Cleveland Cliffs Inc (CLF)

[DewDiligence]

CLF’s CEO shareholder letter (in annual-meeting proxy):

https://www.sec.gov/ix?doc=/Archives/edgar/data/764065/000076406523000063/clf-20230403.htm

April 3, 2023

Dear Fellow Cleveland-Cliffs Shareholders:

The key to our 175-year longevity at Cleveland-Cliffs has been the ability to adapt and reinvent ourselves throughout our long history. The transformational acquisitions we completed in 2020 represented our latest evolution, and 2022 was the year where we finally made our presence felt as the largest flat-rolled steelmaker in North America. We recorded full-year revenue of $23 billion, the highest in our nearly two-century history. We also recorded near-record highs for Adjusted EBITDA and free cash flow, which were only surpassed by our performance in 2021.

With the help of this strong profitability, we were able to dramatically transform our balance sheet in 2022, reducing debt and net post-retirement liabilities by over $3 billion. …In addition, even with these major improvements to our balance sheet, we were still able to return healthy levels of capital to our shareholders.

We believe that our leading position as an automotive supplier is a strength of our business that will promote our future success. Our steel’s surface quality, formability and strength characteristics, as well as our company-wide devotion to meeting demanding service and delivery needs, sets us far apart from any competing material supplier, steel or otherwise.

Our reliability as auto manufacturers’ go-to supplier has enabled us to achieve significant fixed price increases for our automotive steel in back-to-back years. The increases we have achieved most recently were in the face of precipitously falling spot pricing for steel, finally breaking us free of the harmful notion that automotive steel should be priced like a commodity.

The main reason we have such a strong position in the automotive market is because of our commitment to blast furnace/basic oxygen furnace steelmaking [in addition to EAFs—Dew]. Supplying highly-specified automotive-grade materials, particularly exposed parts, dictates the use of blast furnaces and basic oxygen furnaces. We believe that this will continue to be the case; and over time, we are confident we will be able to drive sustained reductions in carbon emissions from our integrated steelmaking footprint. This includes the success we have had thus far with using more hot briquetted iron and scrap throughout our operations, as well as facilitating emerging technologies, such as carbon capture and hydrogen usage.

Our 27,000 employees have been vital to our recent success, and I thank all of our employees, particularly our union workforce, for their continued buy-in. This year, we successfully negotiated new, 4-year labor contracts with our USW partners, covering more than half of our employee base. The Company and the unions representing our workforce share the same goals. Through our established relationship with all unions, we will continue to collaborate and accomplish these goals together.

We continue to build Cleveland-Cliffs for the present, and for the future generations. The decisions that we are making and the changes we are implementing today will resonate for decades. I do not take that responsibility lightly. The ultimate measure of our success is the ability to share the benefits of all this work with our valued shareholders.

As a fellow shareholder, I appreciate your confidence and your support.

Sincerely,

Lourenco Goncalves

Emphasis added.