Cleveland-cliffs Inc. · NYSE:CLF
Cleveland-cliffs — Debt Investor Presentation (October 2024)
33 slides from Cleveland-cliffs's debt investor presentation, Oct 8, 2024
Slide 1: Cleveland-Cliffs Inc. Investor Presentation
© 2024 Cleveland-Cliffs Inc. All Rights Reserved. CLEVELAND-CLIFFS INC. Investor Presentation October 8, 2024
Slide 2: Reserved.2 This presentation has been prepared by Cleveland-Cliffs Inc. (the “Company,” “Cliffs,” “Cleveland-Cliffs,”…
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.2 This presentation has been prepared by Cleveland-Cliffs Inc. (the “Company,” “Cliffs,” “Cleveland-Cliffs,” “we,” or “us”) for the exclusive use of the party to whom the Company delivers this presentation. This presentation is the property of and con
Slide 3: Forward-looking statements
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.3 This presentation contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements other than historical facts, including, without limitation, statements regarding our current expecta
Slide 4: Company Overview
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.4 Leading North America-based steel producer with focus on value-added sheet products, particularly for the automotive industry Recently announced acquisition of Stelco adds lowest cost flat-rolled steel producer to footprint and diversifies end marke
Slide 5: Stelco Acquisition
STELCO ae STELCO ACQUISITION
Slide 6: Acquisition of Stelco
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.6 ACQUISITION OF STELCO • Galvanizing, galvannealing, cold-rolling, batch annealing, a temper mill and coke battery • Capacity of approximately 1.0m tpa cold rolling and 600k of coating Lake Erie Works • One of the lowest cost steelmaking facilities i
Slide 7: Pro Forma Operational Footprint
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.7 PRO FORMA OPERATIONAL FOOTPRINT Hibbing Taconite Mine (85.3% owned) BF/BOF Steel Operations Iron Ore Mines And Pellet Plants Coal/Coke Production Facilities EAF Assets Direct Reduced Iron Finishing Facilities Downstream Assets Scrap Processing Facil
Slide 8: Premier and Dynamic North American Steel Producer
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.8 PREMIER AND DYNAMIC NORTH AMERICAN STEEL PRODUCER 2023 US & Canada Shipments – Top Steel Producers (million net tons) 23.3 Pro Forma 19.0 16.4 12.8 11.6 6.5 Source: Company Filings | Note: (1) Based on AM NA total shipments of 11.6 million net tons,
Slide 9: Further Enhances Scale and Margin
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.9 2.5 NT Source: Company Filings | Note: LTM as of 6/30/2024 | (1) Excludes synergies | (2) Figures converted to USD using average LTM CAD / USD of 0.738x | Note: Adjusted EBITDA is a non- GAAP and non-IFRS financial measure. For a reconciliation to t
Slide 10: Stelco's Industry Leading Cost Advantages
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.10 STELCO’S INDUSTRY LEADING COST ADVANTAGES Iron Ore Supply Agreement Five key drivers of Stelco’s cost advantage: • Favorable-cost pellet agreement • Agreement does not expire until 2028 Currency Advantage Healthcare Costs Optimal Operating Layout L
Slide 11: Improves Diversification Across End Markets
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.11 IMPROVES DIVERSIFICATION ACROSS END MARKETS 2023 Product Mix by Shipments 2023 End Market Mix by Revenue 54% Distributors & Converters 31% Infrastructure & Manufacturing 13% Other 2% Direct Automotive 35% Direct Automotive 26% Infrastructure & Manu
Slide 12: Highly Efficient Operational Footprint
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.12 Pre-Paint (JV) Stelco Share: 130k ntpa HIGHLY EFFICIENT OPERATIONAL FOOTPRINT Vertically integrated operations support efficiency and high margin profile L a k e E ri e H a m il to n Saleable Products Resulting from Stelco’s Process 1 2 3 4 5 6 7 8
Slide 13: Increases Volume of Spot Sales in the Mix
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.13 INCREASES VOLUME OF SPOT SALES IN THE MIX 2023 Flat-Rolled Spot/Non-Contractual Sales Volume Further diversifies customer base from contract buyers to spot customers Pro Forma N e t T o n s ( In M ill io n s ) Note: CLF volume represents Spot/Non-C
Slide 14: Substantial Cost Synergy Opportunities
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.14 SUBSTANTIAL COST SYNERGY OPPORTUNITIES ~$120 million in annual savings with no impact to union jobs Primary Opportunities ✓ Increased throughput at low-cost Lake Erie Works with HBI use in BF & BOF ✓ Optimization of overlapping capabilities and mat
Slide 15: Stelco Transaction Closing Timeline
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.15 STELCO TRANSACTION CLOSING TIMELINE Remains on track for a Q4’24 transaction close U.S. DOJ Antitrust Completed Investment Canada Act Expected Q4’24 Stelco Shareholder Vote Completed (99.97%) Stelco Transaction Close Expected Q4’24 Clear Path to Cl
Slide 16: Cleveland-Cliffs Corporate and Financial Overview
CLEVELAND-CLIFFS CORPORATE AND FINANCIAL OVERVIEW
Slide 17: Top Priorities
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.17 TOP PRIORITIES Continue Cost Reduction Maximize commercial strengths Progress value-enhancing projects Reprioritize debt repayment Opportunistic M&A Significant year-over-year cost reductions and further reductions expected into 2025 $600 million+
Slide 18: Balance Sheet Strength Post-Acquisition
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.18 BALANCE SHEET STRENGTH POST-ACQUISITION Flexibility to execute strategic, operational and financial opportunities PF Leverage Liquidity $3.5 Billion 2.8x Note: All metrics based on pro-forma company post Stelco acquisition. Leverage ratio based on
Slide 19: Lower 2025 Capex Target
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.19 Cliffs’ Standalone Capex LOWER 2025 CAPEX TARGET 2025 Capex Target D o lla rs i n M ill io n s ▪ $600 million targeted total standalone capex ▪ Updated strategic capital timeline and refined spend estimates ▪ Reduced sustaining capex due to catch-u
Slide 20: Free Cash Flow History
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.20 Cliffs’ Annual Free Cash Flow FREE CASH FLOW HISTORY More than $1.4 billion of FCF each year since transformation Proven ability to generate free cash flow through the cycle Track record of quickly deleveraging following acquisitions Note: Free Cas
Slide 21: Prepayable Debt Schedule
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.21 PREPAYABLE DEBT SCHEDULE Amount in Millions 2024 2025 2026 2027 2028 2029 2030+ Debt Outstanding Maturity Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -- Current: Fully Prepayable at All Times Matures 6/9/2028 Current: March 2025:
Slide 22: Working Capital Management
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.22 WORKING CAPITAL MANAGEMENT Inventory Balance Evolution ($ in millions) $5,562 $5,784 $5,542 $5,130 $4,923 $4,727 $4,592 $4,460 $4,449 $4,199 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 ✓ Continued focus on inventory reduction has ma
Slide 23: Pension and OPEB Liability Reduction
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.23 $4,207 $4,007 $3,931 $3,847 $2,872 $2,784 $2,702 $2,495 $813 $778 $747 $717 $586 $540 $496 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 PENSION AND OPEB LIABILITY REDUCTION
Slide 24: Middletown Works - DRI Plant and Electric Melting Furnaces
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.24 MIDDLETOWN WORKS - DRI PLANT AND ELECTRIC MELTING FURNACES Lower Carbon Emissions No Impact to Product Quality Net Capital Cost1 Award From D.O.E. Annual Cost Savings $1.3 (billion) $500 (million) $450 (million) Expected Completion2029 Replacement
Slide 25: Butler Works - Induction Reheat Furnaces
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.25 BUTLER WORKS - INDUCTION REHEAT FURNACES Lower Carbon Emissions Increased Yield Net Capital Cost1 Award From D.O.E. Annual Cost Savings ~$100 (million) $75 (million) $80 (million) Would replace two existing natural gas fired slab reheat furnaces wi
Slide 26: Downstream Transformer Production
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.26 DOWNSTREAM TRANSFORMER PRODUCTION Weirton, WV selected for manufacturing site of distribution transformer production plant $100 million net investment with $50 million in expected support from West Virginia Economic Development Authority Re-employm
Slide 27: Best in Class Integrated Emissions Profile
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.27 BEST IN CLASS INTEGRATED EMISSIONS PROFILE 2.15(1) 1.98 1.57 1.54 Global Average Stelco to further leverage Cliffs’ industry leading technology to continue to reduce emissions Note: (1) CRU as of 2/22/24 2023 Average Intensity of Integrated Mills (
Slide 28: Prime Scrap Supply Has Been Shrinking for 50+ Years
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.28 10 15 20 25 30 35 40 45 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Steel Research Associates, LLC Scrap Model & Cliffs Analysis PRIME SCRAP SUPPLY HAS BEEN SHRINKING FOR 50+ YEARS Prime Scrap Supply (including home scrap) P ri m e S c r
Slide 29: Appendix
APPENDIX
Slide 30: Pro Forma LTM Adjusted EBITDA Reconciliation
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.30 Source: Company Filings | Note: LTM as of 6/30/2024 | (1) Figures converted to USD using average LTM CAD / USD of 0.738x Pro Forma LTM 6/30/24 ADJUSTED EBITDA RECONCILIATION Net Income (loss) C$173 Depreciation (128) Finance Costs (120) Income Tax
Slide 31: Historical Non-GAAP Adjusted EBITDA Reconciliations
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.31 CLEVELAND-CLIFFS’ HISTORICAL NON-GAAP ADJUSTED EBITDA RECONCILIATIONS Source: Company Filings ($ in Millions) Historical Year Ended December 31, Six Months Ended June 30, LTM 2021 2022 2023 2023 2024 6/30/2024 Net Income $3,033 $1,376 $450 $314 ($4
Slide 32: Historical Non-GAAP Free Cash Flow Reconciliations
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.32 CLEVELAND-CLIFFS’ HISTORICAL NON-GAAP FREE CASH FLOW RECONCILIATIONS Source: Company Filings ($ in Millions) Historical Year Ended December 31, LTM 2021 2022 2023 6/30/2024 Net cash provided by operating activities $2,785 $2,423 $2,267 $2,080 Less:
Slide 33: Reserved.
© 2024 Cleveland-Cliffs Inc. All Rights Reserved.
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