Good morning, ladies and gentlemen. My name is May, and I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs' fourth quarter and full year 2020 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 that its 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 forms 10-K and 10-Q and news releases filed with the SEC, which are available on the company website. Today's conference call is also available and being broadcast at cleveland-cliffs.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 in the earnings release, which was published this morning. At this time, I would like to introduce Lourenco Goncalves, Chairman, President, and Chief Executive Officer. Thank you, May, good morning to everyone on the call. Life at Cleveland-Cliffs has been intense, we have a number of developments to discuss today. We completed the acquisition of ArcelorMittal USA on December 9, 2020. A couple of weeks earlier, we completed the construction and began operating our direct reduction plant in Toledo, Ohio. We have also, one more time, put our financial expertise to good use and took advantage of opportunities presented by the capital markets to improve our balance sheet. Last but not least, we have recently announced our public commitment to aggressively reduce our greenhouse gas emissions 25% by 2030. I will begin with the most transformational piece, the acquisition of ArcelorMittal USA, including the totality of I/N Tek and I/N Kote, which ArcelorMittal previously shared ownership with Nippon Steel. The very first point I would like to make is the most important part of the acquisition, and that's the people that are now working for Cleveland-Cliffs. I could not be more pleased with the buy-in we have received from the workforce previously working for ArcelorMittal, not just from the leadership team, but also from the employees at the shop floor. If there is a single reason why we are doing so well as we integrate the new assets to our existing footprint, that's the buy-in from these new Cleveland-Cliffs employees. That came also with the enormous support and help coming from the employees that were with us before, including the ones that joined Cliffs from AK Steel. It's fair to say that the entire workforce, and that includes our union partners, all recognize that Cleveland-Cliffs' unique business model is now the envy of the steel industry, and they seem to be proud of that. We are too. Ideas without strategy are nothing, and strategy without execution is irrelevant. One can only execute if the people involved believe and buy in. Our great workforce, integrated and unified under a common strategy and disciplined execution, is the reason why we have been so successful. To our entire team, thank you all very much. Our competitive advantage is also predicated on a few things. We operate the entire production flow, from the extraction of iron ore out of the ground, all the way to manufacturing of complex auto parts and components. Said another way, Cleveland-Cliffs has reinvented the meaning of the word integrated, as in integrated steel mill. The word now includes mines, pellet plants, direct reduction, blast furnaces, BOFs, EAFs, AODs, hot strip mills, plate mills, cold rolling mills, electrolytic cleaning lines, hot-dip galvanizing lines, electro-galvanizing lines, cold and hot stamping, precision welding, laser manufacturing, and complex tooling. All these resources give Cleveland-Cliffs full control on costs and quality, and results in Cliffs having a tangible competitive advantage over our competitors. Also, as we process in our downstream facilities the steel produced by other companies, we have a window into what others are actually capable or not capable to do in automotive. Such insight was a determinant factor in guiding our decision to acquire AM USA. The assets we acquired from AM USA are complementary to the ones we already had from AK Steel, and that will save us from spending a significant amount in CapEx to make the AK Steel assets able to produce certain grades that we can't produce in Indiana Harbor or Cleveland Works. For the ones that like to talk about who is gaining market share from whom in the steel business, let me remind you one thing. One year ago, Cleveland-Cliffs was producing and selling zero tons of steel, and we're now, one year later, the largest flat-rolled steel company in North America. There's a pretty sizable gain in market share, I believe. Even more importantly, in comparing what we have at Cleveland-Cliffs with what we see from others, we feel extremely comfortable that our leadership position in automotive is very solid. The acquisition of AM USA elevated our participation in automotive to five million tons per year. On top of that, we also supply 1.5 million tons of automotive-grade slabs to ArcelorMittal Nippon Steel in Calvert, Alabama. Even with increasing tons from three to five million, we actually reduced our percentage of participation in the auto sector from 70% as AK Steel standalone, to 40% as a combined Cleveland-Cliffs, allowing us to benefit faster from higher market prices for steel. We also supply 100% of our iron ore needs in-house, and that's extremely important. The steel-making assets we acquired, both from AM USA and from AK, might have been historically at a competitive disadvantage on that regard due to having to purchase pellets from us. Now, the advantage is kept all within Cleveland-Cliffs. Another point to consider, differently from the scrap-based non-union shops, we do not pay our employees based on tons produced. They do that. We don't. Unlike these other steel producers, our business model does not prioritize the production of tons, and we are not in the pursuit of capacity utilization either. We prioritize value over volume. We prioritize delivering on time, and we accommodate the demands of our clients, particularly automotive clients. We, in 2021, are applying to the newly acquired assets the same m ethodology we applied to AK Steel in 2020, and that will bring the new assets to the same high level of delivered performance we have established at AK Steel since we implemented our way of doing business last year. Our clients know that and appreciate the changes and improvements we have been implementing. Our asset optimization process is off to a great start as well. We have already started moving slabs and coils between the former AK and former AM facilities to reduce logistics costs and to improve our customers' delivery requirements. This material movement continues to be optimized and should increase over time. With that and several other initiatives, we are well on the way to reach our synergy target of $150 million by the end of this year. Next, onto our Toledo plant. We are delighted to have completed construction of the most modern direct reduction plant in the world, and to begin production of HBI late last year. Those who have been following us are well aware of the value proposition this product brings to both Cleveland-Cliffs and to the entire industry. Our natural gas-based HBI is not only a cost-competitive premium alternative to imported pig iron and scrap, but will also reduce the Scope 2 greenhouse gas emissions in our industry as a whole. Additionally, once hydrogen becomes commercially available, our plant is already capable of using up to 30% of hydrogen as a partial replacement for natural gas with no equipment modification needed. Up to 70% with minor modifications, which would even further reduce emissions from the baseline. We are progressing through our planned ramp-up period, steering through a cold winter, and making the appropriate adjustments to bring the plant up to its full production level by the second quarter. We are currently making HBI exclusively for our own internal use, and we will start to ship products to third-party customers later in March. The timing of the startup of HBI plant is extraordinarily positive for us, with the obvious scarcity of domestic prime scrap in the marketplace. This scarcity of scrap should only grow as new E AFs start up in the United States, and we will have more buyers for the same scrap. Good for our HBI and good for Cleveland-Cliffs. We are also benefiting from a favorable steel price environment. This is particularly true since we acquired AM USA. This latter acquisition has given us more exposure to spot HRC prices than when we only owned AK Steel, with AK's outsized percentage of fixed price automotive contract sales in the product mix. With our very relevant position as a player in the newly consolidated U.S. domestic market, we are taking a disciplined approach to supply. We will continue to manage our customers' needs, and will not restart capacity on a whim just to add tonnage to the spot market. That would not be good for anyone, including Cliffs' business and our workforce. As I said, we don't pay our people based on tons produced, which is a practice that has infected this industry. We let our order book guide our production levels. Right now, the order book is in a good place, particularly for consumer goods, as well as from the stainless steel clients and service centers in general. Demand from automotive remains strong, and the auto OEMs continue to struggle to keep up with resilient consumer demand. far, we have seen only minor short-term demand impacts from a widely publicized chip shortage, all of which, as we have been told by our automotive clients, will be made up for during the year. In the meantime, we have been selling more steel to select service centers and manufacturing clients outside the automotive sector, enhancing our presence with these clients. This is actually a very positive demand development for these select clients because they are increasing their business with Cleveland-Cliffs, a company that is very accustomed with producing high-quality steel and delivering on time. Also very good for us, because we are accelerating the benefits from higher steel market prices ahead of annual contract renewals with automotive clients. The value over volume philosophy also guides our near-term production decisions. As has been publicized, we will be taking our Middletown facility down for a 45-day maintenance outage to do some work inside the blast furnace, but not a full reliance. In order to continue to meet our strong customer demand, we have restarted the smaller Cleveland number six blast furnace to make up for the lost Middletown reduction. Once Middletown comes back, we will have another maintenance outage at Indiana Harbor number seven. We currently have 10 blast furnaces in our portfolio and are keeping between six and eight furnaces in simultaneous operation. At any given time, we will probably have some maintenance to perform. We will manage all of these assets appropriately without having any shortfalls with our customers, while also not flooding the market with steel. Value over volume is a simple philosophy that will carry on into the future, and it's why you're not going to hear me talk about capacity utilization or even market share, except in automotive, but just because our leadership position on this one segment is too obvious. Only a small slice of the recent steel price run-up positively impacted our fourth quarter adjusted EBITDA performance of $286 million. Due to how contract prices work and usually applied lagging mechanisms, and the fact that we only control the AM USA assets for the last 23 days toward the end of the year, our steel profitability in the fourth quarter of 2020 has not benefited from these strong prices just yet. As a result, our EBITDA performance will dramatically improve in the first quarter of 2021. In addition, we can confidently say that the second quarter will look even better than the first quarter, this very good first quarter that we are in now, as rising prices become further reflected, HBI shipments pick up pace, and external pellet sales pick up with the reopening of the Great Lakes. This current steel pricing environment has also highlighted the competitive advantages that our unique business model has. As we all know, EAFs use scrap as their primary feedstock. The price for a ton of busheling scrap in the Midwest has almost doubled from where it was a little over a year ago. Meanwhile, the cost of our primary iron feedstock, iron ore pellets we produce ourselves out of our own mines, is basically the same as it has been for the past five years. Because of this, Cliffs has actually been your proverbial low-cost producer. To make it clear, this is not even a title I care to have, because there is so much more to making steel than a low production cost. You cannot treat safety first if you are obsessed with tons per employee. You can't invest capital to protect the environment if you are governed by your production cost number. You will not pay your workforce well if cash cost is your main metric. This is actually a capital-intensive industry, and we must work to generate return on invested capital, and not for bragging rights based on a questionable and not always true low cost position. Hopefully, this current environment is a lesson on the blanket statements made comparing cost positions, and we can put that subject to rest for good. This being said, we don't believe this current scrap dynamic will be short-lived. China has publicly stated their target of doubling EAF capacity from current 100 million metric tons to 200 million metric tons over the next five years. The increase alone is bigger than the size of our entire domestic steel industry and will require a lot of scrap. By 2025, China will be producing two and a half to three times more steel via the EAF route than the United States. However, to move from where they are today to the level that they plan to be, China does not have the infrastructure in place to collect and deliver all that scrap, and the void will be filled by imported scrap into China. That will come in large part from the United States, which has, by far, the largest and most mature scrap infrastructure in the world. This is something we at Cleveland-Cliffs predicted several years ago, and one of the reasons why we built our direct reduction plant. With the already very large existing EAF capacity in the United States, the new EAF furnaces being built by the domestic mills here in the U.S., and the massive new EAF capacity coming online in China, all fighting for the same amount of scrap available. We at Cleveland-Cliffs feel very comfortable with the powerful company we have built and with our self-sufficiency metallics business model. The capital structure underlying this best-in-class business model was improved once again two weeks ago. As you may recall, last April, at the beginning of the pandemic, when the automotive industry was out of operation, we issued a tranche of high coupon secured bonds as insurance capital. Now that business conditions have normalized, we sought to reduce the outstanding amount of these secured notes as much as possible. The only method to achieve that was by using the 35% equity call provision from the indenture of the notes. The sole purpose of issuing the small number of 20 million shares was to use this call back provision and retire the maximum amount possible of these high coupon notes without paying a make-whole penalty. This coincides with a block sale of about half of ArcelorMittal's CLF common shares that they received as part of the payment we made to them when we acquired AM USA. These secondary shares were already outstanding and had no impact on share count. We also successfully placed $1 billion of unsecured notes at the lowest coupons we have ever achieved as a high yield issuer, respectively 4.625% and 4.875% for eight and 10 year issues. These outstanding coupons and the same day deal price execution after spending just a few hours in the market, are a clear and unequivocal demonstration of the leveraged finance market support to our business model, strategy, and execution. At the end of the day, with this capital markets activity, we replaced secured debt with unsecured debt, lowered interest expense, cleared our maturity runway entirely all the way to 2025, and further improved our liquidity by using a portion for ABL repayments. Finally, in January, we publicly announced our commitment to reduce greenhouse gas emissions by 25% by the year 2030, covering both Scope 1 and Scope 2 emissions. While we have transformed as a business, we will continue to operate Cleveland-Cliffs on the same environmentally responsible manner we have always done. Climate change is one of the most important issues impacting our industry and our planet. Our commitment includes using more natural gas to reduce our iron ore, as we do in our direct reduction plant, producing HBI. Implementing clean energy and carbon capture technologies, and becoming more transparent on disclosing our progress. With that, I will turn it ov er to Keith Koci before giving my final remarks. Keith? Thanks, Lourenco. Before I get into the specific results that were foreshadowed with our pre-announcement a month ago, I will first discuss our new business segmentation. You saw in today's release that we are now split into four segments, but the bulk of the operational and commercial activity will take place in our steel making segment. The foundation for this is driven by how the management team views our business. The strategic rationale behind our two major acquisitions was to form one large and competitive, fully integrated steel company, which is exactly what this segment represents. This segment captures effectively all of the production activity that begins at our mine sites, including our pellet plants and other raw materials operations, and ends with our steel and finishing plants. Products sold from this segment include slabs, hot-rolled, cold-rolled, coated, galvanized, stainless, electrical, tinplate, plates, rail, forgings, pellets, and HBI. Our downstream units will remain as separate segments due to the different commercial nature of these businesses, although they remain an important piece of our integrated entity. Because of this reporting change, we will not have any significant noticeable inter-segment eliminations going forward, other than the small impact from the finished steel sold to our downstream segments, resulting in a much smoother and cleaner model. As for our results, our fourth quarter adjusted EBITDA of $286 million represented 127% increase over last quarter, and 158% increase over last year's fourth quarter. The sequential increase was driven by the following. increased steel shipments, higher prices, better costs due to increased production volumes and reduced idle costs, the stub period contribution from the AM USA assets, and increased third-party pellet prices. In the steel making segment, of our 1.9 million net tons of shipments, we shipped 1.25 million net tons from the AK side and picked up the remaining 600,000 from our 23 days of ownership of AM USA. We expect to more than double this amount in the first quarter, with total shipments of approximately four million net tons. You will notice our average net selling price declined in the fourth quarter compared with the prior quarter, which was purely related to mix. The AM USA assets we acquired do not sell stainless or electrical steels, which carry a much higher average selling price, bringing the overall average down. Our shipments during the quarter were 44% coated, 22% hot-rolled, 18% cold-rolled, and 16% other steel, which includes stainless, electrical, slabs, plate, and rail. Third-party pellet sales during the fourth quarter were about 2 million long tons, which consists of approximately 1.6 million long tons sold to AM USA prior to the acquisition date. Going forward, our external pellet sales volume should be 3-4 million long tons per year, with the remainder of our output being used internally by our blast furnaces and direct reduction facility. Our steel supply contracts are roughly 45% annual fixed price with resets throughout the year and 55% HRC index-linked. That latter piece further breaks down to about 40% on pricing lag, split between monthly and quarterly, with the remaining 15% on a spot basis that currently have lead times up to three months for hot-rolled and four months for cold-rolled and coated products. As Lourenco noted, given this structure and the short stub period for the new AM USA acquisition, the recent run-up in steel prices should accelerate in our results in the first quarter and continue its advancement into the second quarter. When we completed the AM USA acquisition, we upsized our ABL facility from $2 billion-$3.5 billion, which is currently more than fully supported by our inventory and receivable balances. This has provided us with a sizable liquidity balance of $2.6 billion as of this week, of which approximately $850 million is earmarked for bond redem ptions set to take place in March related to the capital markets transactions we completed earlier in February. Most of the other significant changes to our balance sheet, like PP&E and goodwill, are attributable to standard acquisition accounting. As for cash flow, our fourth quarter was impacted primarily by changes in working capital, most notably receivables and inventory. Because of the factoring arrangement AM USA had in place prior to the acquisition that was terminated at closing, we began rebuilding the receivable balance in December, which was factored into our valuation for the acquisition. We will continue to build working capital in the first quarter, after which it will then normalize and become a source of cash for the remainder of the year. Our fourth quarter capital expenditures of $147 million took into account spending for the AM USA assets during the last 23 days of the year and included $61 million related to the Toledo plant, where we have about $60 million in run-out spend going into 2021. This is included in our $600 million-$650 million capital budget for 2021, which includes about $500 million in sustaining CapEx, as well as other small projects such as the new Precision Partners plant in Tennessee, walking beam furnaces at Burns Harbor, and the powerhouse at Clev eland Works. In closing, with the completion of our two transformative acquisitions and the recent capital structure activity we completed two weeks ago, this company is on solid financial ground. With no cash taxes to pay and manageable CapEx interest, post-employment obligations, we are primed to generate significant free cash throughout 2021. We will use this excess free cash flow to continue to reduce our debt balance, and we will have ample opportunity to do so in the current market environment. Now, I will turn it back to Lourenco for his closing remarks. Thanks, Keith. What a year 2020 was, and what a phenomenal company we have formed during 2020. Rather than panic during the most challenging days of the pandemic, we went on the offensive and took advantage of the amazing opportunities out there to improve not only ourselves, but also to change, for good, the steel business environment in the United States. As the new Biden administration starts to work towards infrastructure, manufacturing, environmental responsibility, and good-pay, middle-class union jobs, we believe we have just built the perfect company to thrive in these challenging times that we're in. We are ready to make our mark on the industry with our 25,000 employees all rowing in the same direction, and we can't wait to show you what we can accomplish. With that, I will turn it over to May for Q&A. Thank you, sir. As a remin der, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. We have our first question from Seth Rosenfeld from Exane. Your line is now open. Good morning. Thank you for taking our questions. If I can kick off, please, with a few questions on the integration of the ArcelorMittal assets. I'm wondering if you can give us a bit of color, I guess, in terms of what perhaps has surprised you most about the asset post-acquisition. How comfortable are you with asset quality? Is there any need to invest more Cap Ex going forward that you should flag at this stage? We understand that a lot of what happened in late 2020 were a number of challenges with their delivery performance. What do you think can be done in order to improve that and really bring that up to par with what you've been able to do within AK? Thank you. Good morning, Seth. Asset quality of ArcelorMittal is a notch below the asset quality that we found at AK Steel, but that's way above the average of the industry. I did not see any massive concerted efforts to reduce the reported cost that I saw in other companies during the last several years happening at ArcelorMittal USA. This being said, it was clear that some more maintenance CapEx should have been spent in, at the very least, during the last one or two years. We are going to have to play a little catch up, but this is all reflected in the numbers that we are anticipating, so nothing to be worried about. Long story short, even though it's not like AK Steel that we found equipment pretty much in good shape, the equipment at ArcelorMittal is not at the same page, but I cannot call them bad. The money involved to bring them up to speed, which we have already started spending, by the way, is not anything to be worried about. As far as delivering performance, keep in mind one thing. The same people that are complaining about delivery performance now are the ones that when hot rolled prices were 440, they were not buying because they were waiting for prices to go further down. Don't forget that. Now, hot rolled prices are above $1,200, and we are doing everything we can to take good care of these clients. There are clients and clients and clients. We are taking care of the ones that deserve first, the ones that don't deserve that much second, and we also serve the others with the amount of availability that we have left. That's the nature of the beast. We are not going to overcrowd the market just to see these clients walking away from us with absolutely no concern if things change. Things change in this business unless we do as much as we can to keep things the way they are, and that's exactly what we're doing. Long story short, we are working for, one, ourselves, Cleveland-Cliffs and our employees. Two, for our shareholders. Three, for our bondholders, and we'll take care of the clients in between. Thank you. That's very clear. If I can ask a separate question, I think you touched on this just now, but how do you think about serving your customers from a volume perspective? I think in the past, at the time of the AK acquisition, you were very vocal in saying you weren't gonna increase production in the case of just chasing after high prices. Today it looks like demand is also very strong, and people are talking about that shortage. How would you classify different customers as an issue that you're prioritizing, say, contract auto customers over distributors and traders? At what point would those latter customers become more attractive to you? Look, it's very difficult to compare, Seth, in a company like us because one year ago we were just iron ore. Six months ago, we were basically AK Steel, and AK Steel was a 70%+ automotive supplier. The rest of the market was not really a matter of concern because it was marginal. Now we are a 40% supplier of automotive, so we have a 60% for the rest of the market. The good news is that our way of doing business, because we came from a Cleveland-Cliffs and an AK Steel background, is to supply on time, is to deliver just in time, is to take care of the customer's needs. We do that metric. We had one excellent moment of fixing automotive inventories when we were going through the horrible three months at the beginning of the pandemic when automotive shut down, and we fixed our inventory. We are doing the same right now with the ArcelorMittal assets and a little bit of help we are getting from the chip manufacturers that are not delivering the chips to automotive. By the way, it was the same thing. Automotive shut down, the chip manufacturers had to generate return to their investors, and they start to sell it to other people and other industries, and now they are coming back to the automotive. Like I mentioned in my prepared remarks, things will be fixed during the year. Our way of doing business, the systems we have in place, the people that are running commercial, Seth, just to let you know, are basically the people that were running commercial for AK Steel. that's our default position. Our production planning is geared towards delivering on time. even though it's far from perfect at this point, it's a lot better than our competition. in this race, you don't need to be beating to the fastest lap all the time, but we absolutely need to do better than the competition. we know exactly what the competition can do, and we're doing better than the competition. That's why we are gaining market share. There's no avoiding for that. We just need to improve our delivered performance above the competition. That's what we're doing. Okay, Seth. Perfect. Thank you. Thanks. We have our next question from Lucas Pipes from B. Riley Securities. Your line is now open. Hey, good morning, everyone, and congratulations on a tremendous year. Thanks, Lucas. Lourenco and Keith, when I go through the historical results for CLF, AKS, and ArcelorMittal USA, and I add in synergies, I shake out at EBITDA, call it in the kind of high $2 billion range for prior market peaks. Steel pricing during these prior market peaks was much lower than it is today. I wondered if there's a perspective on your earnings power in the current market environment that you would be able to share. Thank you very much. Okay. Look, we're not going to discuss modeling in a investor's call. just to directionally guide you through how things work. In contract prices with automotive, they stay in place for a year. whatever we negotiated during the pandemic when the automotive clients were not even operating, it's still in place. What we negotiated in December, when they were back, but still with a lot of scars from the time that they were not in operation, will stay in place. the automotive portion will lag, in terms of spot price performance that you see reported in the market every day. That's a kind of one side that we can call bad news. It's not bad news. Otherwise, not every single company out there would be trying desperately to grow their participation in automotive. It's a net positive. As far as pricing, it lags what you're seeing in the marketplace. The good news is that with the acquisition of the assets from ArcelorMittal USA, we increased our tonnage in general, and we also increased our tonnage to automotive, but we dramatically increased our tonnage to other clients. To these other clients, even though it's still not a real spot transaction, it's a lot closer and a lot faster to materialize the gain. I said in my prepared remarks, we are now down to 40%, maybe 38% participation automotive. That means that we have a lot more in the market to HVAC and appliances and cool hot vans, stuff like that. We are selling more in that market than we are anticipating, and accelerating the realization of these higher prices. Of course, it's a lot easier to work in a price environment in which hot rolled is above $1,200 per net ton and IODEX is $174 per long ton. It's a lot easier. We're good. We're going to have an EBITDA this year that will be higher than the revenues of the previous year when we're Cleveland-Cliffs alone. Very few companies can say that I transformed my yearly revenues and my yearly EBITDA, and actually the yearly EBITDA is a little high. Very few can say that. We can, and we will do that this year. I appreciate that. Thank you, Lourenco. I wanted to follow up on the value over volume strategy. Kind of we typically think of integrated steelmakers and integrated suppliers more sort of like baseload, given the fixed cost nature of the business. My question is, how should we think about volume more broadly? I think you mentioned six to eight furnaces running typically. Could you translate that into kind of a normalized volume run rate? How, if at all, would you dock the strategy to, let's say, a new market environment, for example, continued EAF capacity additions or the new administration taking another look at Section 232 tariffs? Thank you. Yeah. Look, we are not very concerned about what the government will do or not do on the regulatory environment because President Biden has been very clear that he's not going to give away the farm to China. That's all one needs to know. If outsiders are expecting that China will have a free ride, they are off to a very bad start because that's not going to happen. The new USTR that we fully expected to be doing well today in her hearing is from the trade. She understands, and she is good, as good as or on the same line of thought of Ambassador Bob Lighthizer. There's no such a thing as a dramatic change on the approach to international trade. They need to agree on the details and Section 232, no Section 232. That's a separate issue. We just can't allow foreigners to control the supply of things that are super relevant to our business. Even the CEO of Ford was saying this morning, I read on CNBC, that they can't continue to work with imported materials for batteries if they are going to produce a massive amount of electric vehicles. That's good news because we are the producer of oriented electrical steel for batteries here in the United States. Everything is shaping up extremely well for our business. Value over volume is also the fact that we acquired ArcelorMittal USA. Now we don't need to spend millions and millions of dollars to upgrade our hot strip in Middletown to produce stock that I already can do at Cleveland or at Indiana Harbor. That's a saving that we are going to have off the bat. We're already enjoying that. That's value over volume. We're not going to produce more tons just to create a situation that we will have more out there in the marketplace, and we will start to see price deteriorating. We will do our part to protect price, and that's the right thing to do from the return on capital investment standpoint. We are not going to print money out of the blue in order to do all the improvements that we need to make in the next 10- 20 years to transform the steel business in a real green business. It's feasible. It's possible. The first step in our company has been taken because we have the most modern and the only plant in the world that can use hydrogen as of today. We are ready for that, just waiting for the hydrogen. That's not our business. As soon as it's available over the fence, we'll take it because our plant is ready. We are investing real money. We invest $1 billion in that plant. That's not something that you can do if you're not generating profits. It's value. It's not volume. It's volume only if the volume comes with value. If it doesn't come with value, we are not trying to sell steel to the ones that were waiting for prices when hot dip prices were $440. They're waiting for lower prices to buy. We don't want to deal with these people. We hope that they continue to be waiting. Lourenco, very much appreciate your perspective. Congratulations again, and all the best of luck. Thank you very much. Appreciate it, Lucas. Next is Phil Gibbs from KeyBanc Capital Markets. Your line is now open. Okay, thanks. Good morning. Morning, Phil. Hey, Lourenco and team, you've got a handful here, or more than a handful, obviously, contracts into auto and slab, and then you've got a nice big piece of spot business as you pointed out. How should we be thinking about pricing cadence in the steelmaking segment as we move into the year and just kind of the timing of some of these step-ups? You've got an integrated model, so this is obviously very leveraged to pricing at this point. I think we're just trying to get a feel for are we looking for a $50 step-up in price, $100 step-up in price, something less than that because some of these contracts don't kick in yet. I just think a magnitude or just a general direction would be helpful. Yeah. Directionally, Phil, as far as automotive prices, you make no mistake. We should expect prices to continue to increase and step up every time we renegotiate the contracts, not only because we are good at these renegotiations, but also because these contracts lag. When we negotiated last year, we negotiated in a completely different environment, and now the prevalent market prices around the business are a lot more benign to us and to our negotiation than they were a year ago or even six months ago. That's an undeniable truth. These prices will continue to appreciate. Also, we have a meaningful business now selling slabs to AM/NS in Calvert, Alabama, and that's also a business that will generate good revenues because these automotive quality slabs and supports their business over there for automotive. It's another leg up and that's indexed to the international price for slab. That's a good thing and will be a big contribution. Don't forget HBI. HBI is all average to things that are very expensive these days. Iron ore, which settled back $174 as of this morning, and scrap. That's pretty expensive, and it will become more expensive. This trend, I'm not going to commit with any numbers, but this trend for price realization is up. I'm not saying the price will go to $1,200, $1,300, $1,400. That's not what I'm saying. What I'm saying is that with the $1,200 that we're seeing right now, we are going to be catching up with this pricing level. Demand is good. That's the most important thing. Demand is fantastic. The clients are complaining that they're not receiving steel. Remember, these folks run service centers, and they don't want to carry inventory. That's weird. That's strange. I run a service center company for 10 years. Guess what? Service centers carry inventory. That's their business proposition. If a service center doesn't want to carry inventory, he or she is in the wrong line of business. That's something else to do. Open a competitor of GameStop, because that will really provide a lot of wealth to that person. He or she is in the business of carrying inventory. They complain, but they don't do their part. We are fine with what we have. Prices are going up. We are going to be paying down debt very fast. We have a goal to finish this year with leverage, in terms of debt divided by EBITDA, at 2.5x or less, and we will accomplish that. Thanks, Lourenco. Appreciate that. just a question for Keith on the share count. Obviously, a lot of moving pieces. How do you account for the preferred shares? just trying to pinpoint what a share count is going to be for Q1 and then also Q2, because I know you had the timing of the offering. Yeah, Phil. We ended the year with 477 million common shares outstanding. We issued 20 here in February, so that 20 will get averaged out in the first quarter on a prorated basis. For the full year, you can almost count the entire 20 to be in the numbers. Your potential dilution would be the preferred is being carried as mezzanine equity, so you can pretty much count the preferred equivalent of 58 million common. That will impact earnings per share, and then that would pretty much carry throughout the year. Depending on where share prices land, say for example, using today's share price, the converts would have roughly around a 20 million share dilutive impact as well, if you want to calculate dilution on the converts. That should pretty much get you the re. Does that help? Which is clean ex-converts. It sounds like it's around 570. That's a decent number. Right. That is correct. Yep. That's right. Okay. Last one for Lourenco, and I'll jump off. The HBI project, to your point, very timely, and you mentioned you'll be shipping to some third-party customers into March here. Some of that I would imagine is trialing just because you're getting up to speed here pretty quickly. Where do you think you're going to be this year in terms of your mix in the back half, in terms of external shipments versus internally consumed shipments? Thanks very much. Phil, we are using our HBI in-house because, from the cost standpoint and productivity standpoint, it makes a lot of sense. For example, we are using a lot of HBI in our Dearborn blast furnace. Twofold. Using HBI saves us on coke, so generates less CO2. It's environmentally positive, especially in an area that has been historically very ready to complain, even though they have nothing to complain at this point, even without HBI. We prioritize Dearborn because it's probably our most delicate area in terms of environmental concerns. We are doing that. The second thing is that because it saves a lot of money by doing that. We are happy with that. That's one location that we are using. We're also using our own EAFs because scrap has been extremely expensive in the marketplace. As you know, we have a lot of EAFs. We are delivering HBI to our EAFs in Pennsylvania, and it has been a very net positive cost-wise because we are doing that. All this being said, we are not going to ignore the potential clients and now competitors that helped us get to where we got. I always keep saying that we would not be here if we were not able to produce DR-grade pellets. We only developed the ability to produce DR-grade pellets in Norths hore because one day, Nucor opened their doors for us to develop the pellets with them in Trinidad. I'll be forever thankful to Nucor for that. Of course, Nucor will be the first one receiving HBI from us in March, and followed by Steel Dynamics not far from that, and North Star BlueScope will be next. You asked me for numbers. It's very difficult to give a precise number at this point because the nature of this business is transactional. It's a month-to-month negotiation, and it's by design. It's not that we don't want to have long-term contracts, or we want to have long-term contracts. That's not how the market works. We play with the market. We don't change the market. We are happy with that because that allowed us to use in-house and with a big advantage. The numbers that we're working with internally is that we are going to be selling half to the outside world and using half in-house. That's a pretty good guidance for you to use. Thank you. Thank you. We have our final question from Alex Hacking from Citi. Your line is now open. Good morning, Lourenco and Keith. Thanks for the time. I wanted to ask- Good morning, Alex. Morning. I just wanted to start on capital allocation, if I may. I think, Lourenco, you just mentioned that maybe you could get to 2.5 x net debt by the end of the year. At what level do you become comfortable with net debt, enough to start having a discussion around either ramping up capital returns or making more strategic investments? Thanks. Thank you. Alex, look, first of all, I'm comfortable today because it's all planned, and it's all being taken care of. With the latest transaction, the ArcelorMittal transaction that we just announced, we again recovered our four-year window with no significant maturities, and that's how we have managed the company forever. The two and a half times or less, at the end of the year, is the goal. It's feasible, and will be achieved. This year is the year that the entire cash generated by the company, except for the very good and conservative assumptions on CapEx that are not to starve any equipment. All the way around, we're actually bringing, like I explained during the call, bringing some equipment back to a better place. Even with that, we feel like we have enough to massively pay down debt. We should pay more than $1 billion in debt this year, just with cash generation. We don't have any acquisitions in our horizon either, at this point. even that, to calm people down, that we are not going to be continuing to expand. We feel like this year should be spent on integrating, perfecting, improving delivered performance from the AM U SA assets, bringing these assets to the same level of delivered performance that we already have from the former AK Steel assets. All these things are on the making and gives us peace of mind and makes us very comfortable with how things will be taken care of this year. that's pretty much it. As far as returning capital to shareholders, look, I am convinced that people that invest on Cleveland-Cliffs, they're not investing for dividends. If they are, they're investing in the wrong company at this point. With all the growth that we demonstrated last year, with all the potential that we have right now in terms of continuing to generate real equity by paying debt and moving the numbers from the debt side to the equity side for the same enterprise value, that's what I should be doing, and that's exactly what I'm going to be doing. One year ago, when we were talking in this call, I was talking about iron ore. This year, I'm talking about being the leader in flat rolled steel in North America and making sure that the market behaves, and these prices that we're seeing right now are in good shape, on behalf of our shareholders to generate return on invested capital. One year from now, we'll be talking about a company with very little debt. we'll talk again. I hope I covered the point of your question. If not, please, by all means, let me know. Thank you. That was great. Let me just follow up on one other question, if I may. Firstly, congratulations on the sustainability goals that you put in place. Do you envisage significant CapEx investments associated with reducing the carbon footprint, or is it more a series of smaller incremental investments that will enable you to work towards that goal? I'm sorry. Meaningful CapEx, I kind of missed what you said after that. Can you repeat? Sorry. Meaningful CapEx associated with hitting your emissions targets, your 2030 targets. No, because the meaningful CapEx that I had to deploy, we already did was to put our direct reduction plant in place. That's done. You are talking billion dollars in Toledo and almost $100 million in upgrades in our Norths hore mining operation in Silver Bay, Minnesota. We have already invested that massive amount. Everything else will come in incremental events, and they do not demand a lot of CapEx. Also, some of these investments are done and will continue to be done by our partners, like the investment made by WEC in the Upper Peninsula in Michigan to replace power supply from traditional source of fuel to two brand new state-of-the-art plants using natural gas. We are there. We are moving there. We are going to continue to introduce HBI in our blast furnaces, and that will continue to reduce our consumption of coal and coke. all these things have an environmental impact and actually, they are a positive to our cost. I tend to agree when I hear President Biden talking that environmental compliance can be done and can be done generating good-paying union jobs. I check mark that. reducing costs. I check mark that on that as well. The investments, the massive amounts of CapEx in our case, are not that releva nt. at the very least, they have already been done. That's great. Thanks, Lourenco. Congrats. Thanks, Alex. on the transformation of the co mpany last year. Really appreciate it. Thanks a lot. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect. Have a great day.