What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-23 compared with 2026-04-21 · 119 added, 86 removed, 440 unchanged (32% of the section changed)

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STEEL MARKET OVERVIEW

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.

Steel market conditions continued to improve throughout the second quarter of 2026 driven by higher than historical HRC pricing, continued subdued import levels, extending lead times and increasing demand.

The price for domestic HRC, the most significant index impacting our revenues and profitability, averaged $1,079 per net ton during the second quarter of 2026, representing a 19% increase compared to the second quarter of 2025, and the highest quarterly average per net ton since the second quarter of 2022.

Finished steel import levels remained significantly below historical levels during the second 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.

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

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

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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.

Additionally, foreign steel producers often take advantage of cheaper labor, 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.

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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.

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

market, ultimately leading to increased domestic demand.

Year-to-date total steel imports through April 2026 declined 29% as compared to the same period in 2025.

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.

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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.

During the second quarter of 2026, the Department of Finance Canada announced the extension of the tariff-rate quota regime through June 2027.

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

During the first half 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 strengthen 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 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.

North American light vehicle production in the second quarter of 2026 was approximately 3.9 million units, down from approximately 4.0 million units in the second quarter of 2025.

During the second quarter of 2026, light vehicle sales in the

saw an average seasonally adjusted annualized rate of 16.2 million units sold, representing a more than 500 thousand unit improvement compared to the first quarter of 2026.

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.

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.

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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 $434 per long ton during the first quarter of 2026.

The busheling price averaged $458 per long ton during the second 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.

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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.

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 elevated utility costs and any inflationary cost increases we have experienced.

Our steel unit costs in the second quarter of 2026 were impacted by the timing of routine maintenance and outages, a further shift in mix from semi-finished slabs to value-add flat-rolled steel products and elevated diesel costs, driven by a temporary spike in diesel prices due to the impact from the war with Iran.

COMPETITIVE STRENGTHS

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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.

Our automotive customers continue to recognize us for our product quality, operational excellence, and supply-chain reliability.

During the first half of 2026, we received Toyota's Quality Excellence Award and were awarded 2025 Supplier of the Year from General Motors, reinforcing our position as a leading and preferred supplier to the U.S.

automotive industry.

Since becoming a steel company in 2020, we have dedicated significant resources to maintain and upgrade our facilities and equipment.

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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.

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 and slabs.

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

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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.

Upon conclusion of this contract, we shifted 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.

During the second quarter of 2026, we announced a multi-year strategic partnership with Palantir Technologies, 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.

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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.

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

We successfully consolidated all production capabilities to one plate mill at Burns Harbor, which has improved utilization and enhanced 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.

In parallel with these operational initiatives, our commercial strategy remains focused on optimizing utilization across our entire downstream footprint and directing tons to the highest-value applications.

A key area of focus is increasing throughput on our coating assets, several of which have historically operated below their optimal utilization levels.

By better aligning our product mix, commercial efforts and customer engagement with available coating capacity, we are improving fixed-cost absorption, enhancing overall margin performance and maximizing the value of our integrated manufacturing network.

These efforts complement our footprint optimization initiatives by ensuring that available production capacity is utilized as efficiently as possible while meeting customer demand across key end markets.

EXPLORE STRATEGIC OPPORTUNITIES

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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.

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

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

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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 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.

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 Facili ty of $3.1 billion as of June 30, 2026, and have approximatel y $3 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 months ended March 31, 2026 and 2025 (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 and six months ended June 30, 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)

2026 2025 2026 2025 2026 2025 2026 2025

Q2 2026 Q2 2025 YTD 2026 YTD 2025 Q2 2026 Q2 2025 YTD 2026 YTD 2025 Q2 2026 Q2 2025 YTD 2026 YTD 2025 Q2 2026 Q2 2025 YTD 2026 YTD 2025

STEEL PRODUCT REVENUE:

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Three Months Ended

(In thousands of net tons) 2026 2025 % Change

June 30, Six Months Ended

(In thousands of net tons) 2026 2025 % Change 2026 2025 % Change

Steel shipments by product:

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Three Months Ended

(In millions) 2026 2025 % Change

June 30, Six Months Ended

(In millions) 2026 2025 % Change 2026 2025 % Change

Steelmaking revenues by market:

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Total Steelmaking revenues by market $ 5,052 $ 4,771 6 % $ 9,809 $ 9,238 6 %

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.

Revenues increased by approximately $280 million, or 6%, for the three months ended June 30, 2026, as compared to the prior-year period.

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:

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• 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;

Steel product revenue increased by approximately $200 million from favorable mix as our contract to supply semi-finished steel slabs, which was initiated in connection with the closing of the acquisition of ArcelorMittal USA, concluded in December 2025, enabled us to shift toward higher margin hot-rolled steel sales;

• Improved other Steelmaking revenue:

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• 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:

Steel product revenue decreased by approximately $270 million due to a 6% reduction in overall steel product sales volume.

Revenues increased by approximately $570 million, or 6%, for the six months ended June 30, 2026, as compared to the prior-year period.

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 $480 million due to rising pricing, particularly for hot-rolled steel, which increased our average selling price to $1,086 per net ton of steel;

• Favorable sales mix:

Steel product revenue increased by approximately $240 million from favorable mix as our contract to supply semi-finished steel slabs, which was initiated in connection with the closing of the acquisition of ArcelorMittal USA, concluded in December 2025, enabled us to shift toward higher margin hot-rolled steel sales;

• Improved other Steelmaking revenue:

Non-steel product revenue increased by approximately $150 million, primarily driven by higher revenue in the scrap business;

which was partially offset by

• Lower steel product shipment volumes:

Steel product revenue decreased by approximately $300 million due to a 4% reduction in overall steel product sales volume.

Gross margin increased by $341 million during the three months ended June 30, 2026, as compared to the prior-year period, primarily due to:

• Higher pricing on hot-rolled steel sales:

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• 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.

Cost of goods sold decreased by approximately $60 million, reflecting a net decrease in idle charges incurred as compared to the second quarter of 2025.

This was partially offset by elevated repair and maintenance costs in the second quarter of 2026.

Gross margin increased by $651 million duri ng the six months ended June 30, 2026, as compared to the prior-year period, primarily due to:

• Higher pricing on hot-rolled steel sales:

Revenue increased by $570 million, primarily driven by an increase in pricing on hot-rolled steel sales, which favorably impacted gross margin for the six months ended June 30, 2026 ;

• Lower cost of goods sold:

Cost of goods sold decreased by approximately $80 million, reflecting a net decrease in idle charges incurred as compared to the first half of 2025.

This was partially offset by elevated energy costs in the first quarter and higher repair and maintenance costs in the second quarter of 2026.

ADJUSTED EBITDA

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.

Adjusted EBITDA from our Steelmaking segment for the three and six months ended June 30, 2026, increased by $190 million and $459 million, respectively , as compared to the prior-year periods, primarily due to the increased g ross margin from our Steelmaking operations.

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

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REVENUES & GROSS MARGIN

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.

During the three and six months ended June 30, 2026, our consolidated Revenues increased by $292 million and $585 million, respectively, and our consolidated gross margin increased by $344 million and $658 million, respectively, as compared to the prior-year periods.

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

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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.

Selling, general and administrative expenses increased by $17 million for the three months ended June 30, 2026, as compared to the prior-year period.

The increase was primarily driven by higher incentive based compensation.

Selling, general and administrative expenses increased by $9 million for the six months ended June 30, 2026, as compared to the prior-year period.

The increase was primarily driven by higher incentive based compensation partially offset by lower legal fees.

RESTRUCTURING AND OTHER CHARGES AND ASSET IMPAIRMENT

During the three and six months ended June 30, 2025, we recorded Restructuring and other charges of $86 million and $89 million, respectively, primarily related to our indefinitely idled Steelton rail production facility.

Additionally, Asset impairment of $39 million was recorded for both the three and six months ended June 30, 2025.

During both the three and six months ended June 30, 2026, we recorded Restructuring and other charges of $3 million.

MISCELLANEOUS - NET

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.

During the three and six months ended June 30, 2026, Miscellaneous – net decreased by $3 million and $8 million, r espectively, compared to the prior-year periods.

The decrease was primarily due to a reduction in idle expense and severance, as both the three and six months ended June 30, 2025 included idle facilities charges related to the indefinite idle of our Conshohocken and Riverdale facilities and severance related to a redu ction in salaried workforce.

This was partially offset by unfavorable currency exchange expense period-over-period related to routine remeasurement of an intercompany note with our Stelco subsidiary.

INTEREST EXPENSE, NET

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.

Our consolidated Interest expense, net increased by $7 million and $15 million , respectively, for the three and six months ended June 30, 2026, as compared to the respective prior-year periods.

This increase was driven by an increase in average interest rates primarily driven by debt mix.

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.

Net periodic benefit credits other than service cost component increased by $21 million and $28 million , respectively, three and six months ended June 30, 2026, as compared to the prior-year periods.

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

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

Refer to NOTE 12 - FAIR VALUE MEASUREMENTS for further information.

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 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.

During the three and six months ended June 30, 2026, our consolidated Income tax benefit decreased by $128 million and $196 million , respectively, as compared to the prior-year periods.

This decrease is primarily due to a decrease in Loss from continuing operations before income taxes .

LIQUIDITY, CASH FLOWS AND CAPITAL RESOURCES

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The following table provides a summary of our cash flow:

Three Months Ended

Six Months Ended

(In millions) 2026 2025

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Financing activities 375 567

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

Net increase in cash, cash equivalents and restricted cash $ 14 $ 5

OPERATING ACTIVITIES

Three Months Ended

Six Months Ended

(In millions) 2026 2025 Variance

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

• 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.

partially offset by

• A $345 million decrease in cash from working capital primarily from a build in Accounts receivable, net, the result of rising steel prices and the timing of sales in the period.

INVESTING ACTIVITIES

Three Months Ended

Six Months Ended

(In millions) 2026 2025 Variance

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Net cash used by investing activities $ (266) $ (256) $ (10)

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 during the six months ended June 30, 2026 was $45 million higher than 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 $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.

Included within cash used for capital expenditures was $5 million related to our non-owned SunCoke Middletown VIE for the six months ended June 30, 2026, compared to a nominal amount for the six months ended June 30, 2025.

We anticipate total cash used for capital expenditures during the next 12 months to be approximately $900 million, which primarily consists of sustaining capital spend and includes spending related to the major reline project at our Burns Harbor C blast furnace.

FINANCING ACTIVITIES

Three Months Ended

Six Months Ended

(In millions) 2026 2025 Variance

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Net cash provided (used) by financing activities $ 375 $ 567 $ (192)

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:

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

• For the six months ended June 30, 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:

• For the six months ended June 30, 2026:

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

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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.

Cash and cash equivalents, which totaled $70 million as of June 30, 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 June 30, 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.

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

As of June 30, 2026, outstanding letters of credit totale d $60 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 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.

As of June 30, 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 approximat ely $3.2 billion o f secured note capacity.

We currently have approximat el y $3 billion of secured note capacity.

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

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Three Months Ended

June 30, Six Months Ended

(In millions) 2026 2025 2026 2025

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Amortization of inventory step-up — (1) — 6

Severance — (19) (1) (20)

Other, net (4) — (9) (1)

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Three Months Ended

June 30, Six Months Ended

(In millions) 2026 2025 2026 2025

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INFORMATION ABOUT OUR GUARANTORS AND THE ISSUER OF OUR GUARANTEED SECURITIES

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of 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.

The accompanying summarized financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant's Securities." Certain of our subsidiaries (the "Guarantor subsidiaries") as of June 30, 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 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

as of June 30, 2026.

Refer to Exhibit 22 , incorporated herein by reference, for the detailed list of entities included within the obligated group as of June 30, 2026.

As of June 30, 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:

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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) March 31, 2026 December 31, 2025

(In millions) June 30, 2026 December 31, 2025

Current assets $ 6,644 $ 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:

Three Months Ended

(In millions) March 31, 2026

Six Months Ended

(In millions) June 30, 2026

Revenues $ 9,037

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

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

(In millions) June 30, 2026 December 31, 2025

Balances with non-Guarantor subsidiaries:

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Accounts payable (12) (11)

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.

Additionally, for the six months ended June 30, 2026, the obligated group had Revenues of $60 million and Cost of goods sold of $51 million, in each case, with other related parties.

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

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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:

The following table summarizes the negative effect of a hypothetical change in the fair value of our derivative instruments outstanding as of June 30, 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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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.

We do not believe the current 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 three months ended March 31, 2026, we concluded that there were no triggering events resulting in the need for an impairment assessment.

For the six months ended June 30, 2026, we concluded that there were no triggering events resulting in the need for an impairment assessment.

FOREIGN CURRENCY EXCHANGE RATE RISK

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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).

As of June 30, 2026, a 1% change in the Canadian dollar foreign currency exchange rate would result in a $9 million change in currency 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 March 31, 2026, we had $959 million of outstanding borrowings under our ABL Facility.

As of June 30, 2026, we had $895 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 March 31, 2026 borrowing level would result in a change of $10 million to interest expense on an annual basis.

For example, a 100 basis point change to interest rates under our ABL Facility at the June 30, 2026 borrowing level would result in a change of $9 million to interest expense on an annual basis.

SUPPLY CONCENTRATION RISKS

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis