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Item 7. Management’s Discussion and Analysis

2026-02-09 compared with 2025-02-25 · 191 added, 218 removed, 425 unchanged (49% of the section changed)

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Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

During the third quarter of 2025, we identified an immaterial error related to our accrual for certain employment costs, resulting in an understatement of Costs of goods sold in prior periods.

Prior periods affected include the interim periods ended March 31, 2025 and June 30, 2025, and the interim and annual periods during the years 2022, 2023 and 2024.

Refer to NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES for further information.

Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report discusses our financial condition and results of operations as of and for the years ended December 31, 2025 and 2024.

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Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025.

Throughout 2024, we continued to position the Company for long-term success and further established ourselves as a leading North America based steel producer.

We completed the Stelco Acquisition, which diversifies our end-markets, expands our geographical presence in Canada and incorporates Stelco's industry low-cost structure into our overall asset portfolio.

We also announced new strategic initiatives that are expected to provide meaningful earnings improvement in years to come;

reduced our operational costs;

returned substantial capital to shareholders through share repurchases;

and announced new GHG emissions reduction targets after achieving our prior commitments, all with an eye toward the future and in line with our consistent strategic objectives.

The Stelco Acquisition, our operational achievements and strategic initiatives further strengthen our position as a North American leader in the steel industry and are expected to create value for all Company stakeholders.

Throughout 2025, we continued to position the Company for long-term success and further established ourselves as a leading North America based steel producer, particularly for the automotive industry.

We announced a potential strategic partnership with a top-ten global steel producer, optimized our operational footprint, moved away from non-core assets, signed multi-year fixed price contracts with major automotive customers and further reduced unit costs year-over-year.

The operational changes to our footprint, along with our commercial and strategic initiatives, further strengthen our position as a North American leader in the steel industry and are expected to create value for all Company stakeholders.

2025 HIGHLIGHTS

• Record safety year since becoming a steel company with lowest Total Reportable Incident Rate of 0.9, which represents a 26% improvement from prior year

• Completed the Stelco Acquisition during the fourth quarter of 2024

• Record safety year since becoming a steel company with lowest Total Recordable Incident Rate (including contractors) of 0.8 per 200,000 hours worked, which represents a 43% decrease since 2021, our first full-year as a steel company.

• President Trump implemented 50% tariffs on imported steel from all major steel producing countries and 25% on imports of automobiles and certain automobile parts.

• Signed Memorandum of Understanding with POSCO, Korea's largest steelmaker, and the world's third largest steelmaker outside of China, to potentially form a strategic partnership as POSCO seeks to leverage our domestic operations.

• Optimized operational footprint and repositioned away from non-core assets, with minimal impact to our flat-rolled steel output.

• Signed multi-year fixed price contracts with major automotive customers, increasing our market share and securing historically high-margin business for years to come.

• Improved balance sheet flexibility and capital structure by extending all senior note maturities to 2029 and beyond.

• Successfully completed a production trial in collaboration with a major automotive OEM, in which our steel was stamped into exposed automotive steel parts with no defects using the customer's existing aluminum-forming equipment.

• Further reduced unit costs year-over-year.

• Returned $733 million in capital to shareholders through share repurchases

• Announced new GHG emissions reduction goals

• Selected by the DOE for award negotiations to receive up to $575 million for two decarbonization initiatives

• Announced $600 million of future annual EBITDA improvement from strategic projects expected to be completed by the end of 2029

• Announced project to develop new state-of-the-art electrical transformer production plant in Weirton, West Virginia

• Completed successful hydrogen injection trial at Indiana Harbor #7 blast furnace

We continued our best practices from both a safety and environmental standpoint.

During 2024, our safety Total Reportable Incident Rate (including contractors) was 0.9 per 200,000 hours worked, the lowest since becoming a steel company in 2020.

Throughout 2024, we continued to focus on our goal of reducing GHG emissions with our optimal utilization of HBI and scrap throughout our facilities, as well as efficient power generation through recycling off-gases.

In May 2024, we announced our commitment to new GHG emissions reductions targets after we successfully achieved our prior commitments set in 2021.

We have also continued our partnerships with the DOE as part of the Better Climate Challenge initiative and the DOE Better Plants programs.

We continue to evaluate opportunities such as carbon capture and the use of hydrogen within our facilities.

With the U.S.

government potentially awarding funding for the development of regional hydrogen hubs throughout the country, including near our largest facilities, we would be able to dramatically increase our use of hydrogen gas as both a reducing agent and energy source as the clean hydrogen production facilities come online and become commercially and economically viable.

Additionally, we have continued forming partnerships to develop renewable and clean energy sources – such as wind, solar and hydrogen – which will benefit our own environmental footprint while combating the global impacts of climate change.

45 | CLF 2024 FORM 10-K

FINANCIAL SUMMARY

The following is a summary of our consolidated results for the years ended December 31, 2024, 2023 and 2022 (in millions, except for diluted EPS):

Total Revenue Net Income Adjusted EBITDA Diluted EPS

See "— Non-GAAP Financial Measures" below for a reconciliation of our Net income (loss) to Adjusted EBITDA.

• Announced commissioning of our new state-of-the-art bright anneal line at our Coshocton facility.

• Five-year contract that was initiated in conjunction with the closing of the AM USA Transaction to supply approximately 1.5 million net tons of semi-finished steel slabs annually, which was unprofitable in 2024 and 2025, expired on December 9, 2025 and was not renewed.

• Maintained disciplined capital spend with 19% reduction in capital expenditures year-over-year.

ECONOMIC OVERVIEW

STEEL MARKET OVERVIEW

Steel market conditions in 2024 were 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 $772 per net ton for 2024, which was 15% lower than 2023 and the lowest annual average per net ton since 2020.

Import levels were elevated in 2024, which contributed to downward pressure on HRC pricing.

North American light vehicle production of 15.4 million units in 2024 was down from 15.7 million units in 2023 and significantly lower than the original expectation to exceed 16 million units.

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 improving, 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.

As passed initially, the Infrastructure and Jobs Act includes approximately $550 billion of authorized spending for new investments and programs.

This legislation provides direct spending support for roads, bridges and other infrastructure projects, including upgrades to the domestic power grid.

The CHIPS Act promotes semiconductor manufacturing in the U.S., which should help support non-residential construction as well as machinery and equipment.

The Inflation Reduction Act provides incentives for the use of domestic steel for investments in clean energy projects, including wind and solar projects, which consume a substantial amount of steel.

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

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

Steel market conditions in 2025 were driven by higher-than-historical HRC pricing and lower import levels, but subdued demand remained, driven by inconsistent buying behavior as our largest end markets experienced recession-like conditions.

The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $851 per net ton for 2025, which was 10% higher than 2024.

Finished steel import levels declined in 2025 after being elevated in early 2025 in anticipation of the implemented steel tariffs, which helped support domestic steel pricing.

North American light vehicle production of 15.3 million units in 2025 was down from 15.4 million units in 2024 and remained lower than the five-year pre-COVID level of approximately 17 million units.

Looking forward, we expect domestic steel demand to grow as interest rates have started to decline, steel imports are

43 | CLF 2025 FORM 10-K

currently unattractive, other end-user demand is improving, and incremental steel demand stimulated by recent government legislation and manufacturing on-shoring is realized.

Steel and light vehicles remain at the top of the Trump administration's trade agenda, and we are at the intersection of both of these industries.

We believe that steel tariffs play a crucial role in protecting the U.S.

economy, national security and industrial base from violators of fair trade.

The steel industry has long faced significant challenges due to overcapacity and overproduction of steel beyond certain countries' domestic needs, along with other unfair trade practices.

The overproduction by certain countries results in dumping of steel in the U.S.

at below market value.

remains the only major steel-producing country that produces less steel than it consumes.

Additionally, foreign steel producers often take advantage of government subsidies, currency manipulation and weak environmental and safety regulations.

Furthermore, there is an overall lack of foreign countries holding their own steel producers accountable for unfair trade practices.

During 2025, President Trump signed an executive order to implement 50% tariffs on steel imports originating from all major steel producing countries.

We believe that the 50% steel tariffs are critical to leveling the playing field and addressing global overproduction issues, confronting unfair trade practices and supporting a healthy domestic steel market.

As a leading domestic steel producer, we expect to benefit for years to come from President Trump's pro-manufacturing and America-first agenda, along with the implemented tariffs, not only for steel but also for the automotive industry.

The Canadian steel industry is also an important market for us.

Similar to the U.S.

steel market, the Canadian steel market is impacted by global overcapacity and other unfair trade practices, resulting in the dumping of steel in Canada at below market value.

This contributed to weakened results for our Canadian operations in 2025.

In the second half of 2025, Canada imposed tariff-rate quotas on steel imports to protect their domestic steel industry.

We expect these tariff-rate quotas to help support a healthier Canadian steel industry and allow Stelco to generate healthier margins in 2026.

We believe it is crucial for Canada to maintain or improve measures in place to protect its domestic steel industry in order to preserve the Canadian economy and national security.

During 2025, to appropriately respond to market conditions and to optimize our footprint, we made the decision to fully or partially idle, or permanently close, six of our operations.

These operational changes allowed us to streamline our operations and enhance efficiency, with minimal expected impact to our flat-rolled steel output.

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.

Light vehicle production in 2024 was well below initial expectations.

Light vehicle production in 2025 remained below the five-year pre-COVID level of approximately 17 million units.

North American light vehicle production in 2025 was 15.3 million units, down from 15.4 million units in 2024.

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

During 2024, light vehicle sales in the U.S.

saw an average seasonally adjusted annualized rate of 15.8 million units sold, representing a 2% increase compared to 2023.

December 2024 seasonally adjusted annualized rate was 16.8 million units sold, the highest published rate since 2021, indicating healthy consumer demand.

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

During 2025, there were 16.3 million light vehicles sold in the U.S., representing a 2% increase compared to 2024.

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

is at an all-time high of 12.8 years, surpassing the previous record set in 2024, which should support demand as older vehicles need to be replaced.

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

Furthermore, we expect the 25% tariff on imports of automobiles and certain automobile parts, which were implemented during 2025, to lead to increased demand for domestically produced vehicles that consume domestically made steel.

We also expect that a declining interest rate environment would increase demand for vehicles in the U.S.

as consumers have been cautious due to elevated interest rates.

As a leading supplier of automotive-grade steel in the U.S., we expect to benefit from healthier domestic vehicle production over the coming years as we continue to be an established and reliable supplier.

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 $385 per long ton.

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As we are fully integrated and have primarily a blast furnace footprint, increased prices for busheling scrap in the U.S.

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 $109 per metric ton in 2024, which is 15% 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.

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

During 2025, we continued our cost-cutting efforts, which began in 2023.

We further reduced our year-over-year cost per ton as we worked through higher cost inventory, and we experienced lower coal and alloy costs, which helped mitigate the inflationary cost increases we experienced.

We expect to continue our cost-cutting efforts in 2026 and maintain a strong focus on cost discipline for the long term.

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OTHER FACTORS

On February 10, 2025, President Donald Trump signed an executive order to implement 25% tariffs on all steel imports without exceptions or exemptions, beginning March 2025.

We expect these steel tariffs will help level the playing field against countries that have long taken advantage of the domestic steel market.

A level playing field in steel, along with President Trump's pro-manufacturing and America-first agenda, should support a healthy domestic steel environment for years to come.

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.

With the revised rule, the DOE acknowledged the fundamental importance of GOES and the essential role played by our steel plants in Butler, Pennsylvania and Zanesville, Ohio in effectively sustaining the functionality of the U.S.

electric grid.

The originally proposed distribution transformer rule would have required the use of amorphous metal in nearly all transformer production in the U.S., putting demand for our GOES product at serious risk.

The final rule provides clarity going forward on production requirements, allowing for increased investments in the transformer market, such as our announced project at Weirton, which should ultimately lead to increased GOES demand.

During 2024, we continued our cost cutting efforts, which began in 2023, further reducing our year-over-year cost per ton as we worked through higher cost inventory and lower natural gas, coal and alloy costs mitigated any inflationary cost increases.

STEELMAKING RESULTS

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$16,865 $16,311 —% (5)% 4% —% $1,081 $1,005

47 | CLF 2024 FORM 10-K

The following tables represent our steel shipments by product and total revenues by market:

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Total Steelmaking revenues $ 17,953 $ 18,529 (3) %

Revenues from our Steelmaking segment decreased by 13% during the year ended December 31, 2024, as compared to the prior year, primarily due to:

• A decrease of $1.9 billion, or 25%, in revenues from the direct automotive market, predominantly due to a decrease in demand;

• A decrease of $404 million, or 7%, in revenues from the infrastructure and manufacturing market, predominantly due to a decrease in steel index pricing;

• A decrease of $480 million, or 16%, in revenues from the steel producers market, predominantly due to the decrease in pricing indices for slabs and busheling scrap.

Gross margin from our Steelmaking segment decreased by $1.3 billion, during the year ended December 31, 2024, as compared to the prior year, primarily due to:

• A decrease in average selling price (approximately $775 million impact), predominantly due to lower spot prices and lower direct automotive mix;

• A decrease in sales volume (approximately $500 million impact).

Revenues from our Steelmaking segment decreased by $576 million, or 3%, during the year ended December 31, 2025, as compared to the prior year, primarily due to:

• A decrease in revenues driven by lower realized revenue rates, predominantly due to product mix (approximately $400 million);

• A decrease in revenues driven by inconsistent buying behavior from automotive, service centers and other customers resulting in lower tons sold (approximately $1.2 billion);

• A decrease in revenues driven by permanent closures of the Steelton and Weirton operations due to financial underperformance (approximately $220 million);

which was partially offset by

45 | CLF 2025 FORM 10-K

• An increase in revenues related to incremental tons sold related to the addition of Stelco, which primarily consists of hot-rolled steel (approximately $1.5 billion).

Gross margin from our Steelmaking segment decreased by $922 million during the year ended December 31, 2025, as compared to the prior year, primarily due to:

• Lower revenues of $576 million as described above;

• An increase in depreciation and amortization expense as a result of the indefinite idling of our Conshohocken and Riverdale facilities and the Stelco Acquisition (approximately $300 million);

• An increase in idled facilities charges as a result of the operational adjustments related to our Hibbing, Minorca and Dearborn facilities (approximately $70 million).

ADJUSTED EBITDA

Adjusted EBITDA from our Steelmaking segment for the year ended December 31, 2024, decreased by $1.1 billion, as compared to 2023, due to the decreased gross margin from our operations.

Adjusted EBITDA from our Steelmaking segment for the year ended December 31, 2025, decreased by $736 million, as compared to 2024, due to the decreased financial performance from our Steelmaking operations.

Additionally, our Steelmaking Adjusted EBITDA included $515 million and $457 million of Selling, general and administrative expenses for the years ended December 31, 2025 and 2024, respectively.

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REVENUES AND GROSS MARGIN

During the year ended December 31, 2024, our consolidated Revenues decreased by $2.8 billion, as compared to 2023.

The decrease was primarily due to the decrease in the average steel product selling price of $90 per net ton and a decrease of 0.8 million net tons of steel shipments from our Steelmaking segment.

During the year ended December 31, 2024, our consolidated gross margin decreased by $1.3 billion, as compared to 2023.

During the year ended December 31, 2025, our consolidated Revenues decreased by $575 million, as compared to 2024.

The decrease was primarily due to the decrease in the average steel product selling price of $76 per net ton as a result of product mix from our Steelmaking segment.

During the year ended December 31, 2025, our consolidated gross margin decreased by $923 million, as compared to 2024.

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

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses decreased by $91 million during the year ended December 31, 2024, as compared to 2023.

The decrease primarily relates to employment-related costs due to lower incentive compensation.

Selling, general and administrative expenses increased by $57 million for the year ended December 31, 2025 compared to 2024, primarily driven by a full year of Stelco selling, general, and administrative expenses resulting in an approximately $70 million increase, which was partially offset by cost-reduction initiatives implemented in 2025.

RESTRUCTURING AND OTHER CHARGES & ASSET IMPAIRMENT

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 $129 million for the year ended December 31, 2024.

Additionally, this resulted in an asset impairment of $79 million for year ended December 31, 2024.

As a result of decisions to indefinitely idle two non-core Steelmaking operations, the Company recorded Restructuring and other charges and Asset impairment during 2025 and 2024.

The indefinite idling of the Steelton rail production facility occurred in the second quarter of 2025, while the idling of the Weirton tinplate production facility was announced in the first quarter of 2024.

Restructuring and other charges totaled $86 million for the year ended December 31, 2025, compared to $129 million for the year ended December 31, 2024.

Asset impairment totaled $39 million in 2025, compared to $79 million in 2024.

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

ACQUISITION-RELATED COSTS

The increase of Acquisition-related costs primarily relates to third-party expenses associated with the Stelco Acquisition in 2024.

Acquisition-related costs decreased by $43 million during the year ended December 31, 2025 compared to 2024, primarily reflecting the absence in 2025 of significant third-party costs that were incurred in 2024 in connection with the Stelco Acquisition.

Refer to NOTE 3 - ACQUISITIONS for further information.

GOODWILL IMPAIRMENT

In 2023, our annual goodwill impairment analysis resulted in an impairment charge of $125 million for goodwill related to our Tooling and Stamping reporting unit.

MISCELLANEOUS – NET

Miscellaneous expense increased by $88 million for the year ended December 31, 2024, as compared to 2023.

The increase in miscellaneous expense for the year ended December 31, 2024 was primarily related to a $63 million gain on sale of business in 2023, which was not repeated in 2024.

Additionally, to a lesser extent, this increase was also due to higher currency exchange expense, primarily related to routine remeasurement of an intercompany note with our Stelco subsidiary during 2024.

Miscellaneous – net decreased by $38 million for the year ended December 31, 2025 compared to 2024.

The decrease resulted from approximately $60 million improvement in currency exchange year-over-year and approximately $10 million gain from the sale of FPT Florida, along with various other improvements not individually significant.

These favorable impacts were partially offset by approximately $40 million in charges for idle facilities and severance.

INTEREST EXPENSE, NET

During the year ended December 31, 2024, our consolidated Interest expense, net increased by $81 million compared to 2023.

The increase primarily relates to increased interest incurred on outstanding borrowings, year over year, as well as fees incurred in 2024 associated with financing arrangements undertaken in connection with the Stelco Acquisition.

During the year ended December 31, 2025, consolidated Interest expense, net increased by $224 million compared to 2024, primarily reflecting higher-than-average borrowing during 2025 following the Stelco Acquisition, which was completed in the fourth quarter of 2024.

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LOSS ON EXTINGUISHMENT OF DEBT

During the year ended December 31, 2024, our consolidated Loss on extinguishment of debt increased by $27 million compared to 2023.

The increase entirely relates to the repurchase of $829 million aggregate principal amount of our then-outstanding 6.750% 2026 Senior Secured Notes.

During the year ended December 31, 2025, our consolidated Loss on extinguishment of debt decreased by $17 million compared to 2024.

During 2025, we redeemed an aggregate principal amount of $685 million in outstanding debt, compared to $829 million in aggregate principal amount repurch ased during 2024.

The decrease in loss recorded in 2025 is primarily reflecting a lower redemption price and the related write-off of deferred charges in comparison to the prior year.

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information.

NET PERIODIC BENEFIT CREDITS OTHER THAN SERVICE COST COMPONENT

During the year ended December 31, 2024, our consolidated Net periodic benefit credits other than service cost component increased $43 million compared to 2023.

This increase primarily relates to an increase in actuarial gains reclassified from AOCI to net income and a decrease in interest cost year over year.

During the year ended December 31, 2025, our consolidated Net periodic benefit credits other than service cost component decreased $24 million compared to 2024.

This decrease primarily relates to an approximately $15 million year-over-year decline in amounts recognized from Accumulated other comprehensive income, largely driven by a reduction in actuarial gains and from a $5 million increase in special termination charges recorded in relation to decisions to indefinitely idle facilities in each respective period.

Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

OTHER NON-OPERATING INCOME (LOSS)

During the year ended December 31, 2024, our consolidated Other non-operating income (loss) decreased by $42 million compared to 2023.

The decrease primarily relates to a loss recorded in 2024 as a result of a fair value adjustment of the MinnTac option, as well as a loss recorded on foreign currency contracts obtained in connection with financing the Stelco Acquisition.

CHANGES IN FAIR VALUE OF DERIVATIVES, NET

During the year ended December 31, 2025, our consolidated Changes in fair value of derivatives, net increased by $4 million compared to 2024.

The increase is primarily a reflection of a full year of fair value adjustments to the MinnTac option, partially offset by a one-time loss recorded on foreign currency contracts obtained in connection with financing the Stelco Acquisition in 2024.

Refer to NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS and NOTE 15 - DERIVATIVE INSTRUMENTS AND HEDGING for further information.

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

Our effective tax rate is impacted by state income taxes and permanent items.

It also is affected by discrete items that may occur in any given period but are not consistent from period to period.

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(In millions) 2025 2024

Income tax benefit (expense) $ 235 $ (148)

Income tax benefit $ 581 $ 236

Effective tax rate 29 % 25 %

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A reconciliation of our income tax attributable to continuing operations compared to the U.S.

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Percentage depletion in excess of cost depletion (1) — (20) 2

Valuation allowance — — 14 2

Unrecognized tax benefits (70) 4 7 —

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Income not subject to tax (10) — (10) 1

Goodwill impairment — — 26 4

Other items, net (19) 1 20 (2)

Provision for income tax (benefit) expense and effective income tax rate including discrete items $ (235) 25 % $ 148 25 %

The increase in income tax benefit in 2024, as compared to income tax expense in 2023, is predominantly related to the decrease in the pre-tax book income year-over-year.

Provision for income tax benefit and effective income tax rate including discrete items $ (581) 29 % $ (236) 25 %

See NOTE 11 - INCOME TAXES for further information.

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We are focused on maximizing the cash generation of our operations, reducing debt, returning capital to shareholders, and aligning capital investments with our strategic priorities and the requirements of our business plan, including regulatory and permission-to-operate related projects.

47 | CLF 2025 FORM 10-K

The following table provides a summary of our cash flow:

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Net increase (decrease) in cash and cash equivalents $ 1 $ (137)

Free cash flow 1

$ (590) $ 1,621

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

The market environment in 2024 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 at par.

A portion of the net proceeds from the 7.000% 2032 Senior Notes issuance was used to repurchase our 6.750% 2026 Senior Secured Notes.

We no longer have any secured notes outstanding.

• During the second half of 2024, we issued an additional $600 million aggregate principal amount of our 7.000% 2032 Senior Notes at 99.25% of their principal amount, $900 million aggregate principal amount of 6.875% Senior Notes due 2029 at par, and $900 million aggregate principal amount of 7.375% Senior Notes due 2033 at par.

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

• During the first quarter of 2025, we issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 at par.

The net proceeds will be used for general corporate purposes, including the repayment of borrowings under our ABL Facility.

• Additionally, during the year ended December 31, 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.

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

During 2024, we completed the Stelco Acquisition, which diversifies our end markets, expands our geographical presence in Canada and incorporates Stelco's industry low-cost structure into our overall asset portfolio.

We have a track record of demonstrating that we can quickly deleverage our balance sheet following prior acquisitions.

We expect 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

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(In millions) 2025 2024 Variance

Net income (loss) $ (708) $ 450 $ (1,158)

Non-cash adjustments to net income (loss) 1,030 1,125 (95)

Net loss $ (1,428) $ (714) $ (714)

Non-cash adjustments to net loss 754 1,029 (275)

Income taxes 13 (17) 30

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Working capital (receivables, inventories, payables and other liabilities) 353 2 351

Net cash provided by operating activities $ 105 $ 2,267 $ (2,162)

Net cash provided (used) by operating activities $ (462) $ 105 $ (567)

The variance was driven by:

• A $1.3 billion decrease in net income after adjustments for non-cash items due to lower gross margins resulting from a decrease in selling prices and sales volumes for our steel products.

• A $989 million decrease in net income after adjustments for non-cash items due to lower gross margins resulting from a decrease in selling prices for our steel products.

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

• A $669 million decrease in cash provided for working capital is primarily related to ending inventory levels remaining consistent year over year.

This differs from the prior year when inventory levels decreased significantly.

This prior year decrease was primarily the result of lower costs of steel, driven by higher production, cost control and lower raw material costs.

• A $351 million increase in cash provided by working capital is primarily related to a reduction in iron ore pellet inventory in comparison to the build of iron ore pellet inventory in the prior year and is also related to a reduction in payables due to cost-cutting efforts.

These increases were partially offset by a decrease in accounts receivable collections year over year as a result of lower total revenue.

INVESTING ACTIVITIES

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Acquisitions, net of cash acquired — (2,512) 2,512

Other (5) 55 (60)

Proceeds from sale of business 53 — 53

Net cash used by investing activities $ (479) $ (3,212) $ 2,733

1 Includes DOE funding associated with awarded capital projects.

Refer to NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES for further information on accounting treatment on government grants.

The variance was driven by:

• A $2.5 billion increase in cash used for acquisitions, net of cash acquired related to the Stelco Acquisition, which was completed on November 1, 2024.

• A $2.5 billion decrease in cash used for acquisitions, net of cash acquired related to the Stelco Acquisition, which was completed on November 1, 2024.

Refer to NOTE 3 - ACQUISITIONS for further information.

• A $134 million decrease in purchase of property, plant and equipment as a result of disciplined spending and reduction in overall sustaining capital costs primarily related to idled facilities.

• A $53 million increase in proceeds from sale of business related to the sale of FPT Florida in the fourth quarter of 2025.

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FINANCING ACTIVITIES

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(In millions) 2025 2024 Variance

Net borrowings (repayments) of debt $ 2,376 $ 750 $ 1,626

Net borrowings of debt $ 1,298 $ 2,376 $ (1,078)

Net borrowings (repayments) under credit facilities (1,109) 1,560 (2,669)

Repurchase of common shares (733) (152) (581)

Net issuance (repurchase) of common shares 951 (733) 1,684

Other (198) (233) 35

Net cash used by financing activities $ 2,970 $ (1,504) $ 4,474

The variance was driven by:

• A $5.1 billion increase in cash provided from net borrowings on both debt and under credit facilities, primarily related to the issuance of 7.000% 2032 Senior Notes, 6.875% 2029 Senior Notes and 7.375% 2033 Senior Notes and additional borrowings on the ABL Facility.

Approximately $2.5 billion of the net borrowings were utilized to finance the Stelco Acquisition, completed on November 1, 2024.

We also used a portion of the net proceeds to repurchase $829 million in aggregate principal amount of our 6.750% 2026 Secured Senior Notes.

This variance was partially offset by a $581 million increase in cash used to repurchase common shares during the year ended December 31, 2024.

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Net cash provided by financing activities $ 942 $ 2,970 $ (2,028)

During 2025, we completed multiple financing transactions in order to extend our debt maturities, opportunistically access the equity market and reduce the outstanding borrowings under our variable-rate ABL Facility.

These transactions improved our liquidity position, reduced our sensitivity to interest rate volatility, and enhanced the overall stability of our capital structure.

In comparison, our net cash provided by financing activities in 2024 was primarily a result of transactions to finance the Stelco Acquisition.

Our financing transactions during 2025 were as follows:

• In February 2025, we issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 and used the proceeds primarily to repay borrowings under our ABL Facility.

• In September 2025 and October 2025, we issued $1,125 million in aggregate principal amount of 7.625% Senior Notes due 2034 and used the proceeds to redeem all then-remaining 2027 senior notes and repay borrowings under our ABL Facility.

• On October 30, 2025, we issued 75 million of our common shares in an underwritten offering, resulting in net cash proceeds of $951 million, which were subsequently used to repay borrowings under our ABL Facility.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are Cash and cash equivalents, cash generated from our operations, availability under the ABL Facility and access to capital markets.

Our primary sources of liquidity are Cash and cash equivalents, cash generated from our operations, availability under our ABL Facility and access to the capital markets.

Cash and cash equivalents, which totaled $57 million as of December 31, 2025, include cash on hand and on deposit, as well as short-term securities held for the primary purpose of general liquidity.

The combination of cash and availability under our ABL Facility equated to $3.3 billion in liquidity as of December 31, 2025.

During 2024, we issued $1.4 billion in aggregate principal amount of 7.000% 2032 Senior Notes, $900 million in aggregate principal amount of 6.875% 2029 Senior Notes, and $900 million in aggregate principal amount of 7.375% 2033 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 used remaining net proceeds of the debt issuances to finance a portion of the Stelco Acquisition.

During 2025, we issued $850 million in aggregate principal amount of our 7.500% 2031 Senior Notes and $1,125 million in aggregate principal amount of our 7.625% 2034 Senior Notes, as well as 75 million of our common shares resulting in $951 million of net cash proceeds.

In totality, we used the proceeds from these transactions to extend debt maturities by redeeming all remaining 2027 senior notes and repay borrowings on our ABL Facility.

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.

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

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

The available borrowing base, which was $3.2 billion as of December 31, 2025, 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 December 31, 2024, outstanding letters of credit totaled $62 million, which reduced availability.

As of December 31, 2025, outstanding letters of credit totaled $65 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.

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As of December 31, 2025, 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, additional secured debt, if we elect to access the debt capital markets.

On February 6, 2025, we issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 at par.

The net proceeds will be used for general corporate purposes, including the repayment of borrowings under our ABL Facility.

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, additional secured notes if we elect to access the debt capital markets.

We currently have approximately $3.2 billion of secured note capacity.

However, our ability to issue additional notes could be limited by market conditions.

We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise.

We intend from time to time to seek to redeem or repurchase our outstanding senior notes with cash on hand, borrowings from existing credit sources or new debt or equity financings and/or exchanges for debt or equity securities, in open market purchases, privately negotiated transactions or otherwise.

Such redemptions or repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material.

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES and NOTE 21 - SUBSEQUENT EVENTS for further information on our ABL Facility and debt.

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our ABL Facility and debt.

MATERIAL CASH REQUIREMENTS

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CAPITAL EXPENDITURES

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $700 million, which primarily consists of sustaining capital spend of approximately $600 million, including Stelco, as well as initial spend on our capital projects at Middletown Works, Butler Works and Weirton.

Each of these three capital projects are expected to be value-adding growth projects that have governmental support.

We have principal long-term debt of $7.1 billion with maturities starting in 2027.

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our long-term debt and interest.

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $700 million, which primarily consists of sustaining capital spend.

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As of December 31, 2025, our Long-term debt was $7.3 billion, with our ABL Facility maturing in 2028 and senior notes maturities starting in 2029.

Refer to NOTE 8 - DEBT AND CREDIT FACILITIES for further information on our long-term debt and interest expense.

LEASE OBLIGATIONS

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Refer to NOTE 13 - ASSET RETIREMENT AND ENVIRONMENTAL OBLIGATIONS for further information on our environmental and asset retirement obligations.

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SHARE REPURCHASE PROGRAM

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These arrangements include unconditional purchase obligations, surety bonds and letters of credit.

Our unconditional purchase obligations include minimum "take or pay" commitments, such as minimum electric power demand charges, minimum coal, diesel and natural gas purchase commitments, minimum railroad transportation commitments and minimum port facility usage commitments.

Our unconditional purchase obligations include minimum "take or pay" commitments, such as minimum electric power demand charges, minimum coal, coke, diesel, industrial gas and natural gas purchase commitments, minimum railroad transportation commitments and minimum port facility usage commitments.

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

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Refer to NOTE 20 - COMMITMENTS AND CONTINGENCIES for further information on our unconditional purchase obligations, surety bonds and surety-backed letters of credit.

NON-GAAP FINANCIAL MEASURES

The following provides a description and reconciliation of each of our non-GAAP financial measures to its most directly comparable respective GAAP measure.

The presentation of these measures is not intended to be considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with GAAP.

The presentation of these measures may be different from non-GAAP financial measures used by other companies.

NON-GAAP FINANCIAL MEASURE

The following provides a description and reconciliation of our non-GAAP financial measure to its most directly comparable GAAP measure.

The presentation of this measure is not intended to be considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with GAAP.

The presentation of this measure may be different from non-GAAP financial measures used by other companies.

ADJUSTED EBITDA

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$ 76 $ 76 $ 83

Weirton indefinite idle (217) — —

Arbitration decision (71) — —

Acquisition-related costs (44) (12) (1)

Idled facilities charges (239) (217) —

Changes in fair value of derivatives, net (45) (41) —

Currency exchange 37 (20) —

Severance (25) (16) (11)

Loss on extinguishment of debt (10) (27) —

Amortization of inventory step-up (26) — —

Loss on currency exchange (20) — —

Gain on sale of business 9 — 28

Loss on disposal of assets

(7) (16) (15)

Amortization of inventory step-up

Acquisition-related costs (1) (44) (12)

Goodwill impairment

Arbitration decision — (71) —

Other, net (18) — 1

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Total Adjusted EBITDA $ 37 $ 773

FREE CASH FLOW

Free cash flow is a non-GAAP measure defined as operating cash flow less purchase of property, plant and equipment.

Management believes it is an important measure to assess the cash generation available to service debt, strategic initiatives or other financing activities.

The following table provides a reconciliation of our Net cash provided by operating activities to free cash flow:

Year Ended December 31,

(In millions) 2024 2023

Net cash provided by operating activities $ 105 $ 2,267

Purchase of property, plant and equipment (695) (646)

Free cash flow $ (590) $ 1,621

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INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES

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Information for the non-Guarantor subsidiaries was excluded from the combined summarized financial information of the obligated group.

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Each Guarantor subsidiary is consolidated by Cleveland-Cliffs Inc.

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Non-current liabilities (8,884)

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

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Net loss attributable to Cliffs shareholders (1,063)

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As of December 31, 2025, the obligated group had the following balances with non-Guarantor subsidiaries and other related parties:

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PRICING RISKS

In the ordinary course of business, we are exposed to market risk and price fluctuations related to the sale of our products, which are impacted primarily by market prices for HRC and other related spot pricing indices, and the purchase of energy and raw materials used in our operations, which are impacted by market prices for natural gas, electricity, ferrous and stainless steel scrap, metallurgical coal, coke, zinc, chrome, nickel and other alloys.

Our strategy to address market risk has generally been to obtain competitive prices for our products and services and allow operating results to reflect market price movements dictated by supply and demand;

however, we make forward physical purchases and enter into hedge contracts to manage exposure to price risk related to the purchases of certain raw materials and energy used in the production process.

Our financial results can vary for our operations as a result of fluctuations in market prices.

We attempt to mitigate these risks by aligning fixed and variable components in our customer pricing contracts, supplier purchasing agreements and derivative instruments.

In the ordinary course of business, we are exposed to price fluctuations in both the production and sale of our products.

Price fluctuations related to the production of our products are impacted by market prices for natural gas, electricity, ferrous and stainless steel scrap, metallurgical coal, coke, zinc, chrome, nickel and other alloys.

Price fluctuations related to the sale of our products are primarily impacted by market prices for HRC and other related spot indices.

Our financial results can vary for our operations as a result of these fluctuations.

Our strategy to address the risk of changes in the prices of both energy and raw materials that are purchased and utilized in our operations includes improving efficiency in energy usage, identifying alternative providers, utilizing the lowest cost alternative fuels and making forward physical purchases.

Some customer contracts have fixed pricing terms, which increase our exposure to fluctuations in raw material and energy costs.

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There is a risk, however, that the variable-price mechanisms in the sales contracts may not necessarily change in tandem with the variable-price mechanisms in our purchase agreements, negatively affecting our results of operations and cash flows.

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Our strategy to address volatile natural gas rates and electricity rates includes improving efficiency in energy usage, identifying alternative providers and utilizing the lowest cost alternative fuels.

If we are unable to align fixed and variable components between customer contracts and supplier purchase agreements, we routinely evaluate the use of derivative instruments to hedge market risk.

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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.

Our strategy to address price fluctuations related to the selling price of our products has generally been to obtain competitive prices for our products and allow operating results to reflect market price movements dictated by supply and demand;

however, from time to time, we also utilize sales swaps to manage our exposure to HRC price fluctuations in the average selling price of our products.

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The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of December 31, 2025, due to a 10% and 25% change in the market price of each of the indicated commodities:

(In millions)

Commodity Derivative 10% Change 25% Change

Contract Type 10% Change 25% Change

Natural gas $ 52 $ 129

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Any resulting changes in fair value would be recorded as adjustments to AOCI, net of income taxes, or recognized in net earnings, as appropriate.

These hypothetical losses would be partially offset by the benefit of lower prices paid for the related commodities.

These hypothetical losses would be partially offset by the benefit of lower prices paid for the related commodities or the benefit of higher selling prices related to the HRC price, respectively.

VALUATION OF GOODWILL AND OTHER LONG-LIVED ASSETS

We assign goodwill arising from acquired companies to the reporting units that are expected to benefit from the synergies of the acquisition.

Goodwill is tested on a qualitative or quantitative basis for impairment at the reporting unit level on an annual basis (October 1) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Goodwill is tested on a qualitative or quantitative basis for impairment at the reporting unit level on an annual basis (October 1) and between annual tests if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

We have an unconditional option to bypass the qualitative test for any reporting unit in any period and proceed directly to performing the quantitative test.

Should our qualitative test indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative test to determine the amount of impairment, if any, to the carrying value of the reporting unit and its associated goodwill.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and if a quantitative assessment is deemed necessary in determination of the fair value of each reporting unit.

Triggering events could include a significant and sustained change in the business climate, including, among other factors, declines in historical or projected revenue, operating income, Adjusted EBITDA or cash flows, and declines in the stock price or market capitalization, considered both in absolute terms and relative to peers, legal factors, competition, or sale or disposition of a significant portion of a reporting unit.

Automotive production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit, spending and preferences, and supply chain disruptions.

Additionally, to the extent that commodity prices, including the HRC price, coated and other specialty steel prices, international steel prices and scrap metal prices, significantly decline for an extended period, we may have to further revise our operating plans.

As a result, testing for potential impairment on our goodwill may be adversely affected by uncertain market conditions for the global steel industry, as well as changes in interest rates, inflation, commodity prices and general economic conditions.

Changes in general economic and/or industry specific conditions, such as the impacts of significant recent shifts in trade policies, including the imposition of tariffs, retaliatory tariff measures and subsequent modifications or suspensions thereof, and market reactions to such policies and resulting trade disputes, could further impact our impairment assessments.

We do not believe the current challenging macroeconomic and industry conditions, or volatility in our market capitalization, have significantly changed our assessment of the fair value of our reporting units.

Application of a goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit, if a quantitative assessment is deemed necessary.

The fair value of each reporting unit is estimated using the guideline public company method, the discounted cash flow methodology, or a combination of both, which considers forecasted cash flows discounted at an estimated weighted average cost of capital.

Assessing the recoverability of our goodwill requires significant assumptions regarding discount rates, market multiples, the estimated future cash flows and other factors to determine the fair value of a reporting unit, including, among other things, estimates related to forecasts of future revenues, Adjusted EBITDA, capital expenditures and working capital requirements, which are based upon our long-range plan estimates.

The assumptions used to calculate the fair value of a reporting unit may change from year to year based on operating results, market conditions and other factors.

The assumptions used to calculate the fair value of a reporting unit may change based on operating results, market conditions and other factors.

Changes in these assumptions could materially affect the determination of fair value for each reporting unit.

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

During the year ended December 31, 2024, we concluded there were no triggering events resulting in the need for an asset impairment assessment except for the announcement of the indefinite idle of our Weirton tinplate production plant, which resulted in a $79 million asset impairment charge.

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During the year ended December 31, 2025, we concluded there were no triggering events resulting in the need for an asset impairment assessment except for the announcement of the indefinite idle of our Steelton rail production plant, which resulted in a $39 million asset impairment charge.

FOREIGN CURRENCY EXCHANGE 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 December 31, 2024, we had $1.6 billion outstanding borrowings under our ABL Facility.

As of December 31, 2025, we had $452 million outstanding borrowings 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.

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Refer to "–Market Risks" above for additional information.

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IRON ORE MINERAL RESERVES

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We perform an in-depth evaluation of our mineral reserve estimates by mine on a periodic basis, in addition to routine annual assessments.

The determination of mineral reserves requires us and third-party QPs to make

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significant estimates and assumptions related to key inputs, including, but not limited to, (1) the determination of the size and scope of the iron ore body through technical modeling, (2) the estimates of future iron ore prices, production costs and capital expenditures, and (3) management’s mine plan for the proven and probable mineral reserves.

The determination of mineral reserves requires us and third-party QPs to make significant estimates and assumptions related to key inputs, including, but not limited to, (1) the determination of the size and scope of the iron ore body through technical modeling, (2) the estimates of future iron ore prices, production costs and capital expenditures, and (3) management’s mine plan for the proven and probable mineral reserves.

The significant estimates and assumptions could be affected by future industry conditions, geological conditions and ongoing mine planning.

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These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.

At December 31, 2024 and 2023, we had a valuation allowance of $388 million and $396 million, respectively, against our deferred tax assets.

At December 31, 2024 and 2023, the valuation allowance on our U.S.

deferred tax assets was $39 million and $40 million, respectively, and the valuation allowance on our foreign deferred tax assets was $349 million and $356 million, respectively.

During 2023, we recorded a $14 million valuation allowance against a portion of our Canadian deferred tax assets due to losses in recent years.

We intend to maintain a valuation allowance against these deferred tax assets, unless and until sufficient positive evidence exists to support the realization of such assets.

Our losses in Luxembourg in recent periods represent sufficient negative

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evidence to require a full valuation allowance against the deferred tax assets in that jurisdiction.

We intend to maintain a valuation allowance against the deferred tax assets related to these operating losses, unless and until sufficient positive evidence exists to support the realization of such assets.

As of December 31, 2025 and 2024, we had a valuation allowance of $394 million and $388 million, respectively, against our deferred tax assets.

As of December 31, 2025 and 2024, the valuation allowance on our U.S.

deferred tax assets was $47 million and $39 million, respectively, and the valuation allowance on our foreign deferred tax assets was $347 million and $349 million, respectively.

Our losses in Luxembourg and certain Canadian entities in recent periods represent sufficient negative evidence to require a full valuation allowance against the deferred tax assets in those jurisdictions.

We intend to maintain a valuation allowance against the deferred tax assets related to the operating losses in these jurisdictions, unless and until sufficient positive evidence exists to support the realization of such assets.

Changes in tax laws and rates also could affect recorded deferred tax assets and liabilities in the future.

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Although our actual returns will likely differ from our estimate on any given year, the returns over the long term are expected to match our assumptions.

In 2025, our weighted average expected return on assets for pension plans will remain at 7.85% while OPEB plans will decrease from 5.95% to 5.89%.

In 2026, our weighted average expected return on assets for pension and OPEB plans will remain at 7.85% and 5.89%, respectively.

Cumulative actuarial gains and losses will be amortized to expense using the corridor method, where gains and losses are recognized if they exceed 10% of the greater of the fair value of plan assets or the plans' benefit obligations.

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Refer to NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

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FORWARD-LOOKING STATEMENTS

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• continued volatility of steel, scrap metal and iron ore market prices, which directly and indirectly impact the prices of the products that we sell to our customers;

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• uncertainties associated with the highly competitive and cyclical steel industry and our reliance on the demand for steel from the automotive industry;

• potential weaknesses and uncertainties in global economic conditions, excess global steelmaking capacity and production, prevalence of steel imports, reduced market demand and oversupply of iron ore;

• potential weaknesses and uncertainties in global economic conditions, excess global steelmaking capacity and production, prevalence of steel imports and reduced market demand;

• severe financial hardship, bankruptcy, temporary or permanent shutdowns or operational challenges of one or more of our major customers, key suppliers or contractors, which, among other adverse effects, could disrupt our operations or lead to reduced demand for our products, increased difficulty collecting receivables, and customers and/or suppliers asserting force majeure or other reasons for not performing their contractual obligations to us;

• risks related to U.S.

government actions and other countries' reactions with respect to Section 232, the USMCA and/or other trade agreements, tariffs, treaties or policies, as well as the uncertainty of obtaining and maintaining effective antidumping and countervailing duty orders to counteract the harmful effects of unfairly traded imports;

• impacts of existing and increasing governmental regulation, including actual and potential environmental regulations relating to climate change and carbon emissions, and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorizations of, or from, any governmental or regulatory authority and costs related to implementing improvements to ensure compliance with regulatory changes, including potential financial assurance requirements, and reclamation and remediation obligations;

and Canadian government actions and other countries' reactions with respect to Section 232, the USMCA and/or other trade agreements, tariffs, treaties or policies, as well as the uncertainty of obtaining and maintaining effective antidumping and countervailing duty orders to counteract the harmful effects of unfairly traded imports;

• impacts of extensive governmental regulation, including actual and potential environmental regulations relating to climate change and carbon emissions, and related costs and liabilities, including failure to receive or maintain required operating and environmental permits, approvals, modifications or other authorizations of, or from, any governmental or regulatory authority and costs related to implementing improvements to ensure compliance with regulatory changes, including potential financial assurance requirements, and reclamation and remediation obligations;

• potential impacts to the environment or exposure to hazardous substances resulting from our operations;

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• adverse changes in credit ratings, interest rates, foreign currency rates and tax laws;

• risks and uncertainties related to our ability to realize the anticipated synergies or other expected benefits of any acquisitions, including the Stelco Acquisition, any potential transaction arising out of our Memorandum of Understanding with POSCO and completing any proposed asset divestiture transactions;

• challenges to successfully implementing our business strategy to achieve operating results in line with our guidance;

• the outcome of, and costs incurred in connection with, lawsuits, claims, arbitrations or governmental proceedings relating to commercial and business disputes, antitrust claims, environmental matters, government investigations, occupational or personal injury claims, property-related matters, labor and employment matters, or suits involving legacy operations and other matters;

• supply chain disruptions or changes in the cost, quality or availability of energy sources, including electricity, natural gas and diesel fuel, critical raw materials and supplies, including iron ore, industrial gases, graphite electrodes, scrap metal, chrome, zinc, other alloys, coke and metallurgical coal, and critical manufacturing equipment and spare parts;

• problems or disruptions associated with transporting products to our customers, moving manufacturing inputs or products internally among our facilities, or suppliers transporting raw materials to us;

• the risk that the cost or time to implement a strategic or sustaining capital project may prove to be greater than originally anticipated;

• our ability to consummate any public or private acquisition transactions and to realize any or all of the anticipated benefits or estimated future synergies, as well as to successfully integrate any acquired businesses into our existing businesses;

• the outcome of, and costs incurred in connection with, lawsuits, claims, arbitrations or governmental proceedings relating to commercial and business disputes, antitrust claims, environmental matters, government investigations, occupational or personal injury claims, property-related matters, labor and employment matters, mineral royalty disputes, or suits involving legacy operations and other matters;

• supply chain disruptions or changes in the cost, quality or availability of energy sources, including electricity, natural gas and diesel fuel, water, critical raw materials and supplies, including iron ore, industrial gases, graphite electrodes, scrap metal, chrome, zinc, other alloys, coke and metallurgical coal, and critical manufacturing equipment and spare parts;

• our ability to implement strategic or sustaining capital projects on time and on budget;

• uncertainties associated with natural or human-caused disasters, adverse weather conditions, unanticipated geological conditions, critical equipment failures, infectious disease outbreaks, tailings dam failures and other unexpected events;

• cybersecurity incidents relating to, disruptions in, or failures of, information technology systems that are managed by us or third parties that host or have access to our data or systems, including the loss, theft or corruption of our or third parties' sensitive or essential business or personal information and the inability to access or control systems;

• liabilities and costs arising in connection with any business decisions to temporarily or indefinitely idle or permanently close an operating facility or mine, which could adversely impact the carrying value of associated assets and give rise to impairment charges or closure and reclamation obligations, as well as uncertainties associated with restarting any previously idled operating facility or mine;

• our ability to realize the anticipated synergies or other expected benefits of the Stelco Acquisition, as well as the impact of additional liabilities and obligations incurred in connection with the Stelco Acquisition;

• cybersecurity incidents relating to, disruptions in, or failures of, IT systems that are managed by us or third parties that host or have access to our data or systems, including the loss, theft or corruption of our or third parties' sensitive or essential business or personal information and the inability to access or control systems, as well as emerging risks related to the adoption and regulation of AI;

• liabilities and costs arising in connection with business decisions to temporarily or indefinitely idle or permanently close an operating facility or mine, which could adversely impact the carrying value of associated assets and give rise to

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impairment charges or closure and reclamation obligations, as well as uncertainties associated with resuming production at any previously idled operating facility or mine;

• our level of self-insurance and our ability to obtain sufficient third-party insurance to adequately cover potential adverse events and business risks;

• uncertainties associated with our ability to meet customers’ and suppliers’ decarbonization goals and reduce our GHG emissions in alignment with our own announced targets;

• uncertainties associated with our ability to meet customers’ and suppliers’ decarbonization goals and reduce our emissions in alignment with our own announced targets;

• challenges to maintaining our social license to operate with our stakeholders, including the impacts of our operations on local communities, reputational impacts of operating in a carbon-intensive industry that produces GHG emissions, and our ability to foster a consistent operational and safety track record;

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• our actual economic mineral reserves or reductions in current mineral reserve estimates, and any title defect or loss of any lease, license, option, easement or other possessory interest for any mining property;

• our ability to maintain satisfactory labor relations with unions and employees;

• unanticipated or higher costs associated with pension and OPEB obligations resulting from changes in the value of plan assets or contribution increases required for unfunded obligations;

• our ability to complete technical and economic studies to determine the potential for economic extraction of rare earth minerals at our mining properties, and the risk that rare-earth extraction at our properties may not be economically viable;

• our ability to maintain satisfactory labor relations with unions and our employees;

• unanticipated or higher costs associated with pension and OPEB obligations resulting from changes in the value of plan assets or contribution increases required for unfunded obligations, including for multiemployer plan withdrawal liability;

• uncertain availability or cost of skilled workers to fill critical operational positions and potential labor shortages caused by experienced employee attrition or otherwise, as well as our ability to attract, hire, develop and retain key personnel;

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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-K

Item 7. Management’s Discussion and Analysis