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Item 2. Management’s Discussion and Analysis

2026-04-21 compared with 2025-10-22 · 217 added, 256 removed, 309 unchanged (60% of the section changed)

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Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and other factors that may affect our future results.

We believe it is important to read our Management's Discussion and Analysis of Financial Condition and Results of Operations in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, as well as other publicly available information.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes that appear in Part 1 — Item 1 - Financial Statements and Supplementary Data of this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025, as well as other publicly available information.

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.

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Headquartered in Cleveland, Ohio, we employ approximately 25,000 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 nine months ended September 30, 2025 and 2024 (in millions, except for diluted EPS):

Total Revenue Net Income (loss) Adjusted EBITDA Diluted EPS

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

ECONOMIC OVERVIEW

STEEL MARKET OVERVIEW

We continued to navigate volatile but improving market conditions throughout the third quarter of 2025.

Steel market conditions in the third quarter of 2025 benefited from higher than historical HRC pricing and lower import levels, but demand remained impacted by inconsistent buying behavior from weaker non-automotive demand.

The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $843 per net ton during the third quarter of 2025, 24% higher than the third quarter of 2024.

Finished steel import levels continued to decline in the third quarter of 2025 after being elevated in early 2025 in anticipation of the recently implemented steel tariffs, which helped support domestic steel pricing.

Looking forward, we expect domestic steel demand to grow, as recently implemented steel and automotive tariffs support demand for domestically produced steel, other end-user demand improves, interest rates continue to decline, 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.

Steel market conditions improved throughout the first quarter of 2026 driven by higher than historical HRC pricing, continued subdued import levels, extending lead times and increasing but still subdued demand.

The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $980 per net ton during the first quarter of 2026, representing a 24% increase compared to the first quarter of 2025.

Finished steel import levels remained significantly below historical levels during the first quarter of 2026, which helped support domestic steel pricing.

Looking forward, we expect domestic steel demand to grow, as implemented tariffs support demand for domestically produced steel, steel imports remain unattractive, and other end-user demand continues to improve.

Additionally, the war with Iran, along with other global tensions, has led to rising global steel costs and increased freight rates, making imports less attractive and supporting higher domestic steel demand and HRC pricing.

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

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

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

The American steel industry has long faced significant challenges resulting from global overcapacity and overproduction of steel, as well as other unfair trade practices.

The overproduction by certain countries has led to 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 regulations.

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

We believe that the steel tariffs recently implemented by President Trump are critical to 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 the recently implemented tariffs, not only for steel but also for the automotive industry.

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

During 2025, President Trump signed a Presidential proclamation to implement 50% tariffs on steel imports originating from all major steel producing countries.

In early April 2026, President Trump issued a proclamation adjusting the Section 232 tariffs on steel and steel derivative products.

The proclamation maintained 50% tariff coverage on steel products and expanded the 50% tariff rate coverage to the full value of articles of iron and steel, including pipe and tube products.

This proclamation also added new steel derivative products, including certain types of transformers, while simplifying the steel derivative product tariff regime.

The strong commitment of President Trump's Administration to the resilience of the Section 232 national security tariffs should help the competitive landscape by reducing the prevalence of dumped steel in the U.S.

market, ultimately leading to increased domestic demand.

As a leading American steel producer, we expect to benefit for years to come from President Trump's pro-manufacturing and America-first agenda, along with the implemented Section 232 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

This has weakened our results for our Canadian operations.

We believe it is crucial for Canada to put 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.

As a consequence of weak automotive production, we made the decision to idle our blast furnace, BOF steel shop, and continuous casting facilities at our Dearborn Works facility.

We also made the decision to permanently close Steelton, Conshohocken and Riverdale due to financial underperformance at these operations.

Additionally, we made the decision to idle the Minorca mine and partially idle the Hibbing Taconite mine in order to consume excess pellet inventory produced in 2024.

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

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 improved margins throughout 2026.

During the first quarter of 2026, the Canadian steel industry experienced lower than historical import levels, indicating an improving Canadian steel market.

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.

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.

North American light vehicle production in the third quarter of 2025 was approximately 3.9 million units, up from approximately 3.8 million units in the third quarter of 2024.

During the third quarter of 2025, light vehicle sales in the U.S.

saw an average seasonally adjusted annualized rate of 16.3 million units sold, representing a 5% increase compared to the third quarter of 2024.

The seasonally adjusted annualized rate has averaged 16.3 million units sold during the first nine months of 2025, 5% higher compared to the same period of 2024, indicating healthy consumer demand.

Additionally, 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.

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

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.

North American light vehicle production in the first quarter of 2026 was approximately 3.7 million units, down from approximately 3.8 million units in the first quarter of 2025.

During the first quarter of 2026, light vehicle sales in the U.S.

saw an average seasonally adjusted annualized rate of 15.7 million units sold, representing a 5% decrease compared to the first quarter of 2025.

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.

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.

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

The current war between the United States and Iran, along with other global tensions, could result in certain implications to the domestic and global steel industry.

In the U.S., the steel industry could see increased costs from elevated freight rates, electricity, gas, and other utilities.

However, rising global steel costs, along with elevated freight rates, are expected to make imported steel in the U.S.

less attractive.

Additionally, certain foreign aluminum and steel facilities have experienced disruptions in production as a result of the war with Iran, which could impact the global supply of aluminum and steel.

is heavily reliant on imported aluminum, a negative impact to the global aluminum supply chain, along with higher aluminum costs, could result in customers pursuing steel as an alternative material.

We expect rising domestic steel demand, along with lower imports, to support higher steel prices, which should mitigate any inflationary costs we experience as a result of the war with Iran.

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 $461 per long ton during the third quarter of 2025, representing a 13% increase compared to the third quarter of 2024.

We expect the supply of busheling scrap to further tighten due to decreasing prime scrap generation from original equipment manufacturers as they improve their production efficiency, the growth of EAF capacity in the U.S., potential for higher prices as a result of tariffs, and a push for expanded scrap use globally.

The busheling price averaged $434 per long ton during the first quarter of 2026.

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, supply chain disruptions from global tensions, and a push for expanded scrap use globally.

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.

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.

We have made significant progress in our cost-cutting efforts and have continuously reduced our year-over-year cost per ton since 2023.

We have been able to capture cost reductions as a result of optimizing our integrated footprint, reducing overhead and fixed costs, improving efficiencies, working through higher cost inventory, and benefiting from lower coal and alloy costs, which has helped mitigate any inflationary cost increases we have experienced.

Our steel unit costs in the first quarter of 2026 were impacted by elevated utility costs, primarily driven by a temporary spike in natural gas prices due to extreme weather conditions.

COMPETITIVE STRENGTHS

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This positioning gives us more predictable costs throughout our supply chain and more control over both our manufacturing inputs and our end-product destination.

One of our most critical strengths that differentiates us from others in our industry is a unique and powerful partnership with our unionized workforce, particularly the USW.

With over 20,000 employees subject to collective bargaining agreements, our strong and productive labor relationships are key to our long-term success and allow us to work together in achieving our goals.

A clear example of the strength of our relationship is how we partner together to fight against dumped and illegally subsidized imported steel products.

Our deep alignment with our represented employees is also recognized by our political leaders, who often publicly support us as a significant employer of a unionized workforce with a track record of working to maintain and increase middle class jobs.

Our primary competitive strength lies within our automotive steel business.

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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 be healthier in the coming years as a result of government support for domestically produced vehicles, low unemployment rate, declining interest rates and the replacement of older vehicles.

Demand for our automotive-grade steel is expected to be healthier in the coming years as a result of government support for domestically produced vehicles, the further shift away from other metals such as aluminum, low unemployment rate, and the replacement of older vehicles.

As an established and reliable supplier of domestically produced automotive-grade steel, we expect customers to continue to look to us to serve increased demand in the coming years.

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The quality of our assets gives us a unique advantage in product offerings and operational efficiencies.

After elevated spend in 2022 to perform overdue maintenance work at the facilities acquired as part of our 2020 acquisitions, we resumed normalized levels of maintenance capital and operating expenses in 2023, which continued throughout 2024 and into 2025.

The necessary resources that we have invested in our footprint are expected to keep our assets at an automotive-grade level of quality and reliability for years to come.

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Our fixed price contracts mitigate pricing volatility through the cycle.

Approximately 30-35% of our volumes are sold under these contracts.

Approximately 40-45% of our flat-rolled steel shipments are sold under fixed price contracts.

Our ability to source our primary feedstock domestically, and primarily internally, is a competitive strength.

This model reduces our exposure to volatile pricing and unreliable global sourcing.

The ongoing conflict between Russia and Ukraine and the Trump administration's focus on U.S.

manufactured products have displayed the importance of our North American-centric footprint, as our competitors primarily operating EAF facilities rely on imported pig iron to produce flat-rolled steel, the supply of which is expected to be disrupted.

Additionally, the outcome of ongoing trade discussions could result in additional tariffs on other raw materials that could further elevate the cost structure for our competitors who import raw materials.

The war with Iran, the ongoing conflict between Russia and Ukraine, other global tensions, and the Trump administration's focus on U.S.

manufacturing underscore the importance of our North American-centric footprint, as our competitors primarily operating EAF facilities rely on imported pig iron and prime scrap to produce flat-rolled steel, the supply of which, from time to time, has been disrupted.

The best example is our legacy business of producing iron ore pellets.

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We believe we offer the most comprehensive flat-rolled steel product selection in the industry, along with several complementary products and services.

A sampling of our offering includes advanced high-strength steel, hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, HRC, cold-rolled coil, plate, GOES, NOES, stainless steels, tool and die, stamped components, slab and cast ingot.

components and slabs.

Across the quality spectrum and the supply chain, our customers can frequently find the solutions they need from our product selection.

We are a leading producer of electrical steels referred to as GOES and NOES in the U.S., which we believe will be critical for the modernization of the electrical grid and the infrastructure needed to allow for increased electric vehicle adoption, both of which require electrical steels.

We are a leading producer of electrical steels in the U.S., which we believe will be critical for the modernization of the electrical grid.

Distribution transformers are critical to the maintenance and expansion of America’s electric grid.

Transformers are in short supply, and that shortage stifles economic growth across the country.

The shortage will continue to be exacerbated by the widespread adoption of Artificial Intelligence in virtually all sectors of the economy, which will exponentially increase the consumption of electricity in the U.S.

The shortage will continue to be exacerbated by the anticipated widespread adoption of AI in virtually all sectors of the economy, which will exponentially increase the consumption of electricity in the U.S.

and worldwide.

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With increasing tightness in the scrap and metallics markets combined with our own internal needs, we expect our Toledo direct reduction plant to continue to support our operational efficiency going forward.

The unique value of our HBI facility is even more evident as recent trade discussions could result in tariffs on pig iron or other imported raw materials for competitors who rely on international suppliers.

One of our most critical strengths that differentiates us from others in our industry is a unique and powerful partnership with our unionized workforce, particularly the USW.

With over 18,000 employees subject to collective bargaining agreements, our strong and productive labor relationships are key to our long-term success and allow us to work together in achieving our goals.

A clear example of the strength of our relationship is how we partner together to fight against dumped and illegally subsidized imported steel products.

MAXIMIZE OUR COMMERCIAL STRENGTHS

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In addition, our state-of-the-art Research and Innovation Center in Middletown, Ohio gives us the ability to collaborate with our customers and create new products and develop new and efficient steel manufacturing processes.

Our five-year contract to supply semi-finished steel slabs that was initiated in connection with the closing of the acquisition of ArcelorMittal USA concludes in December 2025.

This contract has historically represented approximately 10 percent of our sales volume and has recently become unprofitable as a result of current market conditions.

The conclusion of this contract provides a significant opportunity to shift sales and product mix to higher margin business and improve efficiency within our operations.

SUPPORT DOMESTICALLY PRODUCED AUTOMOTIVE SALES

On March 7, 2025, we announced a "Buy American" incentive program for all of our employees in an effort to support President Trump's long-term vision of bringing manufacturing back to the U.S.

Under this program, any Cliffs employee who purchases or leases a new American-built vehicle in 2025 with substantial Cliffs steel content will receive a $1,000 cash bonus in connection with the purchase or lease.

As the domestic automotive market has long been undermined by excessive imports, we are proud to play a role in encouraging the purchase of domestically produced vehicles.

Since the program's inception, feedback has been extremely positive, and employees have been very enthusiastic about the opportunity to support the sale of domestically produced vehicles.

We continue to work with our automotive partners to ensure the availability of domestically produced, automotive-grade steel.

With the recently announced automotive tariffs, we expect to see an increase in demand for domestically produced vehicles, which

should result in an increase in production of vehicles in the U.S.

As a leading supplier of automotive-grade steel, we expect to benefit from increased production of vehicles in the U.S.

over the coming years.

A prime example of our ability to help our customers through research and development occurred during the fourth quarter of 2025 when we successfully completed a production trial in collaboration with a major automotive customer, where our steel was stamped into exposed parts with no defects using the customer's existing aluminum-forming equipment.

After the successful production trial, we moved to routine production and delivery of regular orders to the customer.

Our five-year contract to supply semi-finished steel slabs that was initiated in connection with the closing of the acquisition of ArcelorMittal USA concluded in December 2025, with final shipments occurring during the first quarter of 2026 as we worked through remaining inventory.

This contract historically represented approximately 10 percent of our sales volume and was unprofitable in 2025 due to unfavorable market conditions.

Upon conclusion of this contract, we started to shift sales and product mix to higher margin business, which ultimately improves efficiency as we increase steel throughput within our operations.

UTILIZE ARTIFICIAL INTELLIGENCE TO IMPROVE OPERATIONAL EFFICIENCY

We recently partnered with a prominent enterprise software company that offers platforms for integrating, managing, and securing organizational data in order to improve real-time operational decisions through the use of AI.

As a leading steel producer, it is crucial for us to modernize our operational systems and continuously improve our efficiency across our footprint.

Utilizing cutting edge platforms and AI capabilities, we expect to improve real-time visibility into production and material flows and inventory levels, enable faster identification of bottlenecks, and assist with production planning to improve coordination across our facilities.

By leveraging AI directly in our operations, we expect to reduce costs, improve yields and strengthen our operational efficiency across our steelmaking operations.

OPTIMIZE OUR FULLY-INTEGRATED STEELMAKING FOOTPRINT

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The combination of our ferrous raw materials, including iron ore, scrap and HBI, allows us to do so relative to peers who must rely on more unpredictable and unreliable raw material sourcing strategies.

We have ample access to scrap, along with internally sourced iron ore pellets and HBI.

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.

During 2025, we made the decision to fully or partially idle, or permanently close, six of our operations.

We made the decision to idle our blast furnace, BOF steel shop, and continuous casting facilities at our Dearborn Works facility.

We also made the decision to permanently close Steelton, Conshohocken and Riverdale due to underperformance at these operations.

Additionally, we made the decision to idle the Minorca mine and partially idle the Hibbing Taconite mine in order to consume excess pellet inventory produced in 2024.

Our recent changes allow us to streamline our operations and enhance efficiency, with minimal impact to our flat-rolled steel output.

CAPTURE SYNERGIES FROM RECENT ACQUISITIONS

On November 1, 2024, we completed the Stelco Acquisition.

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

The Stelco Acquisition expands our existing presence in Canada and diversifies our customer base in Canada 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 has doubled, giving us further insight into spot market dynamics and diversifying our customer base toward spot customers.

We have demonstrated a consistent track record of exceeding our initial synergy estimates associated with value-enhancing transactions through mergers and acquisitions.

Significant synergy opportunities from the Stelco Acquisition have been identified, including asset and capital expenditure optimization, procurement savings, selling, general and administrative expenses, duplicative public company costs and other opportunities.

With our 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 achieve identified synergies related to the Stelco Acquisition.

We made the decision to idle our blast furnace, BOF steel shop, and continuous casting facilities at our Dearborn facility.

We also made the decision to permanently close our Steelton, Conshohocken and Riverdale facilities due to underperformance at these operations.

Additionally, we made the decision to idle the Minorca mine and partially idle the Hibbing mine.

During the second quarter of 2026, we plan to further optimize our footprint by idling our Gary plate finishing line and idling one of the two plate mills at our Burns Harbor facility.

We have successfully consolidated all production capabilities to one plate mill at Burns Harbor, which we expect will improve

utilization and enhance cost performance without compromising capability or steel output.

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

EXPLORE STRATEGIC OPPORTUNITIES

During the third quarter of 2025, we announced that we engaged J.P.Morgan as our advisor and launched sell-side processes to explore the potential sale of certain non-core operating assets.

During the third quarter of 2025, we signed a Memorandum of Understanding (the "Memorandum of Understanding") with POSCO, Korea's largest steelmaker and the world's third largest steelmaker outside of China, who seeks to leverage our unmatched U.S.

footprint and trade-compliant operations to support and grow its established U.S.

customer base while ensuring that its products meet U.S.

trade and origin requirements.

The Memorandum of Understanding reflects rising interest in Cliffs amid the resurgence of U.S.

manufacturing and should enable smooth onboarding for downstream industrial customers moving production from South Korea to the U.S.

Any partnership we might pursue with POSCO should be strategic and accretive for our shareholders.

UBS is acting as our financial advisor for the potential transaction.

Although we believe a successful transaction would be highly accretive to our shareholders, the strategic partnership contemplated by the Memorandum of Understanding remains subject to negotiation of definitive terms regarding such strategic partnership, together with the execution and closing of definitive agreements between the parties.

As such, there can be no assurances that the parties will enter into such definitive agreements, that the strategic partnership will be implemented in accordance with the terms of the Memorandum of Understanding, or that the strategic partnership will proceed as currently expected or will ultimately be successful.

While we expect to realize certain financial benefits arising out of the proposed partnership under the Memorandum of Understanding, including substantial proceeds that could be used to reduce our outstanding indebtedness, there is risk that the proposed partnership with POSCO does not come to fruition in a timely manner or at all or that any ultimate financial benefits could be less significant than we currently anticipate.

Also, during the third quarter of 2025, we announced that we engaged J.P.Morgan as our advisor and launched sell-side processes to explore the potential sale of certain non-core operating assets.

As an American-based company with desirable assets, we are favorably positioned to potentially benefit from asset sales.

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We expect the net proceeds of any potential transaction would be used to pay down debt.

Also, during the third quarter of 2025, we signed a Memorandum of Understanding (the "Memorandum of Understanding") with a major global steel producer who seeks to leverage our unmatched U.S.

footprint and trade-compliant operations.

The Memorandum of Understanding reflects rising interest in Cliffs amid the resurgence of U.S.

manufacturing and should enable smooth onboarding for downstream industrial customers moving production from the party’s home country to the United States.

The potential transaction with this party is expected to be highly accretive to Cliffs shareholders.

UBS is acting as financial advisor to Cliffs for the potential transaction.

Beyond steelmaking, the renewed importance of rare earths in the United States has driven us to re-focus on this potential opportunity at our upstream mining assets.

Beyond steelmaking, the renewed importance of rare earths in the U.S.

has driven us to re-focus on this potential opportunity at our upstream mining assets.

We have begun to explore rare earths at our ore bodies and tailings basins and have identified two sites with key geological indicators for rare earth extraction potential.

If successful, it would align Cleveland-Cliffs with the broader national strategy for critical material independence.

Before we can determine the economic potential for rare-earth extraction at our properties, we will need to conduct additional technical and economic studies.

There can be no assurance that rare-earth extraction at our properties will be economical.

If successful, it would align us with the broader national strategy for critical material independence.

Before we can determine the economic potential for rare-earth extraction at our properties, we will need to conduct additional technical and economic studies, and there can be no assurance that rare-earth extraction at our properties will be economical.

While we believe concentrations of rare earths exist within our ore bodies and tailings basins, the economic potential of this venture will depend heavily on the United States' investment in refineries, among other factors.

ENHANCE OUR ENVIRONMENTAL SUSTAINABILITY

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We have made significant progress in reducing our emissions on a per ton basis.

Since 2020, we have reduced our average Scope 1 and 2 emissions of integrated mills from 1.82 to 1.58 metric tons of CO 2 e per metric ton of crude steel produced in 2024, which is 27% lower than the global industry average.

MAINTAIN FINANCIAL FLEXIBILITY

Since 2020, we have reduced our average Scope 1 and 2 emissions of integrated mills from 1.82 to 1.64 metric tons of CO 2 e per metric ton of crude steel produced in 2025, which is significantly lower than the global industry average.

IMPROVE FINANCIAL FLEXIBILITY

Given the cyclicality of our business, it is important to us to be in the financial position to easily withstand economic cycles and be opportunistic when attractive strategic opportunities arise.

Since becoming a steel company 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.

Since becoming a steel company 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, and make investments to both improve and grow our business.

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 generate healthy free cash flow in the coming years and intend to utilize it to deleverage our balance sheet.

We also maintain a long maturity runway with our outstanding debt, with our nearest senior notes maturities coming in 2029 (after redeeming in October 2025 all senior notes that had a maturity date in 2027), have healthy liquidity, and have approximately $3.2 billion of secured debt capacity, which supports our flexibility to navigate varied economic environments for extended periods of time.

We also maintain a long maturity runway with our outstanding debt, with our nearest senior note maturities coming in 2029, have healthy liquidity consisting of cash and availability under our ABL Facility of $3.1 billion as of March 31, 2026, and have approximately $3.2 billion of secured note capacity, which supports 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, net of intersegment eliminations, for the three and nine months ended September 30, 2025 and 2024 (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, net of intersegment eliminations, for the three months ended March 31, 2026 and 2025 (dollars in millions, except for average selling price, and shipments in thousands of net tons):

Total Revenue Gross Margin Adjusted EBITDA Steel Shipments (nt)

Q3 2025 Q3 2024 YTD 2025 YTD 2024 Q3 2025 Q3 2024 YTD 2025 YTD 2024 Q3 2025 Q3 2024 YTD 2025 YTD 2024 Q3 2025 Q3 2024 YTD 2025 YTD 2024

2026 2025 2026 2025 2026 2025 2026 2025

STEEL PRODUCT REVENUE:

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Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands of net tons) 2025 2024 % Change 2025 2024 % Change

(In thousands of net tons) 2026 2025 % Change

Steel shipments by product:

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Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2025 2024 % Change 2025 2024 % Change

(In millions) 2026 2025 % Change

Steelmaking revenues by market:

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Total Steelmaking revenues by market $ 4,757 $ 4,467 6 %

Revenues increased by $142 million, or 3%, during the three months ended September 30, 2025, as compared to the prior-year period, primarily due to:

• An increase in revenues related to incremental tons sold attributed to the addition of Stelco (approximately $400 million);

which is partially offset by

• A decrease in revenue driven by inconsistent buying behavior from service centers and other customers resulting in lower tons sold, excluding Stelco (approximately $150 million);

• A decrease in revenue driven by the decision to indefinitely idle the Riverdale and Steelton operations due to financial underperformance at these operations (approximately $150 million).

Revenues decreased by $562 million, or 4%, during the nine months ended September 30, 2025, as compared to the prior-year period, primarily due to:

• A decrease in revenues driven by lower realized revenue rates (approximately $550 million);

• A decrease in revenue driven by inconsistent buying behavior from automotive, service centers and other customers resulting in lower tons sold (approximately $900 million);

• A decrease in revenue driven by the decision to indefinitely idle the Weirton, Riverdale and Steelton operations due to financial underperformance at these operations (approximately $250 million);

Revenues increased by $290 million, or 6%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

The increase was primarily driven by higher steel pricing, favorable sales mix, and improved non-steel product revenue, partially offset by lower steel product shipment volumes:

• Higher steel pricing:

Steel product revenue increased by approximately $230 million due to rising pricing, particularly for hot-rolled steel, which increased our average selling price to $1,048 per net ton of steel;

• Favorable sales mix:

Steel product revenue increased by approximately $50 million from favorable mix as the conclusion of the ArcelorMittal USA slab contract enabled a shift toward higher margin hot-rolled steel sales, primarily within the distributors and converters market;

• Improved other Steelmaking revenue:

Non-steel product revenue increased by approximately $40 million, primarily driven by higher revenue in the scrap business;

which was partially offset by

• An increase in revenues related to incremental tons sold related to the addition of Stelco (approximately $1.2 billion).

Gross margin increased by $60 million during the three months ended September 30, 2025, as compared to the prior-year period, primarily due to:

• Higher steel margins driven by product mix and lower maintenance spend, partially offset by lower realized revenue rates and higher energy costs (approximately $20 million);

• The unfavorable arbitration decision related to iron ore mining royalties that was realized in the third quarter of 2024 (approximately $70 million), which was partially offset by

• An increase in depreciation, depletion, and amortization (approximately $30 million).

Gross margin decreased by $983 million during the nine months ended September 30, 2025, as compared to the prior-year period, primarily due to:

• Lower realized revenue rates (approximately $670 million);

• An increase in depreciation and amortization expense as a result of the indefinite idling of our Conshohocken and Riverdale facilities and acquisition of Stelco (approximately $220 million);

• An increase in idled facilities charges as a result of the operational adjustments related to our Hibbing, Minorca and Dearborn facilities (approximately $60 million).

• Lower steel product shipment volumes:

Steel product revenue decreased by approximately $30 million due to a marginal reduction in overall steel product sales volume.

Gross margin increased by $310 million during the three months ended March 31, 2026, as compared to the prior-year period, primarily due to:

• Higher pricing on hot-rolled steel sales:

Revenue increased by $290 million, primarily driven by an increase in pricing on hot-rolled steel sales, which favorably impacted gross margin for the quarter;

• Lower cost of goods sold:

Cost of goods sold decreased by approximately $20 million, reflecting a net decrease in idle charges incurred as compared to the first quarter of 2025.

This was partially offset by elevated energy costs in the first quarter of 2026 driven by extreme cold weather in the quarter.

ADJUSTED EBITDA

Adjusted EBITDA from our Steelmaking segment for the three months ended September 30, 2025, increased by $20 million, as compared to the three months ended September 30, 2024, primarily due to the increased gross margin from our Steelmaking operations.

Additionally, our Steelmaking Adjusted EBITDA included $123 million and $105 million of Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024, respectively.

Adjusted EBITDA from our Steelmaking segment for the nine months ended September 30, 2025, decreased by $787 million, as compared to the nine months ended September 30, 2024, primarily due to the decreased gross margin from our Steelmaking operations.

Additionally, our Steelmaking Adjusted EBITDA included $378 million and $326 million of Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024, respectively.

Adjusted EBITDA from our Steelmaking segment for the three months ended March 31, 2026, increased by $269 million, as compared to the three months ended March 31, 2025, primarily due to the increased gross margin from our Steelmaking operations.

This gross margin increase included a net decrease in idled facilities charges which is excluded from Adjusted EBITDA.

RESULTS OF OPERATIONS

REVENUES & GROSS MARGIN

During the three and nine months ended September 30, 2025, our consolidated Revenues increased by $165 million and decreased by $563 million, respectively, and our consolidated gross margin increased by $60 million and decreased by $990 million, respectively, as compared to the prior-year periods.

During the three months ended March 31, 2026, our consolidated Revenues increased by $293 million, and our consolidated gross margin increased by $314 million, as compared to the prior-year period.

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

RESTRUCTURING AND OTHER CHARGES AND ASSET IMPAIRMENT

As a result of the announcements to indefinitely idle two of our non-core Steelmaking operations, we recorded both Restructuring and other charges and Asset impairment .

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

In connection with these decisions, we recorded $3 million and $92 million of Restructuring and other charges during the three and nine months ended September 30, 2025, respectively, compared to $2 million and $131 million for the three and nine months ended September 30, 2024, respectively.

Additionally, Asset impairment of $39 million was recorded for the nine months ended September 30, 2025, compared to $79 million for the nine months ended September 30, 2024.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses decreased by $8 million for the three months ended March 31, 2026, as compared to the prior-year period.

The decrease was primarily driven by lower legal fees and employee compensation incurred during the period.

RESTRUCTURING AND OTHER CHARGES

During the three months ended March 31, 2025, we recorded Restructuring and other charges of $3 million related to our indefinitely idled Weirton tinplate production facility.

MISCELLANEOUS - NET

During the three and nine months ended September 30, 2025, Miscellaneous – net remained relatively consistent as compared to the prior-year periods.

Included within Miscellaneous – net for the nine months ended September 30, 2025 is an increase of approximately $40 million of charges related to the idled facilities and severance charges, as compared to the prior-year period.

This was largely offset by a decrease in currency exchange expense and various other items not individually significant.

LOSS ON EXTINGUISHMENT OF DEBT

During the nine months ended September 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, resulting in a $27 million of Loss on extinguishment of debt for the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2025, we did not repurchase any outstanding senior notes.

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

During the three months ended March 31, 2026, Miscellaneous – net decreased by $5 million compared to the prior-year period.

The decrease was primarily driven by the gain on sale of certain non-core assets during the first quarter of 2026 along with various other improvements not individually significant, which was partially offset by unfavorable currency exchange expense related to routine remeasurement of an intercompany note with our Stelco subsidiary.

INTEREST EXPENSE, NET

During the three and nine months ended September 30, 2025, our consolidated Interest expense, net increased by $51 million and $207 million, respectively, as compared to the prior-year periods.

This increase is primarily due to an increase in our outstanding borrowings.

Our effective tax rate is impacted by state and foreign income taxes as well as permanent items, such as depletion.

Our consolidated Interest expense, net increased by $8 million for the three months ended March 31, 2026, as compared to the prior-year period.

This increase was driven by an increase in average interest rates and from higher average borrowings in the period.

NET PERIODIC BENEFIT CREDITS OTHER THAN SERVICE COST COMPONENT

Net periodic benefit credits other than service cost component increased by $7 million for the three months ended March 31, 2026, as compared to the prior-year period.

Refer to NOTE 8 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS for further information.

CHANGES IN FAIR VALUE OF DERIVATIVES, NET

Changes in fair value of derivatives, net was consistent period-over-period consisting entirely of fair value adjustments to the MinnTac option.

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

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

During the three and nine months ended September 30, 2025, our consolidated Income tax benefit increased by $2 million and $275 million, respectively, as compared to the prior-year periods.

This increase is primarily due to an increase in Loss from continuing operations before income taxes and the impact of immaterial discrete items relative to those losses.

During the three months ended March 31, 2026, our consolidated Income tax benefit decreased by $68 million, as compared to the prior-year period.

This decrease is primarily due to a decrease in Loss from continuing operations before income taxes and the impact of immaterial discrete items relative to those losses.

LIQUIDITY, CASH FLOWS AND CAPITAL RESOURCES

Our capital allocation decision-making process is focused on preserving healthy liquidity levels, strengthening our balance sheet, and creating financial flexibility to manage through the cyclical demand for our products and volatility in commodity prices.

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

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.

The following table provides a summary of our cash flow:

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2026 2025

Cash flows provided (used) by:

Cash flows provided by (used in):

Operating activities $ (325) $ (351)

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Net increase (decrease) in cash, cash equivalents and restricted cash $ (11) $ 3

Free cash flow 1

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

OPERATING ACTIVITIES

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2026 2025 Variance

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Total working capital (272) (11) (261)

Net cash provided (used) by operating activities $ (449) $ 577 $ (1,026)

Net cash used by operating activities $ (325) $ (351) $ 26

The variance was primarily driven by:

• A $1.0 billion decrease in net loss after adjustments for non-cash items primarily due to lower gross margins resulting from a decrease in selling prices for our steel products as compared to the prior-year period.

• A $287 million decrease in net loss after adjustments for non-cash items primarily due to higher gross margins resulting from an increase in selling prices for our steel products as compared to the prior-year period.

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

• A $473 million decrease in cash primarily as a result of volatility in average selling price.

Lower average selling prices at the end of 2024, which increased throughout the first three quarters of 2025, led to higher outstanding accounts receivable balances at September 30, 2025.

In contrast, higher average selling prices at the end of 2023, which decreased throughout the first three quarters of 2024, led to lower outstanding accounts receivable balances at September 30, 2024.

Such decrease in cash was partially offset by

• A $209 million increase in cash primarily related to a reduction in raw material inventories, including iron ore pellets and coke, during the first three quarters of 2025;

• A $179 million increase in cash primarily as a result of lower incentive-based compensation paid in the first three quarters of 2025, as compared to the prior-year period.

• A $218 million decrease in cash resulting from a build in Accounts receivable, net, as a result of rising steel prices and the timing of collections increased receivables.

INVESTING ACTIVITIES

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2026 2025 Variance

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Net cash used by investing activities $ (140) $ (145) $ 5

Our cash used for capital expenditures during the nine months ended September 30, 2025 was $69 million less as compared to the prior-year period.

Our cash used for capital expenditures during the three months ended March 31, 2026 was consistent with the prior-year period.

Our cash used for capital expenditures primarily relates to sustaining capital spend, which includes infrastructure, mobile equipment, fixed equipment, product quality, environmental, and health and safety spend.

Included within cash used for capital expenditures was $3 million related to our non-owned SunCoke Middletown VIE for the nine months ended September 30, 2025, compared to $20 million for the nine months ended September 30, 2024.

Included within cash used for capital expenditures was $1 million related to our non-owned SunCoke Middletown VIE for the three months ended March 31, 2026, compared to a nominal amount for the three months ended March 31, 2025.

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $800 million, which primarily consists of sustaining capital spend.

FINANCING ACTIVITIES

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2026 2025 Variance

Net proceeds of senior notes $ — $ 850 $ (850)

Net borrowings (repayments) under credit facilities (713) 47 (760)

Repurchase of common shares — (733) 733

Net borrowings (repayments) under ABL Facility 507 (305) 812

Other financing activities (53) (46) (7)

Net cash provided (used) by financing activities $ 454 $ 499 $ (45)

The variance was primarily driven by:

• An increase in proceeds from senior notes offerings of $1.1 billion during the nine months ended September 30, 2025 related to the issuance of an aggregate principal amount of $1.7 billion of our 7.500% Senior Notes due 2031 and 7.625% Senior Notes due 2034;

• The repurchase of 37.9 million common shares during the nine months ended September 30, 2024, while no shares were repurchased during the nine months ended September 30, 2025;

which was partially offset by

• An increase in repayments under our credit facilities primarily as a result of temporarily paying down our ABL Facility with a portion of the net proceeds from the 7.625% 2034 Senior Notes issuance in September 2025, prior to redeeming in October 2025 all $685 million aggregate principal amount of our senior notes that had maturity dates in 2027 with the remaining net proceeds from the 7.625% 2034 Senior Notes issuance in September 2025.

The period-over-period change in financing activities reflects differences in our capital‑raising and borrowing activity:

• For the three months ended March 31, 2025:

We issued $850 million aggregate principal amount of 7.500% Senior Notes due 2031 at par.

The net proceeds were used in part to repay borrowings under our ABL Facility;

• For the three months ended March 31, 2026:

No senior notes were issued, and borrowings under our ABL Facility increased to support general corporate requirements.

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.

Cash and cash equivalents, which totaled $66 million as of September 30, 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 $3.1 billion in liquidity as of September 30, 2025.

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

The net proceeds from this offering were used for general corporate purposes, including repayment of borrowings under our ABL Facility.

On September 8, 2025, we issued $850 million aggregate principal amount of 7.625% Senior Notes due 2034 at par.

On October 3, 2025, a portion of the net proceeds from this offering, which were initially utilized to pay down our ABL Facility, was used to redeem all $685 million in aggregate principal amount of our 5.875% 2027 Senior Notes, 7.000% 2027 Senior Notes and 7.000% 2027 AK Senior Notes.

The remaining net proceeds from this offering were used to repay borrowings under our ABL Facility.

On October 10, 2025, we issued an additional $275 million aggregate principal amount of our 7.625% Senior Notes due 2034 at 102.750% of their principal amount.

The net proceeds of this offering were used to repay borrowings under our ABL Facility.

Our ABL Facility, which matures in June 2028, has a maximum borrowing base of $4.75 billion, including a $500 million multicurrency sub-facility, a $555 million sublimit for the issuance of letters of credit and a $200 million sublimit for swingline loans.

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

As of September 30, 2025, outstanding letters of credit totaled $63 million, which reduced availability.

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

Cash and cash equivalents, which totaled $45 million as of March 31, 2026, 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 $3.1 billion in liquidity as of March 31, 2026.

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, which was $3.1 billion as of March 31, 2026, is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.

As of March 31, 2026, outstanding letters of credit totale d $48 million, whi ch 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.

Our ABL Facility agreement contains various financial and other covenants.

As of September 30, 2025, we were in compliance with all of our ABL Facility covenants.

As of March 31, 2026, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

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.

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

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.

However, our ability in the future to issue additional debt 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 currently have approximat ely $3.2 billion o f 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 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.

We also have the potential to generate liquidity from the sale of non-core assets.

In addition to non-core operating assets, we have received inbound inquiries for us to sell recently idled facilities and certain other inactive sites.

We also have the potential to generate liquidity from the sale of non-core assets, recently idled facilities and certain other inactive sites.

Refer to NOTE 7 - DEBT AND CREDIT FACILITIES for more information on our ABL Facility and debt.

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

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2026 2025

5 unchanged sentences

EBITDA from noncontrolling interests 1

Idled facilities charges 3 (2) (245) (219)

Acquisition-related costs — (14) (1) (14)

Changes in fair value of derivatives, net (10) (7) (34) (7)

Idled facilities credits (charges) 10 (44)

Currency exchange (14) (2)

Loss on extinguishment of debt — — — (27)

Arbitration decision — (71) — (71)

Severance (5) (10) (25) (13)

Changes in fair value of derivatives, net (10) (9)

Gain (loss) on disposal of assets, net 7 (2)

Amortization of inventory step-up — 7

Other, net (6) (2)

4 unchanged sentences

EBITDA from noncontrolling interests $ 15 $ 18

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

The following table provides a summary of our Adjusted EBITDA by segment:

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2026 2025

4 unchanged sentences

Total Adjusted EBITDA $ 95 $ (179)

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 (used) by operating activities to free cash flow:

Nine Months Ended

September 30,

(In millions) 2025 2024

Net cash provided (used) by operating activities $ (449) $ 577

Purchase of property, plant and equipment (421) (490)

Free cash flow $ (870) $ 87

INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES

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 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.500% 2031 Senior Notes, the 7.000% 2032 Senior Notes, the 7.375% 2033 Senior Notes, and the 7.625% 2034 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 March 31, 2026 have fully and unconditionally, and jointly and severally, guaranteed the obligations under the 4.625% 2029 Senior Notes, the 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.500% 2031 Senior Notes, the 7.000% 2032 Senior Notes, the 7.375% 2033 Senior Notes, and the 7.625% 2034 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 September 30, 2025.

Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of September 30, 2025.

As of September 30, 2025, 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 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.500% 2031 Senior Notes, the 7.000% 2032 Senior Notes, the 7.375% 2033 Senior Notes, and the 7.625% 2034 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 March 31, 2026.

Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of March 31, 2026.

As of March 31, 2026, the guarantee of a Guarantor subsidiary with respect to the 4.625% 2029 Senior Notes, the 6.875% 2029 Senior Notes, the 6.750% 2030 Senior Notes, the 4.875% 2031 Senior Notes, the 7.500% 2031 Senior Notes, the 7.000% 2032 Senior Notes, the 7.375% 2033 Senior Notes, and the 7.625% 2034 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) September 30, 2025 December 31, 2024

(In millions) March 31, 2026 December 31, 2025

Current assets $ 6,570 $ 6,198

3 unchanged sentences

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

Nine Months Ended

(In millions) September 30, 2025

Three Months Ended

(In millions) March 31, 2026

Revenues $ 4,386

4 unchanged sentences

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

(In millions) September 30, 2025 December 31, 2024

(In millions) March 31, 2026 December 31, 2025

Balances with non-Guarantor subsidiaries:

4 unchanged sentences

Accounts payable (11) (11)

Additionally, for the nine months ended September 30, 2025, the obligated group had Revenues of $64 million and Cost of goods sold of $56 million, in each case, with other related parties.

Additionally, for the three months ended March 31, 2026, the obligated group had Revenues of $27 million and Cost of goods sold of $23 million, in each case, with other related parties.

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

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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.

As a result, we use cash-settled commodity price swaps to hedge a portion of our exposure from our natural gas and electricity requirements.

As a result, we use commodity-based derivative contracts to hedge a portion of our exposure from our natural gas and electricity requirements.

Our hedging strategy is designed to protect us from excessive pricing volatility.

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.

The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of September 30, 2025, due to a 10% and 25% change in the market price of each of the hedge contracts:

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

Our primary strategy for managing fluctuations related to the selling price of our products is to obtain competitive prices and allow operating results to reflect market price movements dictated by supply and demand;

however, from time to time, we also utilize derivative instruments to manage a portion of our exposure to HRC price volatility in the average selling price of our products.

The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of March 31, 2026, due to a 10% and 25% change in the market price of each of the indicated commodities:

Contract Type (In millions) 10% Change 25% Change

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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.

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 our depressed market capitalization, have significantly changed our assessment of the fair value of our reporting units.

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.

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

For the nine months ended September 30, 2025, 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 Steelton rail production facility, which resulted in a $34 million impairment charge to Property, plant and equipment, net for the nine months ended September 30, 2025.

The triggering events discussed above related to goodwill additionally apply to testing for potential impairment of other long-lived assets, including property, plant and equipment and/or intangible assets.

For the three months ended March 31, 2026, we concluded that there were no triggering events resulting in the need for an impairment assessment.

FOREIGN CURRENCY EXCHANGE RATE RISK

3 unchanged sentences

Specifically, we are primarily exposed to fluctuations in foreign currency rates in relation to an intercompany note with our Stelco subsidiary that is denominated in the Canadian dollar.

Changes in the Canadian dollar exchange rate may result in volatility in our

financial condition due to the routine remeasurement of this note.

As of September 30, 2025, a 1% change in the Canadian dollar foreign currency exchange rate would result in a $9 million change in currency exchange income (expense).

Changes in the Canadian dollar exchange rate may result in volatility in our financial condition due to the routine remeasurement of this note.

As of March 31, 2026, a 1% change in the Canadian dollar foreign currency exchange rate would result in a $9 million change in cu rrency exchange income (expense).

Additionally, we engage in routine transactions denominated in foreign currencies, such as the purchases of goods and services.

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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 September 30, 2025, we had $847 million of outstanding borrowings under our ABL Facility.

As of March 31, 2026, we had $959 million of 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.

For example, a 100 basis point change to interest rates under our ABL Facility at the September 30, 2025 borrowing level would result in a change of $9 million to interest expense on an annual basis.

For example, a 100 basis point change to interest rates under our ABL Facility at the March 31, 2026 borrowing level would result in a change of $10 million to interest expense on an annual basis.

SUPPLY CONCENTRATION RISKS

Many of our operations and mines rely on one source each of electric power and natural gas.

Many of our operations and mines rely on one source for each of electric power and natural gas.

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

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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 United States-Mexico-Canada Agreement 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 changing 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 acquisition of Stelco, 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 or divestiture transactions and the transactions contemplated by the Memorandum of Understanding and to realize any or all of the anticipated benefits or estimated future synergies, including any expected accretion, 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, including as a result of geopolitical conflicts;

• 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, trigger contractual liabilities or termination costs, 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;

• emerging risks related to the adoption and regulation of AI, including our ability to achieve the expected benefits of our adoption of IT platforms that use 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 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;

• 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;

• our ability to complete the requisite technical and economic studies to determine the economic potential for extraction of rare earths at our properties, and the risk that rare-earth extraction at our properties may be uneconomical;

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

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In addition, historical, current and forward-looking GHG-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information regarding our market risk is presented under the caption "Market Risks," which is included in our Annual Report on Form 10-K for the year ended December 31, 2025, and Part I – Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q.

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