Good morning, ladies and gentlemen. My name is Sherry and I will be your conference facilitator today. I would like to welcome everybody to Cleveland-Cliffs First Quarter 2025 Earnings 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. The company reminds you that certain comments made on today's call will include predictive statements that are intended to be made as forward-looking within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. Although the Company believes these forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially. Important factors that could cause results to differ materially are set forth in reports on the 10-K and 10-Q and the news release filed with the SEC, which are available on the company's website. Today's conference call is also available and being broadcast at clevelandcliffs.com. At the conclusion of the call, it will be archived on the website and available for replay. The company will also discuss results, excluding certain special items. Reconciliation for regulation G purposes can be found on the earnings release, which was published yesterday. At this time, I would like to introduce Lourenco Goncalves, Chairman, President and Chief Executive Officer. Thank you. You may begin.

Thank you, Sherry, and good morning, everyone. Our first quarter results were unacceptable with worse-than-expected EBITDA and cash flow, mostly due to underperforming non-core assets. Underlying these weak results was the lagged impact of very low steel prices that we were exposed to during the second-half of 2024 and into the beginning of 2025. The implementation of across-the-board tariffs on foreign steel under Section 232 executed by President Trump on March 12 was the most relevant and necessary action to eliminate unfairly priced competition. The entire domestic industry, Cleveland-Cliffs included, continues to suffer and we're starting to see a more consistent business environment and improved pricing in April and May. Besides pricing, our results over the past quarters have been significantly affected by three company-specific issues. In order to bring back consistent profitability and free cash flow generation through the balance of 2025 and into 2026, these three issues must be resolved. Issue number one, underperformance from our core automotive end markets. Number two, loss-making operations that are not core to what we do. And issue number three, a very disadvantageous slab supply contract with ArcelorMittal/Nippon Steel Calvert. Let's address each one of these three issues. On the first one, the numbers speak for themselves on the automotive industry in the United States. In 2024, only 50% of the cars sold in the United States were actually made in the United States. Said another way, imported cars sold in our country, basically you split the market in half with domestically produced cars. No one would argue that we don't need automotive production in the United States and that it is okay to import cars instead of produce them here in the US. Therefore, nobody should be surprised to see consequential policy work towards reshoring automotive production. The Trump administration has strong support for both the American steel and the American automotive sectors. Fortunately, Cleveland-Cliffs is situated right there at the crossroads of these two sectors that are so critical to the US national and economic security. Cliffs is not just a steel company that happens to make some automotive steel. Cliffs is the American steel company designed to supply domestically produced steel to the American automotive industry. The actions taken by the administration are squarely aimed at boosting the production of cars and trucks in the United States using steel produced in the United States. The best suppliers of steel for these current situations are the ones that are well-established with the highest OEM marks for quality, reliability and delivered performance. As our automotive clients are now working to reshore their manufacturing footprint in the United States with a great sense of urgency, we are proactively engaging with these automotive customers and finding short-term solutions for them. There is plenty of spare capacity to increase car production here in the United States right away and we are already seeing some of our most important customers shift overseas production back to made-in-USA vehicles. We are enjoying meaningful success in working with both domestic and international auto OEMs in securing longer-term automotive steel supply as they run their existing factories in the US at higher utilization rates and make plans to build new plants to expand domestic automotive production. We have also gained back market share from our key automotive OEM accounts. At this point, it is very clear through our order book as well as a consequence of recently extended contracts with our well-established clients that profound changes are coming. Automotive remains a high-margin business for Cliffs and we expect to see a benefit in the $250 million to $500 million EBITDA range annually starting to incrementally materialize in the second half of this year and fully impacting our results in 2026. This brings us now to issue number two. We firmly believe that the Trump administration is spot on in its push to bring back manufacturing to the United States. And we know that in the long run, this will be good for the American steel industry and for Cleveland-Cliffs. However, in the short term, we need to do everything we can to make sure that we remain cost competitive. In order to do so and to return to profitability, we are taking decisive actions to optimize our operating footprint. Several of the assets impacted have been loss-making for some time, but we have been absorbing these losses in anticipation of new business resulting from projects widely advertised, but never materialized, supported by the infrastructure bill, the CHIPS Act and the IRA. Unfortunately, that never happened, creating a situation that we now need to fix. We don't take these decisions lightly, knowing that approximately 2,000 employees were impacted by these operational changes. That said, these are necessary actions and we have made the following changes to our operations. First action, we fully idled our Minorca mine and partially idled our Hibbing Taconite mine, both in Minnesota. These idles were necessary to rebalance working capital needs and consume excess pellet inventory that we produced in 2024, responding to the weak demand that plagued us during the final months of the Biden administration. Second action, we're idling the Hot End at Dearborn, Michigan. Dearborn works has very modern downstream equipment with a PLTCM, Pickling Line and Tandem Cold Mill, and an extra-wide automotive grade galvanizing line for exposed parts. These facilities will continue to operate with low interruption. But Dearborn also has a stranded blast furnace BOF caster without the hot strip mills. We will be replacing Dearborn's current production of hot metal with the restart of our Cleveland number six blast furnace. We should be back in operation by the time the Dearborn blast furnace is idle. The mines and Dearborn blast furnace idles are geared toward efficiency gains and these changes will not affect our ability to serve our OEM and service center customers. Outside of these, we still carry some legacy assets that are simply not competitive and loss-making. We will be idling these assets, which are included in the next three actions. Third action is Steelton, Pennsylvania. Steelton is primarily an electric arc furnace rail mill. Unfortunately, our rail customers prefer artificially cheap imported rail. In one case, the customer imports 50% of his needs from Nippon Steel who is continuing to ship rail from Japan right through the Section 232 tariffs. That creates substantial pricing pressure for the domestic portion or the other 50% of the business that we share with the other two domestic suppliers, both of them with more equipment than Steelton. Fourth action, Conshohocken, Pennsylvania. Conshohocken is a high-cost specialty plate finishing facility. We can perform the vast majority of the finishing work currently done at Conshohocken in our EAF facility located in Coatesville, Pennsylvania. Fifth and final action, Riverdale, Illinois. Riverdale depends on liquid pig iron sent by railroads across the state line from Indiana, creating a significant cost disadvantage for the plant. There are several competitors for the Riverdale book of business, each of them with a more competitive cost profile. This action generates operational efficiencies related to logistics and fixed costs with no change in overall volume output. The idling of Riverdale will allow us to keep the pig iron where it belongs at Indiana Harbor, a plant that currently has underutilized capacity in both steel-making and rolling. With more tonnage of liquid pig iron available for internal use, we expect Indiana Harbor to be one of the biggest beneficiaries of the expected reshoring of automotive production into the United States. These last three operational changes solidify our move away from three markets that have not been profitable for us, rail, specialty plate and high carbon steel sheet. The situation can always change, but for now, this is the right thing to do. Taken together, this change represents savings of over $300 million annually, not including the reduction of associated overhead and improved efficiencies at other operations. Very importantly, as we eliminate all this legacy inefficiency, it will become apparent that Cliffs is not a high-cost steel producer. By using pellets and HBI 100% made in the USA in our steel plants, at today's busheling scrap price, we produce hot-rolled coil in our integrated mills for a cost that is very competitive compared to any EAF flat-rolled mini mill. This is why the EAF mini mills are lobbying hard to exempt pig iron from tariffs. They want to continue to enjoy a very unfair advantage by continuing to be able to buy dumped imported cheap pig iron from Brazil, Ukraine, South Africa, just like importers of steel prefer to buy cheap imported dumped steel over domestically produced steel. The level-playing field rules should be applied to the EAF mini mills as much as it is applied to everyone else. And we fully expect that the EAF mini mills are treated by the Trump administration the same way all other importers of dumped products are treated. Issue number three is the contract with ArcelorMittal to supply slabs to their 50-50 joint venture with Nippon Steel in Calvert, Alabama. Most of you are aware that as part of our acquisition of ArcelorMittal USA in 2020, we signed a five-year agreement to supply the Calvert hot strip mill with up to 1.5 million tons of slabs per year, primarily from Indiana Harbor. This slab supply agreement has become exceptionally bothersome in the current environment. The contract price for these slabs is driven by the Brazilian FOB index that usually correlated with US flat-rolled steel pricing. So, when we guided to hot-rolled sensitivities, this slab volume was factored in. However, the correlation with HRC has been disrupted significantly. Brazil, rightfully so, is now facing 25% tariffs instead of the previous Section 232 slab quota. With that, the buyer universe for their slabs in the US has shrunk, and the Brazilian slab mills have had to look elsewhere for buyers in other markets, which led them to dump their slabs at lower prices. So while the domestic flat rolled prices have gone up, our realized prices under this particular Brazilian price-linked arrangement have declined, leaving us with a significant negative margin on this product that is reflected in our Q1 results. We have discussed possible remedies with ArcelorMittal, but a mutually acceptable solution has not materialized. At this point, as the expiration date of this slab contract is getting closer, the best solution for Cliffs is to let the clock run out on December 9, 2025. Based on the current market for slabs and HRC, we expect to see a benefit of approximately $500 million in annualized EBITDA beginning in 2026, just by virtue of no longer having this onerous contract in place. Let me now touch on the Stelco acquisition, which has proven to be well aligned with our non-automotive commercial strategy. Stelco is the steel company of Canada, and we, from day one, have taken deliberate steps to redirect Stelco's sales into the Canadian market, where they belong. Stelco's operations offer an ideal platform to serve their home market with speed and efficiency. With Stelco's favorable cost structure, they can compete for and win any business in Canada. Previously, as a participant in the US market, Stelco was a major disruptor here in the Midwest of the United States. While Stelco has benefited from absorbing legacy Cliffs business in Canada, particularly in automotive, the strategic repositioning of Stelco as a Canadian supplier of steel to the Canadian market has given our US mills more business opportunities, ultimately allowing us to restart Cleveland Works' number six blast furnace. On the strategic front, some of you have probably seen headlines about the uncertain future of our DOE-supported strategic projects at Middletown and Butler. President Trump's administration clearly has different energy policy priorities than the Biden administration. That said, we are in direct dialogue with the Department of Energy leadership on these awards, and the agency wants to fully understand both projects and the benefits of each one. As it relates to the larger Middletown project, we are working with the government to explore changes to the scope to better align with the administration's energy priorities. Such a change in scope would entail a substantially lower-cost project, one that does not assume availability of massive amounts of hydrogen and would instead rely on readily available and more economical fossil fuels. We will hopefully have more to share on this project in the near future, but it is fair to assume that the Middletown project, as announced in 2024, will be substantially altered. As for the Butler project, the induction and reheat furnace project is highly accretive, with a favorable payback, and at a $75 million DOE grant amount, it is not something we feel at risk. Importantly, the Butler project directly supports the US energy dominance goals of President Trump's administration. As the only grain-oriented electrical steel producing mill in the United States, Butler Works is critical to energy security in our country. This project will expand the capacity and capabilities of Butler Works in response to the evolving demands of the transformer industry. We are still big fans of this project for its economics, low capital burden, and enhancement of our most profitable business, the production of GOES, grain-oriented electrical steels. Lastly, the transformer plant at Weirton, West Virginia. Cliffs needed a partner that could supply the technology and licensing required to produce transformers. With our partner currently having second thoughts about the Weirton location and also considering a smaller plant than the one we had originally envisioned, we have made the decision to no longer pursue this investment.

Good morning, everyone. Q1 reflected much of the lagged impact of the challenging pricing environment from late 2024 and pre-Section 232 steel tariff environment in early 2025, and the underperformance of non-core assets that we're now idling. For the first quarter, we posted an adjusted EBITDA loss of $174 million. Total shipments in Q1 were 4.14 million tons, consistent with our guidance to break above the 4 million ton mark with a full quarter contribution from Stelco. Q1 price realization of $980 per net ton was only a slight improvement from Q4's $976, remaining weighed down by lower-than-expected realizations in plate and spreads for cold roll. The inclusion of Stelco into our results continues to help manage our weighted average unit costs, but the underperformance of non-core assets in Q1 largely drove an increase in our unit costs of $15 per ton. Quarters like Q4 2024 and Q1 2025 are completely unacceptable, nor are they a reflection of our typical run rate for us. Between improved pricing and the three factors that Lourenco laid out, automotive recovery, idling of loss-making assets, and the end of the onerous slab contract, financial results should improve in the second half of 2025, and then reset higher in 2026 as all of these factors become fully baked. The six separate asset idlings are the primary reason why we expect even greater cost reductions year-over-year. Our previous expectation was a $40 per ton year-over-year reduction in 2025 relative to 2024, and now we're at a $50 per ton year-over-year reduction. Because of the timing of the WARN notices, all of these reductions will come through in the second half of this year. On our last call, I indicated that with the inclusion of Stelco, for every $100 increase in the HRC price on an annual basis, our yearly revenue would increase roughly $1 billion, all things equal. And after factoring in changes like profit sharing and historical scrap correlations, this $1 billion impact would largely flow directly down to EBITDA. This correlation still applies, assuming all things equal. However, the current environment has resulted in some unusual dislocations that have challenged the all-things-equal assumption for the equation. For example, as previously mentioned, while the HRC prices have rebounded here early in 2025, slab prices have not moved up in tandem as you would typically expect. The fact that we have kept Stelco tons primarily in Canada and other factors like lower-than-expected plate and cold-rolled correlations to hot-rolled prices have also muted the impact of that $1 billion correlation for now. With that said, even with the HRC curve currently in the 800s, you can still expect meaningful EBITDA improvement in performance in the second half of 2025 relative to the first half. Something that often comes up in moments like this is divestitures of non-core assets. And this is a very asset-rich company. We have recently received several unsolicited inbounds from buyers interested in acquiring an array of assets in our portfolio. While there's no assurance that any of these opportunities will ultimately lead to any transactions, we're always open to pursuing a deal if the value is right, if competitive dynamics are not disrupted, and if the sale does not compromise our key competitive advantages. We also continue to take a serious look at capital expenditures and have further reduced our 2025 CapEx guidance from $700 million to $625 million, mostly due to reduced sustaining CapEx at our idled assets and cancelling of our capital deployment at Weirton. Beyond 2025, Lourenco has laid out the status of our three strategic projects. And based on that, it's fair to expect significant reductions in CapEx in 2026 and beyond as well, though we won't have exact numbers until our negotiations are more advanced.

Thank you, Celso. It's clear to us that our rebound from these weak quarters is coming, mainly from our many self-help initiatives, but also from the proper enforcement of the trade laws of the United States. The pathway back to healthy EBITDA in cash flow generation is not a burdensome mountain to climb, but rather a matter of execution on actions that are largely already in motion. With that, I'll turn it to Sherry for Q&A.

Our first question is from Nick Giles with B. Riley Securities. Please proceed.

Thank you, operator. Good morning, everyone. My first question is around the $300 million savings. This is encouraging to see. And so how should we think about the timing to achieve the full run rate of these savings? And I was curious if there are ultimately any additional actions that could still be taken to improve your through-the-cycle earnings. Thank you so much.

Good morning, Nick. I'm going to transfer that to Celso to answer. Go ahead, Celso.

Yeah. Hey, Nick. Part of the reason that we took this action right now is, if you think of the WARN notices, for example, it's a 60-day period. So, if you think of when we took action, in 60 days, you're into the beginning of the second half of the year. So, that's when you'll see the full impact of the $300 million in savings start to materialize. And just to give some more detail around that, as we noted, we also posted a presentation on our website, by the way, which kind of lays out more of the details. But the majority of that $300 million is related to the Cleveland-Dearborn switch. That's about $125 million. And then you have $90 million, call it, $90 million to $100 million related to the Riverdale fixed costs, $45 million for Conshohocken and about $30 million for Steelton, and then the balance, $20 million or so, is the Minorca and Hibbing idles. But you should expect all of that to be realized here in the second half of 2025.

Celso, this is very helpful. I appreciate it. My follow-up question is about what you mentioned regarding the second half. With the incremental increase in cost savings of $10 per ton, could you clarify how we should consider the timing on the cost side? We will likely see some improvement in average selling prices that could begin in the second quarter. I'm interested in how you would quantify those two areas. Thank you.

Yeah. I mean, from a kind of Q1 to Q2 sequential standpoint, you won't see a material impact. Cost should actually be up a little bit, call it, $5 a ton from Q1 to Q2, because we're going to still have those non-core assets in our portfolio. But later in the year is when you're going to start to see a more meaningful impact from optimizing the footprint, the reduction of the fixed costs, and then the reduction of the overhead. So, we'll see a significant benefit in the second half relative to Q1 and Q2.

I'll jump back in the queue, but continued best of luck.

Thank you, Nick. Appreciate it.

Our next question is from Albert Realini with Jefferies. Please proceed.

Hey, good morning, Lourenco and Celso. Thank you for taking my question.

Hi, Albert.

I would like to know the impact of the steel tariffs on Stelco as mentioned on Slide 10. Does this relate to any adjustments in the planned synergies or the anticipated EBITDA impact from Stelco on a yearly basis?

That's a very good question, Albert. We need to clarify which tariffs we are discussing. When we acquired Stelco, we did so with the intention of removing Stelco from the American domestic market as a disruptor, similar to their previous role in Cleveland and Chicago. The Section 232 tariffs on steel were simply in line with our existing strategy, so there hasn't been a shift in our approach. These tariffs also create challenges for other Canadian competitors trying to sell in the U.S. market, which aligns with our plan to not sell Canadian steel produced at Stelco in the United States. While this situation helps us compete against other Canadians in the U.S., the broader tariffs affecting Canada have hurt our clients and their ability to sell to the U.S., which was not anticipated and is not part of our strategy. If I had known Canada would not be treated favorably, I wouldn't have been so eager to acquire Stelco. However, I believe this situation is only temporary. I see the recent Carney-Trump meeting as a positive step towards normalizing the U.S.-Canada relationship. We are interdependent and need to collaborate moving forward. The Section 232 tariffs are a separate issue, but in general, tariffs will need to be reassessed. It's clear that the USCA treaty, which I've always said is necessary, will be revised soon. Did that answer your question, Albert?

Yeah, that's clear. Thank you, Lourenco.

Thank you.

Our next question is from Lawson Winder with Bank of America. Please proceed.

Thank you, operator. Good morning, Lourenco and Celso. It's great to hear from both of you, and I appreciate the update. I would like to inquire about your expectations regarding the rise in domestic auto production, specifically if any of that increase assumes a decrease in imports from Canada. The reason for my inquiry is to understand if there could be any risk to this outlook, particularly if Canada were to regain an exemption related to auto production.

Look, when I say normalization of trade between the US and Canada, auto is included, because there are parts that are produced in Canada that are necessary to assemble a car in the United States. I think this part has already been litigated by the car manufacturers, and they already got some relief. As a matter of fact, we're starting to see a much more benign behavior from the auto OEMs regarding the opportunity to use parts, particularly parts from Canada, and also from Mexico, but particularly parts from Canada. So, this is in the making, and the car manufacturers are doing a good job in negotiating with the Trump administration. And we are seeing the benefits. So, we're extremely excited with the new opportunities in delivering more steel to the car manufacturers here in the United States. Let's face it, Lawson, even if the number of cars sold in the United States or in North America for that matter, are lower in the near future as a result of the restrictions that were applied by President Trump, the overall number of cars produced in the United States will increase, and that for us is what matters. For us, suppliers of steel, that's what matters. Let's put numbers on that. 16 million cars sold, let's call 8 million cars produced here and 8 million cars imported from somewhere. If the number goes from 8 to 12, for the car manufacturer, it's a reduction from 16 to 12 in cars sold. For us suppliers of steel, particularly Cliffs, it's an increase of 50% for 8 million cars to 12 million cars. And that's what I'm preparing my company for. This will happen, and I'm being very conservative in my numbers. We are preparing Cleveland-Cliffs to be by far the biggest beneficiary of the increasing production of cars in the United States because we are a well-established producer of steel for the automotive industry.

Okay, that's very helpful. I want to follow up on the quarterly bridge regarding ASP and cost. You mentioned costs might increase, but I didn't catch if you said whether the ASP would be up as well. Essentially, I am looking to understand the expected direction and magnitude of our EBITDA increase in Q2 compared to Q1.

Yeah, sure. Hey, Lawson. Yep. So, I mentioned costs should be up about $5 a ton from Q1 to Q2, but ASP should be up much higher than that, call it about $40 a ton from Q1 to Q2. And if you break down kind of from product by product, the quarterly lag contracts are way better. Call it, they're up, call it $200 a ton in Q2 relative to Q1. The monthly lag contracts will be up about $100 a ton. And spot pricing right now is generally much higher for the US business. So those are sort of the biggest drivers of that $40 a ton ASP increase from Q1 to Q2.

Yeah, that's great caller. Thank you very much, Celso. Thank you, Lourenco.

Thank you.

Our next question is from Alex Hacking with Citigroup. Please proceed.

Thank you. Good morning. Celso, you mentioned the possibility of asset sales. I have a couple of questions regarding that. First, could you remind us of the debt covenants you have? Second, to the extent you can discuss it, what magnitude of asset sales are we talking about and which specific assets might be involved? Thank you very much.

Yeah, sure. Good morning. So, all of our covenants are springing covenants. So there's nothing that we are too worried about. The leverage ratio does increase on our borrowing base by 25 basis points when you're over four times levered. So we're experiencing that now. But other than that, there's nothing that we're concerned about. And then in terms of asset sales, like I mentioned, we have a lot of assets that are non-core. We're a very asset-rich company. I'm not going to go into specifics of which ones, but we have received unsolicited inbounds, and we're talking about assets that could bring several billion dollars of potential value. So, to the extent that those materialize and we're able to sell those for cash, all that cash will be used to pay down debt as well. And we have a capital structure, just kind of while we're on it, that is kind of pre-designed for deleveraging, as you know. The ABL can be easily paid down with no breakup fees. And all of our bonds are staggered. We don't have any meaningful maturities. And some of those bond tranches are actually callable at par with no penalty either. So there's a lot of avenues that we can deploy cash towards should we be successful in selling those assets.

Okay. Thanks. That's clear. And just to follow up, I mean, are these transactions that could potentially be announced in the next few months or it's longer lead time than that? Thank you.

Some of them are in advanced stages. I think there's some that we could announce still this year. Some are going to take longer. And like I said, nothing's guaranteed, but it's nice to see that there's a lot of inbound interest.

Our next question is from Bill Peterson with JPMorgan. Please proceed.

Yeah. Hi, good morning, Lourenco and Celso, and thanks for taking our questions. Maybe rounding out the second quarter guidance, how should we think about shipment profile within the guidance?

Yeah. Hey, Bill, good morning. Shipments should be up slightly from Q1 from the 4.1 million tons. We're bringing back C6 by the time Dearborn is idled. Auto volume should increase from Q1 to Q2. So, I'd say a slight uptick in Q2 relative to Q1. And then mix should also be pretty similar to Q1.

Okay. Yeah. Thanks for that, Celso. And then I guess coming to Weirton, but also maybe a broader sort of question around GOES, I guess can you provide more detail on what changed given prior indications that equipment had been ordered, and I guess the partnership had been arranged? Is there a chance that this could come back into the fray and actually could fire or is it pretty much not going to happen? And then on GOES directly, maybe outside of the commentary on Weirton, how should we think about demand trends and shipments in that given it still seems that there are some pretty long lead times across the transformer space?

Demand for GOES continues to be very strong. The plant will be constructed with the partner, as I am not able to build it alone due to not having the necessary licenses or intellectual property. I prefer not to engage in joint ventures since partners in a 50-50 deal have a say in decisions. If the partner wants to renegotiate agreements, I will withdraw my involvement. The location and size of the plant are very significant to me because they affect throughput and the number of jobs available in Weirton. The Weirton site holds special importance for me, as it is where everything began. My primary goal is to increase sales of grain-oriented electrical steels, and I am committed to supporting this project, particularly if it occurs in Weirton. If it takes place in Weirton, I am on board; if not, I will step away. The partner is fully committed to building the plant, and I will supply them through a long-term agreement since they cannot source grain-oriented electrical steels from Japan, Korea, or China any longer. Therefore, they must buy from me at market prices. If they choose to proceed with the Weirton location, I will collaborate amicably with them to establish operations there. They've expressed some uncertainty regarding the location and size, but I don't see size as a problem; we can start small and grow. The Weirton location is crucial for me—it's either Weirton, or I'm out. I will remain a supplier of grain-oriented electrical steels, and they can rely on me for that commitment. I hope this clarifies things.

No, that definitely helps. Thanks for sharing the insights, Lourenco and Celso and good luck navigating this current environment we're in.

Thank you.

Thanks, Bill.

Our final question is from Timna Tanners with Wolfe Research. Please proceed.

Yeah, hey, good morning. I wanted to ask if you could walk us through any exit costs or severance costs related to the actions at the different locations now, including maybe Weirton and the other ones that you called out?

Yeah. Hey, Timna. So, cash charges related to the idles in the near term are pretty minimal, call it, $15 million in Q2. What we will have is some non-cash accounting charges in Q2. Those should be close to, call it, $300 million, and those are mostly related to impairment, some employment accrual costs. And then we'll have ongoing, continued employment charges similar to what we have with Weirton, but that's kind of how you should think about it going forward. And then from an ongoing idle cost, those should also be minimal, less than $5 million per year for all of the idle actions.

So that severance costs aren't a big cost hit either, then?

Correct, yeah.

Okay. And then one more, if I could, on the CapEx comment you had for future years also coming down, can you just remind us where you stand with any blast furnace relines that I believe you've called out in the past, any timing updates on those, please?

We will continue to rely on blast furnaces, which are essential and will remain in use, similar to their status in Japan, Korea, Europe, and Brazil. We are committed to competing against electric arc furnaces (EAFs). With the closures of non-core assets, our cost to produce hot-rolled steel is highly competitive with any EAF mini-mills. You can expect to see this reflected in our results. Additionally, we are strengthening our position as a supplier to the automotive industry and will maintain the successful results we've achieved in the past, thanks to our improved cost competitiveness after eliminating non-core assets. It's crucial to have a fair competition environment; thus, I oppose allowing competitors to import dumped pig iron in the same way dumping is not permitted for steel. Our feedstock is completely sourced from the USA, and we have a domestic HBI plant manufacturing HBI in the USA. The competitive landscape is intense, but I am determined to compete effectively and succeed.

Okay, I'm sorry, I was just asking about blast furnace reline costs. I understand that…

We will be relining our blast furnaces, including the one in Middletown due to changes in the project scope, and the one at Burns Harbor. We recently completed a reline in Cleveland and will keep this process ongoing. It’s an essential part of our operations, and the next reline is scheduled for 2027. We’re able to extend the lifespan of our blast furnaces by operating conservatively and performing regular maintenance. The reality is that we are back on track and moving forward.

Yeah, good morning, Lourenco and Celso. A couple of questions. One follow-up on CapEx. Any updates as you analyze or revise potentially your plans on what to do with the two projects that you have received some support from the different grants that the government put out? Would those be considered to maybe cancel them or delay them or at least do them in a more smooth way so that the CapEx is preserved, the cash is preserved? And the second question has to do with the imports and the Section 232. What is your sense as to the benefit of cutting all the quotas going to zero and just keep the rates at 25%? Because what we're hearing is that some foreign countries that before weren't on quotas and now are not, are being quite aggressive in trying to send material into the US, which in the past they were not able to do. Thank you.

Yeah. Hey, Carlos. It's Celso here. Let me comment on the CapEx first, and then Lourenco can talk about the tariffs. But we talked about this a little bit on the prepared remarks, but maybe it wasn't fully clear or you didn't catch it. But the DOE related CapEx stuff is still sort of in flux just given negotiations. But the bottom line is that it's going to be changed and it's going to be significantly lower than what we were talking about before. And then just some metrics around CapEx for this year, we're lowering our guidance to $625 million total from our previous $700 million. And that 2025 guide is inclusive of the $30 million that we're spending on Butler. And then we're not moving forward with Weirton anymore, which saves us $50 million of CapEx in 2025. And then when you combine everything that we discussed in the prepared remarks related to Middletown, you can conclude that 2026 CapEx and beyond are going to be much lower than we had earlier anticipated. And then, as Lourenco mentioned, the Burns Harbor reline, which we previously had slated for 2026, is now going to be in 2027. So those are the main sort of changes to our CapEx expectations.

Regarding Section 232, you mentioned quotas and indicated that you believe quotas are coming. Is that correct, Carlos?

Yeah. No, sorry, Lourenco. What I'm saying is that since the quotas have been removed, a lot of foreign countries that in the past were capped on how much they could send into the US are now being very aggressive because the 25% existed before; they still can make a profit, but with no limit as to how much they can import, they keep calling traders to send material into the US.

Yeah, the biggest situation right now with the Section 232 is there are the countries that are selling through the tariffs. Let's take the example of Vietnam offering hot rolled, duty paid at the port at 700 and something. That's crazy. This is a country that doesn't even deserve a trade agreement because they did not get the underlying message of the administration. The underlying message of the administration is don't dump because you're not going to be treated well if you continue to dump. It's not like, 25% I can accommodate. My government will subsidize me to be able to go through the 25%. That's not the message. The message is stop dumping. So, I hope, I really hope that the Trump administration does not negotiate a very friendly deal with Vietnam, because Vietnam is screwing up in the market as they always do. The other example is Japan. Nippon Steel is selling rail through the tariffs. These things have consequences. And it's not like the case of going to the government and saying, you know what, Trump administration, now we need for rail, we need 50% or 100% tariffs because it's clear that Nippon Steel has no limits. They will go through the end. If I go to 100%, they will sell through the tariffs. How they do that, I don't know. Maybe Morgan Stanley should know how they can do that and how Nippon Steel can continue to be so profitable, selling at so low prices. What's the mystery? There are capitalist markets, right? So, and banks don't question that. I have never seen a report questioning how do they make money. So, anyway, it's not my problem. At least it's not my problem anymore because, like I said, dumping has consequences. I don't shut down a mill that has been in operation for a couple centuries producing rail in the United States lightly. But I do what I have to do. And we did, it's done. And it's a direct consequence of Nippon Steel selling rail through the tariffs, despite of Section 232. Did I answer your question, Carlos?

Yeah. Thanks, Lourenco and thank you, Celso for the clarification.

All right.

Thanks, Carlos.

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