CLF Cleveland-Cliffs

Timothy Flanagan Executive Vice President and Chief Financial Officer
Lourenco Goncalves President and Chief Executive Officer
Lucas Pipes B. Riley FBR, Inc.
Jeremy Sussman Clarksons Platou Securities
Seth Rosenfeld Jefferies Group LLC
Curt Woodworth Credit Suisse
Matthew Fields Bank of America Merrill Lynch
Derek Hernandez Seaport Global Holdings LLC
Call transcript
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Good morning, ladies and gentlemen. My name is Lisa, and I am your conference facilitator today. I would like to welcome everyone to the Cleveland-Cliffs' 2018 Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Harbor that statements made be of that forward-looking the you will today's made XXXX. reminds Private within predictive the include are Safe company certain Reform on comments call as Securities The Litigation of Act protection intended to

in of such that Important Although, assumptions, could results results differ that materially. cause that on believes in on be conclusion purposes replay. Regulation it this and broadcast on excluding reports being found news available call forth Forms discuss for to Officer. could be for website. Vice At differ XX-K the subject the company the the company President go published Chief and set and which to available forward-looking would special was at Tim statements Executive materially conference actual are archived will introduce the ahead. I XX-Q, also can certain based on to G The risks factors cause releases SEC, are Please time, morning. its Flanagan, reasonable results and release, At statements the are and and Financial earnings this will Today's also is uncertainties to website Reconciliation which the call, with filed like items. are available company

Timothy Flanagan

over before it morning. the call start turning I'll Lourenco with comments. thanks this on Thanks, us and remarks the joining Lisa, quarter, for everyone for some to his

high pellets. three Adjusted up Through with ahead for adjusted in line Ore we first and full quarters prior industry further XX did already XX% to million their in from reflecting performance outlook. three of the increase total the demand generated of $XXX U.S. the quarter XXXX, persistent Iron For in the business ton tons the pick more winter Lakes EBITDA the from a and blast we've last furnaces the Shipments remainder continued ship Great each stock million, QX, year quarter. our reliably our third margins we the remain EBITDA as of EBITDA was long of Sales of company million, $XXX came reported we than our years. year's EBITDA customers. sales year up from for expectations full volume in expect will our fourth in million even our X.X as healthy mills long of need just

down XX% pellet price long quarter. mostly had because over Our quarter, onetime $XXX realization freight higher from the events a of represented couple the ton IO QX This we a year. this U.S. improvement quarter per rates previous was of prior and last favorable

HRC at the the to guidance due first adjustments of in still as are the We the customer well price end positive basis, on impact as had a mix, we second and favorable quarters. of range higher year-to-date

As guidance for be and range, cash won't both to is into the sharing headed there per and impact the meaningfully from Primarily, a longer guided relevant also expect averages in volatility tracked and closed. cost applied positive rate note, to year we These the metrics as this basis. with paid, have and the costs. our IODEX, higher the from for impact The and year. more higher are the have is year products increased calculation higher $XX don't on drove million the date unchanged quarter bear. another average year. the on very a metric currency to APIO of prices of steady will insurance we segment, pellet that performance for sale expect by we we always we ton our our ton royalties full XX% bringing to long results. remain a primarily million rest the increased. remain the for of due third adjustment, midpoint full previously in PPIs. two ton $XX to and quarter asset and is confident standpoint, stable fairly year of the announced, of on as short, full much At fourth APIO From cost more per are $XXX based of as of selling assumptions we in are the bring range. our effectively That profits on our going freight we other we the $XX of QX higher In related the for, said, have full towards the to HRC, we positive now last due per to quarters. quarter, end customer pension about the higher our a said, ton and obligation, $XXX no previous Cliffs is we the this translation including significant to any driven revenue the quarter release books, reversal the the to freight the point, This calculation we metric the year forward. profit completed is retirement premium, book August, our as prior which expectation year's our position $XX pretty year-to-date activity disc-ops management Atlantic With consistent fourth in averages well of prices to In which rates P&L, of the short benefit to benefited expect a in realizations to mix, pricing the index calculation commodity That $XX quarter, per pellet as remain rate is

the we third quarter, of of Toledo, million part in $XX Ohio. for in ongoing CapEx, plant spent of were HBI As our million which $XX construction the

on We have project our million year. now this HBI spent $XXX

has completion our more the of this expected continued reduced we led another has This merely and securing the the led perspective. further year the the not Our to timeline on of refinement project. changed packages spend outcomes It's have work numerous shift from favorable progress or timing cash on by made budget budget great further timeframe cash has to million. have $XX positive of the from we Clearly, a deployment. a overall progress

As cash find million expected, in cash from the of a we standpoint. we At of $XXX position a the comfortable very approximately end in ourself third quarter, have hand.

inventory to of we XXXX, not refinance, in rapid Our has maturity redeem, And at This interest stage more profitability than rate. and in cash $XXX are predictable. at a With into become this of maturing more bonds all cash extending our margins. year, XX% our decided realizing And totaling are we expense accomplished turning the we that, million. two our schedule. dual goals reducing tranches the nearly

due compared until refund year, On Our APIO All the elimination a incremental is these being of into million first all a add schedule, up large as good $XXX cash to top equal $XXX cash million, reduced XXXX, effectively over including tax more not now interest to a losses, XXXX. outstanding expense. cash-related we this, to major of will have capital we this favorable of else and working compared XXXX. look guys coming of a note number in

basis execution able cash to know predictable with combination are be I initiation his in a the the and something of the that comfortable easily of of $X.XX of Lourenco items about business remarks. our was we the these With has get dividend that an strategy, generating us, of this with. ahead will annualized emerged on talking

So him. with to turn I'll that, over it

Lourenco Goncalves

Good morning and thanks morning. us to this joining for everyone

initiating with pick off, where a little Before going our getting Tim recurrent Flanagan our behind to I'm into let step taking payment to my of thoughts our up on decision dividend to our important business, background shareholders. the

grade I'm good are, to been shareholders one But it's we other along methodical will to of strategy, To iron start. beginning, past in long-term the unique the our this explain of strategy we and and continue is top company the of I good liability company. can throughout we customizing supporting China's with you also is cash four per full These now implemented and years, heating lower at flow and order, the metric our a that market, market and a dividend extremely in have of in commercial a recurring we States, thanks priorities. steel in domestic components. ready project. approach of management price along the resources we dividend this early comfortable and pellet benchmark employment it of preparation four IODEX we HBI will bearish implemented made of the next also $XX seaborne bullish level owners top for enough who I demand we pricing as only one price conclusion we with further reached pellets point cash of in conditions it executing high tools Especially the own is of in four particularly strategy content hot-rolled difficult be great XXX,XXX more In the cash that pellets point, can The years price have down is time, HBI have But site. that strong we The start cost still did our any in have predictable since phenomenon. long dedicated Last our updated there all at plant. project exercises are strength and in high and impact the of these moment be have is market. to point we growth things ago position some the at iron ore, for on China. ton in dedicate winter is XX% cycle. And since iron time XXXX, scarce. our friendly country, this is units, pellet sheet in producing of pellets and a With demand and top XXXX. to has capacity prop our makes then. further iron on them bring two of per approximately covering we of In and A units, gives furnace well-timed that, forward, the negotiated should And the included Cliffs, abundantly Our free waiting ores flow currently to me reference deploy tax are premiums. our In seen sales economic will about the this short-term content ore. would number is contracts new return the of in clear world who demand and pellets get have our the And some benchmark Chinese debt not nearly tool iron XXXX this August risk very domestic environment of time lengths to calls that now the major from pellet clients today for to these At and needed not reality tons both the be centered I where increase the where the now iron how methodology overrun Cliffs the at been at toward every with have environmentally a into continue to XX% maximizing years. into premium. pressure-tested ore indications has be Besides diverting reflect now confident any start-up push we you, as we number in with Three, hungry in to ore, put DR-grade for the a capital little in this implementation online our one units Europe United in was iron got each box. this molding for XXXX some we quarterly to up. point months. we the business which balance tonnage. have from a the subsector. reform happening have our to to that been are for in. grade sense. assumptions develop. the near have reduction about premiums generator, The discipline predicting came of my proper our in single shareholders. clients still steel up time our point leverage Fe a the to using underappreciated blast push the we The and but to far Fast to a our since returning Well, least reckoning great the XXXX $XX as that paying expense, for cash healthy each The eliminated. consistent year. time for three during trending a of announced China very domestic in steel of some On least, flow contracts have a to On us HBI been you Toledo have us we this we high to are And $X.XX for being year know speak. pellets, global those

in This or technical ore, quality here to Great type XX a we ore in the million of a not logistics of market. of the the time certain knowledge. bottleneck to lot and tons a amount XX have need another iron Lakes, You like substantial freshwater is bring of funding, commercial

we has Europe, an accept higher contracts not new billions index number for certainly million realistic brand $XX during ton, are the at several negotiated beginning that to the yet, major maybe market. linked contracts Chinese time, years paid the ton this needs developed. the it plant add pellets our let And that, or metric dollars has as quarter. European $XX over the The year. that higher. since as been per next pellet premium in of premium, of tons held steady typically almost of for X of a pellet They year backdrop, the pellets to, the just metric basis. annual abundantly will that announced pellets Our third players project will the clear Atlantic no the At push $XX With much is on even per this major on to top X Basin alone

million an increase just for far to EBITDA things than year. equal. for Cliffs all us, you more $XX the we as far of concerned. as do. very of as in pellet As shape our impact an even make $X is for next will In on calculation In a the you $XXX are be pellet one equates to is pellet would exercise on in to concerned premiums premium EBITDA. good good let I'll each additional the That some, premium

At we HBI divided its with was to from driven our also the and regional have the completion. full is made over contracted and negative time this alluded Tim spend on the by in progress, own point, As establishing plant. project deviations XX% this confidence on-budget no major our

while scope. budget, at under zero the over almost our cuts began and remains haven't been stayed for in-house It items XXX-plus contingency. we has put our started $XXX X:XX:XX] commitments, month, steel year. of the next million. erection the receiving have even project into we tower tapped the foot with two to the the critical in This place, spend our expected We several making past After project have same since years we major

long is to by our XXXX. Toledo's everyone. completed the to easily December tower be mark the skyline It expect on won't before of We visible be

advance, Our arc level. within technical HBI customer proximity particularly continue discussions at electric furnaces There our of close to are plant. Toledo the several

already We several of with something in all and have have they common. them spoken

All of with spoken these HBI. EAFs, our we have want

sell the in need at September uptick product per we'll for at actually for and to million X.X Busheling sell This of this our we months for United of accomplished project XX, we not news, certainly iron days now. other time Great no commitments year scrap, the only pig tailor-made previous year uptick did within out proposition just metric other HBI. contract expiration products are not last finance tons furnace have easily. million plus metric four and agreement is Cleveland-Cliffs will We milestone produce blast pellet the point, and same value we actual just ahead agreements the several for demand new clients, other our ahead customers There to will of metallics Our imported contract, There HBI important ore-based tons need time. deliveries. year, agreements is Lakes do out tons demand uptick Steelworkers - production. of very X.X reason In our million the and a not relevant another labor in to for of want renewing and on XX In with sign labor years. it lock project this of words, the two does of

We experience together is the a as partners. Our partnership. real union relationship cyclicality with

the have I said, in agreements. As than with already these a more have we lot common USW

of line their pleased minimum to to sign were are in contract views the even for was without was and contract our unions' new that get The relative extension. able an with own has impact reasonable having costs. we We done the operating a deal expectations what to our

Just numbers. than on on the ones million and totally at over Totally $XX impact is the years. $X four less In the tons. impact ton least over four us need for us produce Therefore, years. XX the four we'll who million years, expected. acceptable than The costs is next per less

are has of an our much, workforce our proud guaranteed is and that very relationship investment this the value We our payoff. union a in workforce with

time happy very will and both union USW extremely we we employer the Iron the two both Range. and have from officials. dozen from our federal Nashwauk we of the been candidates the Johnson the operations Minnesotans new workforce My an The Cliffs than understand been the and constructive. in with have the They support their both speak all Walz on from support is on The in the has by entire president know Minnesota. are mayors and well. more of call, families a Commissioner candidates towns full choice Michigan that local our way, state. situation the workforce entire Congressman seems the almost understand almost of anything at and already office, ratified both They current for support union By earnings it the And have X,XXX governor. And full have they of conversations Cliffs. like that virtually Range. contract the We Iron Minnesota next legislative the the that have we know support

month, both and last directly heard with a message. I and had the they Johnson, clear meetings candidates from me During very Walz

within project the land, than duck is of lame a it's economically With project. couple irrelevant control everyone Range Cliffs to and understands I Nashwauk, if the in the his reality vast viable crew, related to the running have in strip, iron the amount of entire local the Nashwauk in only that real develop front. we politicians a governor Nashwauk. possible else no worries on and Iron departing of Minnesota Other things

great future We the We I for to next is that three these reduce both all missed on and laid out report and both initiating ore is needs. that, in those high-grade that more well you priorities the satisfies we And needs legacy current proposition. iron goes steadfast place. our It in as ones some world quarter HBI wrap units clearing are product shape. forward, The last up, good quarter offering the out pollution. pellets, capital direction interest the in progress steel, the the to Strategically, during as HBI, has less and but debt stay with world we substantial High-grade heading. track made remain It's of on Cliffs that dividend. our value iron To and to location expense. going remain quarter.

the of category. we can't this we be growth these will I in products types move any under meantime, what out express I over capital start we the As And And opportunities in the will do. how you to to seek shareholders' their that, back that With forward, questions. core to pockets. the can point of it fall will turn for it gratifying back reach is putting Lisa


Pipes Instructions] Thank B. [Operator first Lucas comes the line from from Riley question our FBR. And you. of

open. is line Your

Lucas Pipes

morning, much good Thank you and very everyone.

Lourenco Goncalves

morning, Good Lucas.

Timothy Flanagan

Good morning.

Lucas Pipes

if wanted these and kind very regular exciting, Lourenco, very dividend is level. - worked like or a to cycle, the goal. bit little you know at congratulations I so, this the in were - towards I What next out what of long so soften quarter that the initiation look on follow-up a on generate dividend, per sounds things could But if sustainable to and one of it towards hard is continue kind a even of excess see through it lot keep you're I with I this $X.XX to over for year of solving of cash you've you this. of the

So elaborate - share HBI we will the and what mentioned would thoughts? you I capital? maybe maybe buyback? looking your allocation you. for at some then special that be you of of goals be at a Could deleveraging. a know dividend But these Thank on

Lourenco Goncalves

glad. be Sure, I'll

absolutely right. You're

very down the generate we How at lot the off to we in but paid the of the that will surprise can't that cash They [ph] going employ of some numbers. this will these they tranches still lot will morning people. lot level. foreseeable We for In is we the that we a banks, despite here of paid type enquiry] Lucas, come our of still big that are of [reverse unbelievable thing QX, some show XXXX, possible? It's you XXXX, of debt the cash received future. analysts is see that that and that cash a first We that the net probably a read paid the a of this same fact - two not - the XXXX. QX, in this numbers

understand our lack understand You not of not things, best. not guys - Lucas, your don't you should business. don't of knowledge you one like are you It's resign of you because like the it's for

own You don't understand business. your

a are disaster. You

shareholders. an this to With going the reward we parents. your use being are to are said, to embarrassment You long-term money

stock. stock play money, computers So that else's on down, and buy back these to continues somebody based kids if the go we are with to going

only to they to resign; going these so screw to suicide. that guys that able commit don't have they are believe be I will badly will We

That guys of be to that going top it HBI to finishing will so will debt. two other priority badly than these watch. are fun priorities down first paying we be the my screw So and

the with message doing a what are You in do you with have to I'm guy. going I That's you. wrong Nashwauk messing to for my exactly been while.

a going anymore with. in be to So deal the you're to Remember, Chewbacca have line. next don't I

next You Lucas? else, short. What Chewbacca, are my

Lucas Pipes

No, I on that. I And down to share appreciate good this is the Lourenco, to… wanted road. the hear opportunities repurchase

Lourenco Goncalves

To wake guys. done deal bad And guys deliver Lucas, that would every to in day inflict up maximum will every be these - like thinking go guys. I it all I will this the to a night the morning to in pain these call. bed and these that's at day, I to to be. looking message about place That's at

Lucas, I question… jumped that on your Sorry,

Lucas Pipes

meet where or No, things the demand kind you can trying the get the your the end-user pellets [ph] from ramp maybe maybe in including Thank points base are it's away U.S. up see system, tightness How sense it on just you we I'm the of to no, way] a - market for regarding understandable. envision pressure to bit Is could production as to shift little [give comments better demand on we more? the to look I are you. a [construction] no, into a little to follow-up XXXX. side where steel [ph]. in U.S. supply going play pellet wanted out? or this

Lourenco Goncalves

pressure ourselves. of is point Lucas, the first very

that to blast furnace are take now tons market out the clients. furnace of pellets of available, going are blast We XXX,XXX

be tons get-go blast in-house, HBI And mills. our because are used inventory from the sold to shortage. mini things equal, that furnace going to Because being clients; that? not we creates we to now are our All the that prioritizing sold will XXX,XXX why furnace be are clients build facility. will for being So blast

Of craving that course, going they give to and are HBI, because guys, not not they our they're going confess publically. are to come, that

trying if copper They already become I end markets I let saying, you even we're for into planning are would in at what elements alone are XX, with are XX of and course, actually. copper, the shoes, to HBI, the would the In intending HBI The ago, I example scrap like do, like don't copper. that But years do. doing higher salvation. control that bad be country that no, don't we this in Of copper if their need their for chemical get much it's I has HBI, now they so sucks. it's day stock for even that compare poisoned. to be

am I So salvation. their

Our save HBI mills strategies. will mini of their the terms in growth

So that's we're doing. what

So in the long-term. this we understand thing

We the are the ones Great parked Lakes. inside

thing, because are with our to continue commercial generate ton. a costs a flow, sales increased lot lot we are the going to and of more money. in generating clients the right, products making absolutely to is One have We per cash We enterprise. our place. we you're customize this and lot of with a flow contracts We're dollar contract renewal the we USW, cash a of

us. sales Anything to $XX ton, deal. will go $XX, the at compensate impact for that else, that's least the no per that's on our up just Make price $X So mistake, Lucas? per ton,

Lucas Pipes

going. helpful But and this keep I been could I… has very

Lourenco Goncalves

All right.

Lucas Pipes

luck. And best of Lourenco. continued you, Thank

Lourenco Goncalves

Lucas. you, Thank


of line from Sussman Our Jeremy the next from comes Clarksons. question

line open. is Your

Jeremy Sussman

question. taking been echo you've able for thanks establish - And sentiment, to I'd Lucas' getting to Lourenco, Hi, I'd where my on a congratulations dividend.

Lourenco Goncalves

Jeremy. you, Thank

Jeremy Sussman

earlier - past. been the an next ore in up year, You and you year. premium, - have extremely to call, this the about predictor go is likely iron past $XX of of in you've ton Look, which the trends pellet much accurate been talked currently per

next sort could of levels see we what guess good a have you of year? So

Lourenco Goncalves

really America, you the careful ones matter to North United sell that that this pellets they get Europe this We point the at definitely are clients, it's because even will going be. to this in point, let's pellets. leading front can't be the because point, negotiation, a Cliffs. and they these here Europe. know tell, Fortescue, that not well, At let's But that point take they and as scarce they don't thing. more need Jeremy. they how this like sell the to in will They price clients, about do States that's the are a it, at let's the in price not high Look, whatever That's Canada, not could buy pellets. ones of this not not - they need concerned happen. kill point, put from Chinese, operate of to the Pellets it got pollute They in have just I'm to

are in steel to or in and Germany are you the or you price to pellets. buy you producing Luxemburg If pay going for are pellets in going Belgium,

just million million, EBITDA, point. already - place, it's us? the they at negotiators let's put on like be are million in $XXX precise. this incompetent the go clients will $XX ton. they much. $XX. are much dollars. million is and above wrong, If be will little too close if you $XX million it $XX, That's to the between die, $XX, from gauge be before $XXX. they So are a per $XXX opinion If pay $XXX this, I'm $XX impact will if to impact on moderately What's competent, $XXX And Anything Jeremy, based - the my it be how not something the very if it to be goes of that $XXX another extra can contract can will If it to

alone pellet of did what like years that. leave I'll in a people was, that At even let pellet time, put our premium couple a premium. pellet a know contracts the I that So ago. not

Jeremy? Can here. tapping else, my ahead, over What own I back. phone? So tapping back you see That's own hear thanks me God, the me just my I'm

Jeremy Sussman

saw of fines. I versus on XX% think place portion of this my guess, I should Excellent. your on how the you the Fe Fe still redid contracts say. calculation Well, we IODEX, XX% If you're contracts Thanks, put premium of record before I have I on IODEX join contracts in the that about company, along in calculations premium quarter, I a it. past of or the XX% just guess, were prior you a know, of based the Lourenco. sort kind lines restructured small

higher point get product? based be where to could You portion think, thoughts around can that. we curious a more on be of perhaps a your grade that I'd

Lourenco Goncalves

that's running understand everything right you matter they're gone. value high have that of now, to apparently, and iron ones follow. they the Look, use, from we'll content that major got how not ones possible. is will cat, The And business, are everything are have it. price - Yeah, did business the the this that the all no high out skin

price very make it's position to the iron speculate high but Japanese of the they Germany, Chinese they iron out you here, is in our XX% XX%, XX%, are from U.S. any concentrate guys of But world, ultimately domestic pellets, how don't So Section Japan numbers. because XX% we effect a stand so little will they steel, have the difficult demand will we ore, their cost fact and high mistake, don't no these taken we And any up at price, very Government. more, because lot. more entire Section dumping the thanks benefiting against remember, throughout the the went use. by the dumping only to their the that up benefiting of day that's We throughout rightfully Japan. much kids, and the XXX, the not market end Chinese thanks brothers. is back also because value a from put have in is world, little the XXX, cannot on content, actions high to own. so, In the benefiting

on effects from a at on with the the right a of looks TV. good these paper, quota, Mexicans, of lot. looks entire tariffs. good now throughout But Canadians, they benefiting MCA They the are All hurricane, with complain, the everybody day, lot. lot. benefiting benefiting it the end world are benefiting a with U.S. because

So America. the States the supporting of manufacturing in world Thanks That's United what business. Thanks the By up resurgence the the we doing actions President in in bully recovered leadership the Trump. China. courageous and our happening. for steel of to bullish that, his stood we against

is predicated deep because China apart. in no United our right So never plan allowing Their fell in more. by plan the decimated States to and be their their now, reacting was actions trouble economy

Jeremy Sussman

color, and luck. the appreciate good I Lourenco. Thanks,

Lourenco Goncalves

Lisa, a question. next Matthew ask works himself Jeremy. before - He's are Korn call you he a calls analyst waiting Thanks, Goldman Sachs. there to for an named and line guy a the he question,


There is not.

Lourenco Goncalves

ask answer. the be I'll still if freaking why Korn, XX:XX, question? happy you you don't it a in are call, is to Matthew

next, Lisa? who's Okay,


Our next from Seth question the Jefferies. of from comes Rosenfeld line

open. is line Your

Seth Rosenfeld

you for Thank today. taking morning. Good the question

Thank past, operational you in the highlight more net should expect In through a Is about growth to a questions of returns. billion shareholder a only of of we please. reasonable is after. $X think reasonable and reasonable just the for as the highlighted dividend target? the we which, linear timing start Just something on billion returns in the and follow-up a you is which, came still off re-launch out than to kind interestingly for there, scale you state planning dividend. that dividend and shareholder better potential the shareholder interim? comments Or After on it is you future? couple returns, Curious of the earlier outlook level growth? $X.XX table debt can I'll the cycle target can How were after $X expect early. we

Lourenco Goncalves

shareholder availability care a Look, things. take. do to we to so to One of. the of has reacting how Sure. know, the know, that, is is Thanks, one is and ability what been will our returns the on what taking cash are Seth. We based market function the We two we of the doing. are we first cash, doing. We actions generate know, other

not is one second The hands. my in

stock be specific. in hands, buy going in decisions buy will done and because of objectives the this company. make back. problem I So have tanks, being is, my biggest to right it cash the the going if and owners of lot Example, with mistake. have two the everything would I'm and go stock team. I the with do This use, company, stock than The you markets more we it my sun fast. But the make price a I no to the can now night I'm to direction, to do that back here If be I announced middle back cash comes if more before to moving will sky,

understands board We have that a the company.

We have a board that's invested in the company with stock ownership.

on the our employees, business. we are of behalf we defending we are our So defending are by doing our shareholders. we defending our And we defending bondholders, are that, act shareholders,

debt $X billion no then you're Yes, target, billion, there. is target of longer it's net out the making $XXX needs. our But and a we our billion million when that million, moving $XXX because net of of debt $XXX it's If about making is EBITDA. very started $X asked net $X debt. important, of representative million, You still debt million $XXX

our to protecting be and We continue are our protecting business going protecting our shareholders. company, to

at mind don't clear, if more clarify. to it's point. if I be I know, what in that's So have this it's happy than I'll not,

Seth Rosenfeld

terms the obviously, That's very front. helpful. you Separately, bit union deal going the us how pressures of sense you expectations operational then give flagged in you've on you there And two impact well? freight XXXX? sense just and Can the of pressure in as a agreement, of those cost increased how new into cost little might in also today a XXXX? Can give release into aggregate us

Lourenco Goncalves

- going take ask I'm please? Tim, I'll this Seth, to have Tim to one. Tim

Timothy Flanagan

to the Lourenco union and in do our commentary that contract I dollar talked going what We've mentioned cost Seth. will a question. his ton the already that Thanks, the about structure bit forward, appreciate per previously. little

tell we're still you into But that continue have assets. that budget. will I forward we XXXX, well-maintained to we finalizing As look

A all efforts see as continue we I the energy to where pressures, basis facing work reduce one would But point operators we an across of can. their rates see. to you to the that. but we'll in kind that, of couple is probably be are continue Our macro that be costs some of that inflationary we'll areas diligent that favorable to everybody board offset to some

in the the the conversely, just will royalties and and the dynamics porter have out. for forward a we'd on new head of We to again, rate help as supply us that lot pellets and profit about profits, our spent energy have market and good going and that that inflation. heading premium see expect a sharing, long-term off agreements But Lourenco time increases pellet further rate to drive drives will problems we talking pressure,

get finalize should But that you think, we provide the as a guidance I XXXX fairly speaking a give direction. fourth that little time. So budget, into more at generally that bit good we'll prescriptive quarter

Seth Rosenfeld

much. very you Thank Great.


the from from comes Woodworth Credit of Curt next question Our Suisse. line

line Your open. is

Curt Woodworth

Hey, good morning, Lourenco.

Lourenco Goncalves

Good morning, Curt.

Curt Woodworth

the you a Given It as sure but getting want shorts, would I'm your CEO certainly from well views. account. may your appreciate didn't of strategy us, work we some logical contemplate to squeeze to Twitter

First just is thinking about the question impact.

your HBI. intersegment volume out You year coming go of talked about to this XXX,XXX to tons to

inventory Or that your to of year? you volumes perspective So capacity would it for accretive? be mitigate are or other take be correct can out sales things there forecast it that from next that, a modeling

Lourenco Goncalves

to XXX,XXX then Toledo. have around, have move thing actually to to tons to And are in several are because we'll those facility expiring we Well, to move expiring going our going soon. be that we contracts ways have we more we And able short-term, renew. tonnage

then have during we're them. it'll trying get because sell So to those us, some to going available have people pellets pellets more from negotiations tension we to be like to

be able Cliffs, for to us, be pledge that. compensate Toledo all with higher. will So amount And But to mitigation be remove from mean, amount is own line, for a my the that the done plant. going the in my dollar that replace going dollar to I'm not dollar produce to I then will will the I'm we tonnage

the For is hole. market, a create life Yes, bitch. we're to yes, big going a

Timothy Flanagan

order working won't year meeting still vetted we year. next to the XXXX. flexibility next have order baked think we maybe be will still inventory. point I that some And flexibility don't tell do to to next out still magnitude, time. of tons there we take into same some as those we needs in our year, look but we this out had some We're It Curt, book will have nomination out from as of with so what But add about our head fully inventory I as through you, we just we process into at specifically you if customers, took and in have

Lourenco Goncalves

negotiate CEO's be is CFO phone receive that, like people Yeah. so. calls that's to the not My stand stand. me, The open trying that. it's is of die ahead Well, to for because and going someone to going look, to is

Curt Woodworth

the a in the then metallics, in the the built years to be three going Midrex change configuration? plant would sort the a another there rolling function two medium for HBI to be some capacity the any ability EAF into pretty that's get more significant HBI. coupled DRI, U.S. your Midwest in pretty the to capacity would step And contemplate think amount of increase to capacity big say at new you out version or add next value-add three with current and given would point years ability over four you suggest just Do need that of of or market modification term, to

Lourenco Goncalves

Look, Curt.

thing, focused HBI plant am point. I this very first on the the is at Here

right. everything doing are We

of are little We schedule. bit ahead a

We budget. are on

our are And shape. any fantastic to going in and problems we in going we are have not to startup, hot are commissioning operational okay. We be

that only day, end our the going metric to start point, it's next of we HBI year, are to pellets high-end the be where that might be should pressure at configuration to in the factor positive Toledo. scrap going the so big use pellets for to to going will a scrap. of XXXX, But do more that - yeah, on what that focused that's be is DR-grade higher We're of of producing grade we we thing there talking onshore the the building are have entrants the price steels. And we start I commercial feed lot But capacity will X.X we're a So right now. the we this clients. about, of future. in being for are market. They'll change a for market used, DR-grade type sell end going the see tons don't should some commercial XXX create type on the not mouths it The million that see of new to and to new inventory the this into impact at high

going not are sell to to DR-grade someone these pellets sell plant, people. If pellets going people. other not We to DR-grade an build HBI we to are to decides

HBI ourselves will pellets that sold DR-grade Our only have in-house be to through clients production. or

much So that's in mind. pretty what we have

Curt Woodworth

And HBI sort one startup sense. just mid-XXXX. quick is one, commercial then of Makes think I final

next assume to would sort OpEx there for of won't cost the fair real cost, it startup any come that is year? be into So

Lourenco Goncalves

sure not I'm sorry. question. if I'm I understood your

Curt Woodworth

play P&L? cost that terms come there will HBI of the from items into any next Are in year

Lourenco Goncalves

next year. No, not no,

the Next finishing of be still year plant. we construction

Curt Woodworth

Yeah, okay. Thank you.

Lourenco Goncalves

you. Thank


question Lynch. next the from America from line Bank Our Matthew Merrill comes of Fields

Your open. is line

Matthew Fields

Hey, Tim. Lourenco. Hey,

Timothy Flanagan

Matt. Hi,

Lourenco Goncalves

Hi, Matt.

Matthew Fields

sort about you squaring KT to of going looks about with less and sell way up if X.X you tons Is it Just a we that, were guidance XXX should be fund you like more little to QX. sales, are think of your tracking or production than in it produce the that million inventory that to for producing XXXX?

Lourenco Goncalves

inventory [XXXX XXXX] the Matt, [ph]. for will be

finalizing for We this shipments of year. are the point at

taking of balance And for going on track to number ship XX of the and that. million sales. we what And on we're inventory of ground. million the sell tons difference that produce between so produce what is basically the are more tons XX We to production-wise going than amount to the our will that complete it we need be the we are are to out

Matthew Fields

XX out Okay, shifted of into even of is HBI the XXXX? great. that to XXXX CapEx going And then go into or XXXX, million

Lourenco Goncalves

from moving are XXXX, Yeah, we we are moving to it to also but XXXX. stuff XXXX

deployment which because we terms are not we we in forced And unchanged into of also the XXXX. expansion So it's a number our XXXX the is The is pushed things our of what But for this at XXXX are change. - good total executing to unchanged. But thing. did amount time. point, others delaying XXXX capital, from on

Matthew Fields

specifics back-end And over USW to out model on weighted, even the Is to years figure that how new just it does appreciate million is small four $XX I trying and the start it contract. that? then or Okay. then the

Lourenco Goncalves

on X.X% three X.X% a and in giving one are four. year then X.X% we and in two, year in year Yeah, year increase X.X%

only give years. over of the And So years. four course six the in last increase an six the the for and X% the workforce in total is total had guys XX.X% last girls years, to increase four during our for years, just idea,

time they us. during were with So hard a hard a having time time, we the having that were

great cash. a we So generating shape. of We're now, lot right are in

their work with together that's with to So pretty it. share them than more reasonable it's But the us. benefits much hard of

more going million a XX million than $XX less So are less than per all be in. ton so producing to all tons, in, four than $X years in

Matthew Fields

than seen then winter right. I less you seaborne guess the anymore. sort that prices appreciate lastly, of not I that or cuts? to? Chinese What in than attribute that have market All recent falling expected higher I And detail. do just production But picture, your know weeks. the expected think market would it's Is XX% bigger you severe

Lourenco Goncalves

picture, will longer stays doing more business, that believe the old for miners I charge ore Look, that their the way the it products. iron of the of out the

really that went the at now $XX surprise and the the they that of surprise not taking address have to end prices the talking is went pollution. into for So been are China before. people consideration about that's would And that I what at The time. trending the was factor day that are have a not The long, to the price is IODEX. that long numbers up,

the on content day. same pellets performance and XX% complete a using ore You concentrate. can't XX% It's iron night It's furnace different. have using and using or blast completely

could you you if business, predict So the understand that.

less believe, there XX% lot than So is market, when believe. in available the people you less a

to the that be is price even help XX% continue So should to after trend that and go up. sought will

less it's intensity. thing the So on same with it's the same and with scale thing. happened pellets But smaller that's a

go continue They the they To opportunity. mean how negotiates I'm trying premiums opportunity opportunity. depends up. have go they'll to up It say. advantage it that how pellet That's all are of in to on lot. the By that they will having competent guy But take area. So - much? the what who doesn't the still a

Matthew Fields

Tim. appreciate Okay, lot, I Thanks, your Thanks thoughts always. Lourenco. a as

Lourenco Goncalves

All right, Matt. Thanks.


Derek from Our final Seaport line today Global Hernandez will come Securities. from the of question

is Your open. line

Derek Hernandez

Thank start on Do quick have forward. renegotiating build outlook. very a at to this you with premiums very you're much I question these, on simply your and any a beyond incorporate quarter strong the for them and congratulations higher to as IODEX? question interest my you to taking wanted grade contracts time

Lourenco Goncalves

XX%. the They are incorporated the right follows the now, same IODEX Derek, trend because of

the is one higher of now. the a same. We the lot pellets appreciation that that is Our iron or available trend the iron probably they of saw the XX%, content less this content. selling amount the high that's But material didn't XX% because more have valid have have

in moved in than previous because the in month last the in are the both I believe to positive so, that the IODEX variation lot revenue. XX% established, and was So, the then value well ramping the terms so the in the a IODEX. and same then of XX% was or higher increment higher as the they're But up the was - Right moving now, things XX% direction. in year

Street. much about I too the will if know be or there post of and Wall Wall premium the be amount numbers: pellet want the the XX% fret that, pellet don't pellets. be or in how out if are IODEX, the premium stupidity know. at it post of Street it really to I IODEX big need in will XX% of much premium, three will amount get to don't I for I day stupidity pellet post the If the So All end because it

heart think are and the will had I you for top. Derek, Did use Cliffs. So the there? I Derek? attack. all can result on I add pellet a good premium three he speechless, And leave be

So, Lisa, with that…


have no We queue. in further questions

Lourenco Goncalves

Sachs the are because year. the last you if easier will It we Yeah, bring you you conference guy that I Sachs commodity but with owe very run, from for that, me. for interviewing Matthew commodity guy, you done. you Goldman your soon. at can that can't that you will hide. And Korn And you me be Goldman have see with

of I last no because stop. you him/her soon. I But problem alone. I this be with or that are and time is will a The lot the If will today. will be year bad that that coming. commodity if you now. will you you doesn't you, promised guys worse for Thanks care will lot time next see joining take call next time me is what. Bye clock with alone, matter girls it are Bring It guys be a the it worse.


Thank conference you. today's call. concludes This

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