $ 14,361 $ 16,377 (12) %

Revenues decreased by 15% during the three months ended June 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease of $520 million, or 26%, in revenues from the direct automotive market, predominantly due to a decrease in shipments due to proactive customer diversification;

• A decrease of $170 million, or 11%, in revenues from the infrastructure and manufacturing market, predominantly due to a decrease in shipments;

Revenues decreased by 19% during the three months ended September 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease of $624 million, or 32%, in revenues from the direct automotive market, predominantly due to a decrease in demand;

• A decrease of $267 million, or 19%, in revenues from the infrastructure and manufacturing market, predominantly due to a decrease in shipments and steel index pricing;

• A decrease of $129 million, or 18%, in revenues from the steel producers markets, predominantly due to the decrease in pricing indices for slabs and busheling scrap.

Revenues decreased by 9% during the six months ended June 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease of $773 million, or 20%, in revenues from the direct automotive market, predominantly due to a decrease in shipments due to proactive customer diversification;

Revenues decreased by 12% during the nine months ended September 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease of $1,397 million, or 24%, in revenues from the direct automotive market, predominantly due to a decrease in demand;

• A decrease of $342 million, or 8%, in revenues from the infrastructure and manufacturing market, predominantly due to a decrease in shipments and steel index pricing;

• A decrease of $388 million, or 17%, in revenues from the steel producers markets, predominantly due to the decrease in pricing indices for slabs and busheling scrap.

Gross margin decreased by $484 million, or 77%, during the three months ended June 30, 2024, as compared to the prior-year period, primarily due to:

Gross margin decreased by $587 million, or 124%, during the three months ended September 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease in average selling price (approximately $460 million impact), predominantly due to lower spot prices and lower direct automotive mix;

• A decrease in sales volume (approximately $140 million impact);

• These decreases were partially offset by a decrease in cost of production (approximately $40 million impact) driven by lower raw materials and utilities costs, including natural gas, coal, coke, alloys and scrap.

Gross margin decreased by $308 million, or 43%, during the six months ended June 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease in sales volume (approximately $190 million impact);

• A $71 million unfavorable arbitration decision related to iron ore mining royalties for periods of time from 2020 through 2022.

• These decreases were partially offset by a decrease in cost of production driven by lower raw materials and utilities costs, including natural gas, coal, coke, alloys and scrap.

Gross margin decreased by $895 million, or 75%, during the nine months ended September 30, 2024, as compared to the prior-year period, primarily due to:

• A decrease in average selling price (approximately $590 million impact), predominantly due to lower spot prices and lower direct automotive mix;

• These decreases were partially offset by a decrease in cost of production (approximately $15 million impact) driven by lower raw materials and utilities costs, including natural gas, coal, coke, alloys and scrap.

• A decrease in sales volume (approximately $340 million impact).

• These decreases were partially offset by a decrease in cost of production driven by lower raw materials and utilities costs, including natural gas, coal, coke, alloys and scrap.

ADJUSTED EBITDA

Adjusted EBITDA from our Steelmaking segment for the three months ended June 30, 2024, decreased by $459 million, as compared to the three months ended June 30, 2023, primarily due to the decreased gross margin from our operations.

Additionally, our Steelmaking Adjusted EBITDA included $96 million and $141 million of Selling, general and administrative expenses for the three months ended June 30, 2024 and 2023, respectively.

Adjusted EBITDA from our Steelmaking segment for the six months ended June 30, 2024, decreased by $304 million, as compared to the six months ended June 30, 2023, primarily due to the decreased gross margin from our operations.

Additionally, our Steelmaking Adjusted EBITDA included $221 million and $260 million of Selling, general and administrative expenses for the six months ended June 30, 2024 and 2023, respectively.

Adjusted EBITDA from our Steelmaking segment for the three months ended September 30, 2024, decreased by $490 million, as compared to the three months ended September 30, 2023, primarily due to the decreased gross margin from our operations.

Additionally, our Steelmaking Adjusted EBITDA included $105 million and $133 million of Selling, general and administrative expenses for the three months ended September 30, 2024 and 2023, respectively.

Adjusted EBITDA from our Steelmaking segment for the nine months ended September 30, 2024, decreased by $794 million, as compared to the nine months ended September 30, 2023, primarily due to the decreased gross margin from our operations.

Additionally, our Steelmaking Adjusted EBITDA included $326 million and $393 million of Selling, general and administrative expenses for the nine months ended September 30, 2024 and 2023, respectively.

RESULTS OF OPERATIONS

REVENUES & GROSS MARGIN

During the three and six months ended June 30, 2024, our consolidated Revenues decreased by $892 million and $988 million, respectively, compared to the prior-year periods.

During the three and six months ended June 30, 2024, our consolidated gross margin decreased by $482 million and $296 million, respectively, as compared to the prior-year periods.

During the three and nine months ended September 30, 2024, our consolidated Revenues decreased by $1,036 million and $2,024 million, respectively, compared to the prior-year periods.

During the three and nine months ended September 30, 2024, our consolidated gross margin decreased by $584 million and $880 million, respectively, as compared to the prior-year periods.

See "— Steelmaking Results" above for further detail on our operating results.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

During the three and six months ended June 30, 2024, Selling, general and administrative expenses decreased by $46 million and $41 million, respectively.

During the three and nine months ended September 30, 2024, Selling, general and administrative expenses decreased by $27 million and $68 million, respectively.

The decreases primarily relate to lower employment-related costs.

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

This resulted in restructuring and other charges primarily related to severance, other employee-related benefits and asset retirement obligation charges of $25 million and $129 million for the three and six months ended June 30, 2024, respectively.

Additionally, this resulted in asset impairments of $15 million and $79 million for the three and six months ended June 30, 2024, respectively.

LOSS ON EXTINGUISHMENT OF DEBT

During the six months ended June 30, 2024, we used a portion of the net proceeds from the issuance of the 7.000% 2032 Senior Notes to repurchase $829 million in aggregate principal amount of our 6.750% 2026 Secured Senior Notes.

This resulted in $6 million and $27 million of losses on extinguishment of debt for the three and six months ended June 30, 2024, respectively.

Refer to NOTE 7 - DEBT AND CREDIT FACILITIES for further information.

This resulted in restructuring and other charges primarily related to severance, other employee-related benefits and asset retirement obligation charges of $2 million and $131 million for the three and nine months ended September 30, 2024, respectively.

Additionally, this resulted in an asset impairment of $79 million for the nine months ended September 30, 2024.

INTEREST EXPENSE, NET

During the three and nine months ended September 30, 2024, our consolidated Interest expense, net increased by $32 million and $9 million, respectively, compared to the prior-year periods.

The increases primarily relate to financing fees incurred during the third quarter associated with entering into the Commitment Letter, providing an optional Bridge Facility to finance the Stelco Acquisition.

For the nine months ended September 30, 2024, the increase is partially offset by a decrease in interest expense incurred on our outstanding long-term debt.

Our effective tax rate is impacted by state income tax expense and permanent items, primarily depletion.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

Income tax benefit (expense) $ 76 $ (29) $ 99 $ (118)

The changes in income tax benefit for the three and six months ended June 30, 2024, as compared to the income tax expense for the prior-year periods, are primarily related to depletion in excess of state income tax expense and the impact of immaterial discrete items relative to changes in pre-tax income.

The changes in income tax benefit for the three and nine months ended September 30, 2024, as compared to the income tax expense for the prior-year periods, are primarily related to depletion in excess of state income tax expense and the impact of immaterial discrete items relative to changes in pre-tax income.

LIQUIDITY, CASH FLOWS AND CAPITAL RESOURCES

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The following table provides a summary of our cash flow:

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2024 2023

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1 See "— Non-GAAP Financial Measures" for a reconciliation of our free cash flow.

The recent market environment has provided us opportunities to reduce our debt and return capital to shareholders, as follows:

The current market environment has provided us the ability to take advantage of favorable debt markets and return capital to shareholders, as follows:

• During the first quarter of 2024, we issued $825 million aggregate principal amount of our 7.000% 2032 Senior Notes.

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After these transactions, we no longer have any secured notes outstanding.

• Additionally, during the six months ended June 30, 2024, we returned capital to shareholders through our share repurchase programs, repurchasing 37.9 million common shares at a cost of $733 million in the aggregate.

The debt transactions give us additional flexibility by eliminating our secured notes, along with extending our average debt maturity date, which will better prepare us to navigate more easily through potentially volatile industry conditions in the future.

• During the third quarter of 2024, we issued an additional $600 million aggregate principal amount of our $7.000% 2032 Senior Notes.

The net proceeds from the transaction were used to finance a portion of the cash consideration paid in connection with the Stelco Acquisition, which we completed on November 1, 2024.

• Additionally, during the nine months ended September 30, 2024, we returned capital to shareholders through our share repurchase programs, repurchasing 37.9 million common shares at a cost of $733 million in the aggregate.

Our financial flexibility has allowed us to remain active in our opportunistic pursuit of value-enhancing mergers and acquisitions.

On July 15, 2024, we announced that we had entered into the Arrangement Agreement pursuant to which we will acquire Stelco.

During the third quarter of 2024, we announced that we had entered into an Arrangement Agreement to acquire Stelco.

On October 22, 2024, we issued $900 million aggregate principal amount of 6.875% Senior Guaranteed Notes due 2029 at par and $900 million aggregate principal amount of 7.375% Senior Guaranteed Notes due 2033 at par.

The net proceeds from the

transaction were used to finance a portion of the cash consideration payable in connection with the Stelco Acquisition, which we completed on November 1, 2024.

We expect to continue to generate healthy free cash flow in the coming years and intend to utilize it to deleverage our balance sheet following the Stelco Acquisition.

Going forward, we will continue to use the financial levers available to us in order to continue to pursue assets that would grow our business, reduce our debt and return capital to shareholders.

OPERATING ACTIVITIES

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2024 2023 Variance

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See "— Steelmaking Results" above for further detail on our operating results;

• A $348 million decrease in our change in inventories, due to more aggressive inventory reduction in 2023 that did not repeat in 2024.

• This was partially offset by a $422 million improvement in our change in accounts receivable, due primarily to falling selling prices and volume in 2024.

INVESTING ACTIVITIES

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2024 2023 Variance

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As a result, our cash used for capital expenditures was consistent, as compared to the prior-year period.

Included within cash used for capital expenditures was $8 million for the three months ended June 30, 2024, compared to $7 million for the three months ended June 30, 2023, related to our non-owned SunCoke Middletown VIE.

We anticipate total cash used for capital expenditures during the next 12 months to be between $800 and $900 million, which primarily consists of sustaining capital spend as well as initial spend on our capital projects at Middletown Works, Butler Works and Weirton.

Included within cash used for capital expenditures was $20 million for the nine months ended September 30, 2024, compared to $21 million for the nine months ended September 30, 2023, related to our non-owned SunCoke Middletown VIE.

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $600 million, which primarily consists of sustaining capital spend as well as initial spend on our capital projects at Middletown Works, Butler Works and Weirton.

FINANCING ACTIVITIES

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2024 2023 Variance

Net proceeds (repayments) of senior notes $ (20) $ 750 $ (770)

Net proceeds of senior notes $ 576 $ 750 $ (174)

Net borrowings (repayments) under credit facilities 47 (1,539) 1,586

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The variance was primarily driven by:

• A $631 million decrease in cash used resulting from higher net repayments of debt during the six months ended June 30, 2023, along with increased borrowings on our ABL Facility during the six months ended June 30, 2024, as compared to the prior-year period.

• A $639 million increase in cash used to repurchase 37.9 million of our common shares on the open market during the six months ended June 30, 2024, as compared to the prior-year period.

• A $120 million decrease in cash used for other financing activities during the six months ended June 30, 2024, as compared to the prior-year period, primarily driven by a decrease in both fixed asset financing payments and finance lease payments.

• A $1.4 billion decrease in cash used resulting from higher net repayments of debt during the nine months ended September 30, 2023;

• A $581 million increase in cash used to repurchase common shares during the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, we repurchased 37.9 million of our common shares on the open market, as compared to the 10.4 million common shares repurchased in the prior-year period.

LIQUIDITY AND CAPITAL RESOURCES

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We generally maintain minimal cash balances and utilize our access to our ABL Facility to cover fluctuations in our cash requirements.

Cash and cash equivalents, which totaled $110 million as of June 30, 2024, include cash on hand and on deposit.

The combination of cash and availability under our ABL Facility gave us $3.74 billion in liquidity as of June 30, 2024.

During the first six months of 2024, we issued $825 million in aggregate principal amount of 7.000% 2032 Senior Notes.

We used a portion of the net proceeds from the offering and available liquidity to repurchase $829 million in aggregate principal amount of our 6.750% 2026 Secured Senior Notes pursuant to a tender offer and subsequent redemption.

Cash and cash equivalents, which totaled $39 million as of September 30, 2024, include cash on hand and on deposit.

The combination of cash and availability under our ABL Facility gave us $3.8 billion in liquidity as of September 30, 2024.

During the first nine months of 2024, we issued $1.4 billion in aggregate principal amount of 7.000% 2032 Senior Notes.

We used a portion of the net proceeds from the initial offering of the 7.000% 2032 Senior Notes and available liquidity to repurchase $829 million in aggregate principal amount of our 6.750% 2026 Secured Senior Notes pursuant to a tender offer and subsequent redemption.

We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next 12 months and for the foreseeable future.

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.

We expect to incur and/or assume $2.25-$2.75 billion of debt to complete the Stelco Acquisition.

Immediately following completion of the Stelco Acquisition, we expect to have $6.0-$6.5 billion of outstanding indebtedness.

Our ABL Facility, which matures in June 2028, has a maximum borrowing base of $4.75 billion.

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

In addition to the $600 million aggregate principal amount of additional 7.000% 2032 Senior Notes issued in the third quarter of 2024, on October 22, 2024, we issued $900 million aggregate principal amount of 6.875% Senior Guaranteed Notes due 2029 at par and $900 million aggregate principal amount of 7.375% Senior Guaranteed Notes due 2033 at par.

The net proceeds from these transactions were used to finance a portion of the cash consideration paid in connection with the Stelco Acquisition, which we completed on November 1, 2024.

Subsequent to completing the Stelco Acquisition, our pro forma liquidity has remained above $2.5 billion.

During the third quarter of 2024, we amended our $4.75 billion ABL Facility, which matures in June 2028, as part of the financing for the Stelco Acquisition.

The ABL Facility amendments provide conditions to utilize the ABL Facility to finance a portion of the purchase price of the Stelco Acquisition and enable us to include assets from Canadian subsidiaries as part of the Stelco Acquisition.

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

Our ABL Facility includes a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans.

As of June 30, 2024, outstanding letters of credit totaled $46 million, which reduced availability under our ABL Facility.

We issue 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.

As of September 30, 2024, outstanding letters of credit totaled $46 million, which reduced availability under our ABL Facility.

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

Our ABL Facility agreement contains various financial and other covenants.

As of June 30, 2024, we were in compliance with all of our ABL Facility covenants.

As of September 30, 2024, we were in compliance with all of our ABL Facility covenants.

We have the capability to issue additional unsecured notes and, subject to the limitations set forth in our existing senior notes indentures and ABL Facility, to issue secured notes, if we elect to access the debt capital markets.

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

This measure is used by management, investors, lenders and other external users of our financial statements to assess our operating performance and to compare operating performance to other companies in the steel industry.

In addition, management believes Adjusted EBITDA is a useful measure to assess the earnings power of the business without the impact of capital structure and can be used to assess our ability to service debt and fund future capital expenditures in the business.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

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EBITDA of noncontrolling interests 1

$ 15 $ 17 $ 36 $ 40

Weirton indefinite idle 2

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Loss on extinguishment of debt — — (27) —

Acquisition-related costs (14) (3) (14) (5)

Changes in fair value of foreign currency contracts, net (7) — (7) —

Arbitration decision (71) — (71) —

Other, net (19) (8) (24) (16)

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2024 2023 2024 2023

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Other Businesses 8 9 43 32

Corporate and eliminations (1) (5) 1 (10)

Eliminations 3 2 4 (8)

Total Adjusted EBITDA $ 124 $ 614 $ 861 $ 1,632

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The following table provides a reconciliation of our operating cash flow to free cash flow:

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2024 2023

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Free cash flow $ 87 $ 1,134

Net debt is a non-GAAP financial measure that management uses in evaluating financial position.

Net debt is defined as long-term debt less cash and cash equivalents.

Management believes net debt is an important measure of our financial position due to the amount of cash and cash equivalents on hand.

The following table provides a reconciliation of our long-term debt to net debt:

(In millions) June 30,

2024 December 31,

Long-term debt $ 3,507 $ 3,137

Cash and cash equivalents 110 198

Net debt $ 3,397 $ 2,939

INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of June 30, 2024 have fully and unconditionally, and jointly and severally, guaranteed the obligations under the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes and the 7.000% 2032 Senior Notes issued by Cleveland-Cliffs Inc.

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of September 30, 2024 have fully and unconditionally, and jointly and severally, guaranteed the obligations under the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes and the

7.000% 2032 Senior Notes issued by Cleveland-Cliffs Inc.

on a senior unsecured basis.

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Each Guarantor subsidiary is consolidated by Cleveland-Cliffs Inc.

as of June 30, 2024.

Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of June 30, 2024.

As of June 30, 2024, the guarantee of a Guarantor subsidiary with respect to the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes and the 7.000% 2032 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with:

as of September 30, 2024.

Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of September 30, 2024.

As of September 30, 2024, the guarantee of a Guarantor subsidiary with respect to the 5.875% 2027 Senior Notes, the 7.000% 2027 Senior Notes, the 4.625% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes and the 7.000% 2032 Senior Notes will be automatically and unconditionally released and discharged, and such Guarantor subsidiary’s obligations under the guarantee and the related indentures (the “Indentures”) will be automatically and unconditionally released and discharged, upon the occurrence of any of the following, along with the delivery to the trustee of an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable Indenture relating to the release and discharge of such Guarantor subsidiary’s guarantee have been complied with:

(a) any sale, exchange, transfer or disposition of such Guarantor subsidiary (by merger, consolidation, or the sale of) or the capital stock of such Guarantor subsidiary after which the applicable Guarantor subsidiary is no longer a subsidiary of the Company or the sale of all or substantially all of such Guarantor subsidiary’s assets (other than by lease), whether or not such Guarantor subsidiary is the surviving entity in such transaction, to a person which is not the Company or a subsidiary of the Company;

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The following table is summarized combined financial information from the Statements of Unaudited Condensed Consolidated Financial Position of the obligated group:

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Current assets $ 6,516 $ 7,150

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The following table is summarized combined financial information from the Statements of Unaudited Condensed Consolidated Operations of the obligated group:

Six Months Ended

(In millions) June 30, 2024

Nine Months Ended

(In millions) September 30, 2024

Revenues $ 14,629

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The obligated group had the following balances with non-Guarantor subsidiaries and other related parties:

(In millions) June 30, 2024 December 31, 2023

(In millions) September 30, 2024 December 31, 2023

Balances with non-Guarantor subsidiaries:

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Accounts payable (16) (11)

Additionally, for the six months ended June 30, 2024, the obligated group had Revenues of $46 million and Cost of goods sold of $36 million, in each case, with other related parties.

Additionally, for the nine months ended September 30, 2024, the obligated group had Revenues of $63 million and Cost of goods sold of $51 million, in each case, with other related parties.

We are subject to a variety of risks, including those caused by changes in commodity prices and interest rates.

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However, since we do not typically hedge 100% of our exposure, abnormal price increases in any of these commodity markets might still negatively affect operating costs.

The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of June 30, 2024, due to a 10% and 25% change in the market price of each of the indicated commodities:

The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of September 30, 2024, due to a 10% and 25% change in the market price of each of the indicated commodities:

Commodity Derivative (In millions) 10% Change 25% Change

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We estimate fair value using a market approach, an income approach or a cost approach.

For the three and six months ended June 30, 2024, we concluded that there were no additional triggering events resulting in the need for an impairment assessment except for the announcement of the indefinite idle of our Weirton tinplate production plant, which resulted in a $46 million impairment charge to Property, plant and equipment, net for the six months ended June 30, 2024.

For the three and nine months ended September 30, 2024, we concluded that there were no additional triggering events resulting in the need for an impairment assessment except for the announcement of the indefinite idle of our Weirton tinplate production plant, which resulted in a $46 million impairment charge to Property, plant and equipment, net for the nine months ended September 30, 2024.

INTEREST RATE RISK

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Interest payable under our ABL Facility is at a variable rate based upon the applicable base rate plus the applicable base rate margin depending on the excess availability.

As of June 30, 2024, we had $370 million outstanding under our ABL Facility.

As of September 30, 2024, we had $47 million outstanding under our ABL Facility.

An increase in prevailing interest rates would increase interest expense and interest paid for any outstanding borrowings under our ABL Facility.

For example, a 100 basis point change to interest rates under our ABL Facility at the June 30, 2024 borrowing level would result in a change of $4 million to interest expense on an annual basis.

SUPPLY CONCENTRATION RISKS

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A significant interruption or change in service or rates from our energy suppliers could materially impact our production costs, margins and profitability.

FOREIGN CURRENCY EXCHANGE RATE RISK

On July 15, 2024, we announced that we had entered into the Arrangement Agreement with Stelco to acquire all of its common shares in a cash and stock transaction valued, at the time, at approximately $2.5 billion.

We hedged a portion of the purchase price by entering into foreign currency option contracts with a notional amount of $1.5 billion as of September 30, 2024.

These option contracts, with a maturity date of October 15, 2024, expired without being exercised.

We may enter into additional hedging instruments in the future, as needed, to further mitigate foreign currency exchange rate risk.

FORWARD-LOOKING STATEMENTS

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• potential significant deficiencies or material weaknesses in our internal control over financial reporting;

• the risk that the Stelco Acquisition may not be consummated;

• the risk that the Stelco Acquisition may be less accretive than expected, or may be dilutive, to our earnings per share, which may negatively affect the market price of our common shares;

• the risk that adverse reactions or changes to business or regulatory relationships may result from the announcement or completion of the Stelco Acquisition;

• the possibility of the occurrence of any event, change or other circumstance that could give rise to the right of one or both of Cliffs or Stelco to terminate the Arrangement Agreement, including, but not limited to, the companies' inability to obtain necessary regulatory approvals;

• the risk of shareholder litigation relating to the Stelco Acquisition that could be instituted against Stelco, Cliffs or their respective directors and officers;

• the possibility that Cliffs and Stelco will incur significant transaction and other costs in connection with the Stelco Acquisition, which may be in excess of those we anticipate;

• the risk that the financing transactions to be undertaken in connection with the Stelco Acquisition may have a negative impact on the combined company's credit profile, financial condition or financial flexibility;

• the risk that adverse reactions or changes to business or regulatory relationships may result from the Stelco Acquisition;

• the risk that the financing transactions undertaken in connection with the Stelco Acquisition may have a negative impact on the combined company's credit profile, financial condition or financial flexibility;

• the possibility that the anticipated benefits of the Stelco Acquisition are not realized to the same extent as projected and that the integration of the acquired business into our existing business, including uncertainties associated with maintaining relationships with customers, vendors and employees, is not as successful as expected;

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• the risk associated with the retention and hiring of key personnel, including those of Stelco;

• the risk that any announcements relating to, or the completion of, the Stelco Acquisition could have adverse effects on the market price of our common shares;

• the risk that the Stelco Acquisition could have adverse effects on the market price of our common shares;

• the risk of any unforeseen liabilities and future capital expenditures related to the Stelco Acquisition.

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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 2. Management’s Discussion and Analysis