LETTER TO OUR SHAREHOLDERS
March 14, 2022
Dear Fellow Cleveland-Cliffs Shareholders:
I am proud to report our 2021 results. As our financial reports indicate, we achieved all time annual records in revenues, net income, Adjusted EBITDA and free cash flow. More than that, we went from $2 billion in revenues in 2019 to $20.4 billion in revenues in 2021, and $525 million in Adjusted EBITDA in 2019 to $5.3 billion in Adjusted EBITDA in 2021. Very few companies in any business -- let alone companies in the steel business -- can report the growth we have had during the last couple years.
The steel industry consolidation that we led in 2020 allowed for the market conditions that generated these remarkable results. The cash we generated was reinvested in our business, as we de-levered our balance sheet, and reduced our diluted share count by 10%. On top of that, we also used the cash we generated to pay for the acquisition of Ferrous Processing and Trading Company (FPT), the leading prime scrap processor in North America. FPT is key to the execution of our strategy as it relates to the environment.
Talking about the environment, we continue to lower our usage of coke by increasing the utilization of hot briquetted iron (HBI) as a significant part of the burden in our blast furnaces. Our flagship Direct Reduction plant in Toledo is producing HBI that is now being exclusively used in-house within our blast furnaces. This plant was originally designed and built with the possibility of using up to 70% of hydrogen in the mix as reductant gas, and now we are moving ahead with plans to implement the usage of hydrogen in 2022.
Looking ahead, our massive presence as a supplier to the automotive industry is the key differentiator for us compared to other steelmakers. FPT has allowed us to reclaim back from our automotive clients, and from customers in other sectors as well, the scrap that is generated as the clients utilize our steel. As the biggest supplier of automotive OEMs in the United States, the vast majority of the steel used in making cars in the United States is coming from Cleveland-Cliffs. With FPT, we are now able to execute a closed-loop steel recycling strategy with our automotive clients. With that, we are actually helping these clients to effectively execute on their own environmental strategy.
As we look back on 2021, we could not have accomplished so much without the hard work and commitment of our 26,000 employees, approximately 20,000 represented by the USW, the UAW, the Machinists, and other unions. We appreciate the work of each one of our employees and the unions representing them.
We believe in manufacturing in the United States and in good paying middle class jobs. As a shareholder of Cleveland-Cliffs, I believe you do, too. On behalf of our employees, thank you for that.
Sincerely,
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Lourenco Goncalves
Chairman, President and Chief Executive Officer
