I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A 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 protection 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'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 in the earnings release, which was published yesterday. At this time, I would like to introduce Celso Goncalves, Executive Vice President and Chief Financial Officer. Thank you, Daryl, and good morning, everyone. Our Q1 results marked the rebound in profitability from the trough in Q4, as we effectively doubled our adjusted EBITDA from the previous quarter. We outperformed on our 3 most important metrics: selling price, unit costs, and steel volumes. We guided to a Q1 implied selling price of around $1,120 per ton, and realized around $1,130. We indicated that unit costs would decline by $50 per ton. They declined by $60. We said volumes would rise to around 4 million tons. We delivered 4.1 million. Most importantly, we set the stage for another highly profitable year in 2023, which we expect to further materialize, with a much higher Q2 EBITDA and strong free cash flow generation in the last three quarters of the year. Q1 free cash flow was lower, largely because we invested in working capital due to strong demand. As pricing and volumes went up, we saw higher receivables and higher inventory tons. In Q2, we expect this trend to continue, EBITDA will be so much higher and CapEx will be so much lower that the massive amount of free cash flow coming in Q2 should far outpace any further build in working capital. Adjusted EBITDA in Q1 was $243 million, a 98% increase from the previous quarter, driven almost entirely by reduced unit costs, a function of normalized repair and maintenance spend, lower input costs, and higher steel production. Our Q1 shipment volume of 4.1 million net tons was roughly 250,000 tons higher than the previous quarter, making Q1 of 2023 our highest steel shipment quarter since Q3 of 2021. Automotive demand was robust, service center buying behavior has improved, and we did not have any significant maintenance outages like we did for much of last year. Q1 selling price of $1,128 per net ton came in ahead of expectations due to higher tonnage and higher value-added mix in automotive. A little more than half of our sales are index-linked, with lags generally varying from 1 to 3 months. Due to these lags, the recent rise in flat-rolled index pricing was barely reflected in our Q1 results. This improvement is now in full force, which will benefit our results meaningfully here in Q2 and beyond. We have been successful in implementing several spot price increases over the past few months. We have also achieved continued increases in our fixed price contracts for the April first renewal cycle. Taken together, these improved prices will propel our realizations in Q2. In addition, due to the same factors that drove Q1 costs lower, our unit costs should continue their downward trend going forward. We also expect that our strong volume performance will carry over into Q2 as the order book remains full and we run at our configured capacity levels. As pricing and volumes improved in Q1, particularly in the month of March, we built around $230 million in receivables, contributing to the lower free cash flow quarter-over-quarter. As these receipts come in, our cash flow performance will ramp up significantly in Q2, particularly as we have already received $110 million in tax refunds here in April. This comes after a tax refund receipt of $25 million received during Q1. Furthermore, we expect our Q1 CapEx of $188 million to represent the peak CapEx quarter for this year due to some carryover maintenance projects from 2022. Q2, Q3, and Q4 CapEx should each be lower than Q1. In fact, we have lowered our total expected full-year CapEx range by $25 million to $675 million-$725 million, reflecting primarily sustaining projects. Touching now on the capital structure. Two weeks ago, we completed a 7-year unsecured notes offering for $750 million, pricing at only 325 basis points above the comparable Treasury. This was our tightest spread on any unsecured high yield bond ever. We took advantage of the inverted yield curve to issue these notes, which are priced off of lower, longer-term rates, and used the proceeds to pay down our ABL, which is priced off of currently much higher short-term rates. We have been comfortable using our ABL as an effective source of liquidity for some time, given it was nearly free money. With the rapid rise in the Federal Funds rates, this is no longer the case. Terming some of this ABL balance out with longer-term bonds was a no-brainer. In fact, the coupon on these new notes is effectively the same as the all-in interest rate on the ABL. The additional liquidity provided as a result also gives us more flexibility for whatever market conditions or opportunities may come up. This being said, this swap of shorter-term debt with longer-term notes does not change our capital allocation priorities. We intend to continue using the robust free cash flow we expect to generate this year toward continued debt repayment and opportunistic share buybacks. We still have over $1 billion in pre-payable debt on the ABL and another $1.5 billion in callable bonds. For now, the main priority for debt reduction will be to continue driving down the ABL balance. When that has been paid off in full, we will then target redeeming our 2026 secured notes. As we've shown in the past with aggressive bond buybacks, even our non-callable, long-dated, unsecured bonds are effectively pre-payable since we can also opportunistically buy them back in meaningful amounts in the open market. We plan to continue this capital allocation strategy until our net debt gets down to around $3 billion. Assuming market conditions remain as they are now, we should achieve that at some point this year. With that, I will turn it over to Lourenco for his remarks. Thank you, Celso. Good morning, everyone. During the past quarter, order release rates from our automotive clients were the strongest and the most consistent we have seen since becoming a steel company three years ago. Service center buying behavior in Q1 came back to more normal levels. These two factors, combined with reduced imports of flat-rolled steel, forced the buyers to increase their order levels with domestic producers. In addition, The excess scrap and metallics inventories that were built by other steel companies in response to the war in Ukraine were ultimately drawn down, forcing scrap prices back to what we believe are higher, but still acceptable and sustainable levels. We used all of these factors in our favor to implement several spot price increases, which have ultimately driven index pricing higher. Our conviction that this country's prime scrap and metallic shortage will continue to tighten over the coming years is at the core of our strategy. Last year's strange scrap movement in the second half of the year has been proven to be an outlier. The prime scrap market is back in a shortage position. There is less than 20 million tons of annual prime scrap and metallic supply in North America currently. Unless you are a producer of only rebar and nothing else, you need prime scrap and metallics. Our in-house production of 2 million tons of HBI per year at Cleveland-Cliffs is an integral part of our own internal supply chain. We use our HBI primarily to feed our own blast furnaces to reduce coke rate and CO2 emissions. That results in very limited availability to sell HBI to third parties. We anticipate that with the new electric arc furnace coming online, demand for prime scrap and metallics will be at 30 million tons by 2026. This will require significant levels of imported metallics. The largest sources of these imports, up until last year, were Russia and Ukraine. More than a year after the invasion of Ukraine, that import avenue remains heavily disrupted. Said another way, unless one is rerouting Russian supply through other countries for transshipment, which is, by the way, illegal, they cannot get all the feedstock they need. Because prime scrap is a by-product of manufacturing, and we, as a country have been moving manufacturing offshore, prime scrap supply has been shrinking in this country for over 50 years. Bringing more manufacturing back to the United States over the coming years should help alleviate the situation, but that will take time. The alternative to address the scrap shortage would be additional metallics production. That requires iron ore. As the largest producer of iron ore pellets in North America, this plays right into our favor. For the majority of the last three decades, flat-rolled steel production with EAFs took advantage of cheap and plentiful prime scrap. This historical situation is changing fast. Greenfield flat-rolled production from EAFs also plays into our favor in the automotive market. As some EAF startups have been demonstrating for a few quarters now, the metallurgical challenge in automotive is too big for them. This fact, along with our customer service and our R&D capabilities, are the three main reasons why Cleveland-Cliffs remains the supplier of choice to the automotive industry in the United States. That also helped us achieve annual price increases from all and each one of our major automotive clients. Some of these price increases will only show in our Q2 results as they are effective April first. Our shipments in the Q1 to our direct automotive customers were the highest they have ever been in our three years as a steel company, and at higher prices. This was the biggest reason for our strong quarterly shipment number of 4.1 million tons, and why we're running all of our steel making shops at full capacity. Our higher levels of steel production have led to the partial restart of some operations at our iron ore mining and pelletizing swing facility at North Shore earlier this month. As you may recall, North Shore has been totally idle since the spring of last year. We will continue to treat that facility as our swing operation. At this time, we still do not expect to operate North Shore in full any time this year. The remarkable improvement in automotive demand is a combination of the easing of their supply chain issues and the American consumers' growing appetite for new cars. Auto sales seasonally adjusted annual rate, usually called SAAR, in the United States averaged about 15.2 million units during Q1, a massive uptick after averaging 13.7 million units during all of 2022. As such, our forecast for North America automotive builds in 2023 of 15.5 million light vehicles is the best in four years. With one car equaling roughly one ton of steel, and with Cleveland-Cliffs representing nearly half of the flat-rolled market for automotive steel, you can do the math on the additional volume this will bring. The auto sales and production increases we have been seeing are further confirmation of our view on how steel demand in the U.S. will shift in our favor. For the last couple years, non-residential construction has been the outperformer in the steel market, with automotive lagging significantly behind. As you know, Cleveland-Cliffs is not a big player in non-res. That said, given the massive backlog that has been created as a result of supply chain issues over the past few years, and with the Federal Reserve reaching the end of their interest rate hiking marathon, going forward, all signs point to automotive being the outperformer. Cleveland-Cliffs is ready to accommodate any improvements in demand from the automotive sector, whether that be from internal combustion engine vehicles or EVs. Our clients know that very well. At Cleveland-Cliffs, we are agnostic to whatever ways that demand materializes over the coming years, as we are the clear-cut leader in supplying steel for both types, electric or conventional vehicles. Earlier this month, President Biden's administration put forth their latest push to drive large scale EV adoption in the United States. The proposal include a projection that two out of every three new cars sold in the United States in 2023, I'm sorry, in 2032 will be electric, compared to about only 7% today in 2023. This is a structural reset that we have dedicated our research and innovation center efforts toward since we acquired AK Steel in March of 2020. Put simply, due to our size as a supplier of automotive steel in the United States, and also due to our unique technical capabilities, these goals of the U.S. government cannot be reached without Cleveland-Cliffs. We are an integral part of this transition from ICE vehicles to EVs in the United States, regardless of whether it happens at a fast or at a slow pace. This includes our supply of exposed body parts, structural cages, battery support, and oriented electrical steels for motors. Regarding oriented electrical steels, we call NOES, and responding to growing demand from our existing customers, we have already deployed $30 million as CapEx into our Zanesville, Ohio facility to increase our production capacity of NOES by another 70,000 tons annualized. We should start operating this new capacity in the Q3 of this year. As a reminder, Cleveland-Cliffs is the sole producer and a well-established supplier of both GOES, grain-oriented electrical steels, and NOES in our country. That's our technology, originally from Armco, the A in AK Steel. The market for these products is huge, but any new entrants to this market will have to first learn the products and perfect the manufacturing process. The rookie producer will have to qualify these products with each one of the clients. That's not our case. We are already in the house with all of these clients. A couple more things before we open for Q&A. Earlier this month, we published our 2022 Sustainability Report. We are pleased to report that as of 2022, our absolute Scope 1 and 2 greenhouse gas emissions were already below our aggressive target for 2030 of 25% reduction in comparison to our emissions in 2017. That was when we made our decision to build our state-of-the-art direct reduction plant. This early accomplishment of our target was made possible primarily by the use of massive amounts of HBI in our blast furnaces, helped by hot metal stretching through the increased utilization of scrap in our BOFs and natural gas injection in our blast furnaces. We also reported that our Scope 1 and 2 emissions intensity from our blast furnace and BOF operations in 2022 was down to 1.60 metric tons of CO2 per metric ton of steel. This number puts Cleveland-Cliffs in the third percentile of integrated steelmaking emissions worldwide and compares extremely favorably to the global average of 2.32 tons of CO2 per metric ton of steel. Because of the metallurgical requirements and quality needs of our automotive customer base, we remain committed to the blast furnace BOF steelmaking route, and we will continue to work to make it less carbon intensive. In order to further reduce these already low emission numbers, we are pursuing potentially high IRR projects in emerging technologies, particularly carbon capture and storage and iron reduction by hydrogen. As things progress on these fronts, we'll continue to keep you informed. With that, I'll turn it over to Daryl for questions. Thank you. We will now be conducting a Q&A session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first question comes from the line of Emily Chieng with Goldman Sachs. Please proceed with your questions. Good morning, Lourenco and Celso, thanks for taking my questions this morning. My first is just around the electrical steel market. I wanted to follow up here and understand a little bit more about what's happening. Could you perhaps talk to the size of the non-grain-oriented and grain-oriented electrical steel markets and growth outlook, perhaps what electrical steel production capacity Cliffs will have after the 70,000 ton capacity investment later this year? Sure. Well, good morning, Emily. Look, first of all, the non-oriented electrical steels are totally associated at this point with the pace of adoption of electric vehicles. We have developed a special product called the MOTOR-MAX, and the MOTOR-MAX is for this type of high-end applications in non-oriented electrical steels. This investment, that was not a massive investment. We're talking $30 million, but which, by the way, has already been deployed to produce another 70,000 tons of NOES will take care of that. Will take care of that for the time being, and freeing up capacity to produce more grain-oriented electrical steels at our Butler, Pennsylvania plant, because today we basically do both in Butler. We are moving 70,000, what is significant when you notice that our production capacity is around 240,000 tons at Butler. We are really growing our ability to supply more GOES. GOES is related to the grid because it goes in the, no pun intended, it goes into the production of laminations and cores for transformers. Transformers are utilized everywhere in to the grid. We are, at this point, the sole suppliers of these materials. As monies are deployed, and they are monies to be deployed, coming from legislation that will free up capital to be invested in the improvement of the grid and also in the improvement of charging stations that is coming. We're gonna have to continue to grow the production of growth. So that's pretty much what we have at this point, Emily. I think we are right-sized for the pace of the growth of the market at this point. Understood. That's very helpful. A follow-up, if I may, just around the cost outlook there. I think Celso, you mentioned there was a $60 a ton decrease in Q1 in terms of the cost profile, and I think previously you've also talked about further reductions in Q2 and Q3. Do you have any numbers as to help us frame where those numbers could land, and remind us what the moving pieces driving those costs down on a $ per ton basis? Thank you. Yeah, sure. Hey, Emily. you know, we've already decreased cost by, call it $140 a ton in just two quarters. The Q1 cost reduction of $60 a ton is $10 more than we guided down 50 for the quarter. you know, as the inventory continues to come out, you can expect further cost reduction here in Q2. Now, the magnitude won't be as great as it was here in Q1, we're still working hard to bring costs down. you know, call it a $15 to $20 a ton reduction here for this coming quarter, Q2. Great. That's very helpful. Thanks. Thank you. Thank you. Our next question has come from the line of Lucas Pipes with B. Riley Securities. Please proceed with your questions. Thank you very much, operator. Good morning, everyone. My first question is also on the electrical steel side. Lourenco, I wondered if you could maybe frame up the project pipeline after this year. I assume kind of capital intensity would move up somewhat, but maybe that's the wrong assumption. Would really appreciate color on the potential growth opportunities after this year and what the capital intensity would look like for you or your competition. Thank you very much. Good morning, Lucas. First of all, I would like to position electrical steels in a historical perspective. That's always very helpful to understand. When I acquired AK Steel back in March of 2020, Butler and Zanesville were both slated to be shut down. Actually, the first meeting that I participate representing AK Steel happened in a Steel Caucus meeting in Washington, D.C., four days before we closed. I sat in for Roger Newport, then CEO of AK Steel. He was very kind to allow me to be there and speak. I basically put everybody on notice that if nothing would happen, we would just go ahead and execute the shutdown process that was slated to happen. Long story short, we're being slaughtered by imported steel at that time. We're able to stop that. We're able to bring back production to the United States. We're able to shut down the back door production of laminations and cores coming mainly from Mexico and Canada using electrical steels from Korea, Taiwan, and Japan. We fixed the market in a way that we're no longer losing money. At this very point, Lucas, electrical steels is our most profitable line of business. We are very happy with the fact that we're growing our own capacity with the pace of the demand. We're not going to run ahead of the demand. We are aware that the competition will try to participate in this market. Be my guest. It's not an easy market. It's complicated product. We know that a lot of the attempts will fail and this business will come back to us. At the right time, we'll deploy capital. It's not a priority right now. We are happy with what we have. We are happy with the expansion that we deployed in Zanesville for NOES. That will free up more GOES out of Butler. We're in good shape for now. Very helpful. Thank you, Lourenco. Then, my second question is also a little bit more on the near term. I wondered if you could comment on the Q2 pricing outlook. You mentioned the April batch on the fixed contract was reset very successfully, and then spot prices obviously moved up very nicely year to date. I wondered if you could comment on what the whole package would look like on the pricing side in Q2. Thank you very much for your perspective. Lucas, as far as Cleveland-Cliffs is concerned, the outlook is great because, as you know, our contracts with automotive and other clients, but particularly in the automotive business that's big for us, is fixed price. When underlying hot-rolled price in the spot market is $1,000, if I'm selling to, so I'm making this up just to give you the picture. Don't take the number to the bank. If underlying hot-rolled price is $1,000 and my contract is $1,200, then I'm selling for $1,200. If underlying market price is $1,400, my price for the automotive clients is also $1,200. Long story short, it doesn't matter where the spot price will go up or down. A lot down, a lot up. Our price with automotive slice of the business that's in the quarter was 36% of the business will stay where it is. We are feeling very good about that because we are protected in a very, very important part of the market. Celso, do you wanna complement something on that? Yeah, sure. Hey, Lucas. Just to add some numbers to that as well. Thank you. Relative to Q1, we expect Q2 average selling price to increase more than $100 a ton, call it $120 a ton compared to Q1. That's largely driven by higher HRC pricing, higher slab pricing, and then most importantly, those lags that we experienced in Q1 from the sub 700 index pricing environment in November, December, those all fall off in Q2. That's why you see the big jump in sales price. Terrific. This is super helpful. Really appreciate your color and continued best of luck. Thank you. Thank you. Thanks, Lucas. Our next question comes from the line of Carlos De Alba with Morgan Stanley. Please proceed with your questions. Yeah. Thank you. Good morning, Lourenco and Celso. Just on the a couple of questions. One is on CapEx. How should we think about the CapEx going forward, given that, you know, it's running below $100 million, due depreciation, which a lot of time we use a reference for sustaining CapEx is closer to $900 million- $950 million. How do you see for how many years do you think you can keep your CapEx below this threshold of depreciation without jeopardizing the equipment? That would be very useful for the projection of cash flows. Yeah. Just to give you color on what you have just said, the depreciation is a good reference because it's a good average, but it's not good in short-term as a reference because remember, when we acquired the assets, they were mistreated. We had to deploy more capital than the depreciation. That's why we're still paying in our accounting for the higher costs and lower production during the time that we are doing just that. When you average back what's happening this year and is going to happen next year with what happened last year, you'll probably go back to your depreciation number, Carlos. We are now in the back end of the stuff that we have already done, moneys that we have already spent, and we're not going to spend again. I don't know if Celso wants to complement. Yeah, sure. Hey, Carlos. If you think of 2022, we spent over $900 million in CapEx, but that included a lot of maintenance repairs. That cycle is now behind us. The new sustaining level for 2023 and at least 2024 is that $700 million level. When you get to 2025 and beyond, and then you have some additional relines and things like that, it could increase again. For the foreseeable future, what we can see here in 2023 and 2024, that $700 million is a number that we're comfortable with. All right. Just, since you mentioned, Celso, when is the next relining? Just for us to have it here in the record. Yeah. 2025, at Burns. Okay. Great. My second question, if I may, on prices. The October renegotiation for the auto- resetting for the auto contracts, how should we think about that? Is that going to be in line with what we saw in April, or is that more subject to supply and demand conditions of the auto sector, not necessarily the HRC spot market? Yeah. The HRC spot, Carlos, has been taken out of the picture in automotive. I gave each one of our major clients the option to buy from people that sell based on that. No one took it. Now we are in supply and demand in a true relationship type of thing. I know it's a game changer. Yes, it is a game changer. Never happened between steel companies and car manufacturers ever. It's happening now. I believe that the automotive company's relationship with the steel mills are at the core of why we are a small iron ore company. We're able to acquire two big suppliers of automotive steel that were actually already consolidated from several others that went down throughout the history of this business in the United States. That party is over. We will continue to support the automotive industry. We will continue to provide them the technical capabilities that they need. We will continue to develop the products for the next generation cars as we normally do. We want to be rewarded. On behalf of our shareholders, we need to get paid. They understood that through the last two cycles of negotiation. When October comes, we'll talk again. It's too early. I'll get my shoes off when I get to the river. Not there yet. All right. Good luck. Thank you very much. Thank you. Thanks, Carlos. Thank you. Our next question has come from the line of Curt Woodworth with Credit Suisse. Please proceed with your questions. Yeah. Thanks. Good morning, Celso and Lourenco. How are you? Good. And you, Curt? Hey, Curt. Not bad. I guess with respect to the longer term CapEx projections, you know, around the $700 million, you know, you also talked about potential investments in CCS as well as iron reduction via hydrogen, which, you know, some of the numbers being postulated on some of those things are fairly significant capital. I realize it may be preliminary, but can you give us a little bit of insight into, you know, how CCS or hydrogen could fit into your business model and what maybe some of the economics could be around that? Yeah. First indications are showing that particularly CCS could be a very high internal rate of return project based on not only monies available to develop the project with participation of the government, but also tax credits of up to $85 per ton of carbon captured. This is pretty meaningful, pretty significant. It's not a short-term deployment of capital, Curt. There's nothing really urgent about executing right now, but these are the numbers that we're working with. As far as hydrogen, we are ready. We are ready to use it. Why is that? Well, we already built the direct reduction plant that can use hydrogen. We just need a pipe with hydrogen to connect to the pipeline that we feed natural gas. We're starting reaching natural gas with 1%, then 5%, then 10%. We can go up to 60% hydrogen in that plant. We are ready. We just need the hydrogen. We're working with several, not one, but several different groups to create hydrogen hubs that can bring a cheap and plentiful hydrogen to Toledo and also Cleveland, because we actually have the technology of injecting natural gas into blast furnace. I think that in the amounts that we use here in the United States, that's only one other country in the world that does. It's Russia. The other suppliers of steel for the automotive industry throughout the entire world, Japan, Korea, Europe, Brazil, they don't have natural gas available, cheap, plentiful. They don't have this technique, and we do, so like the Russians. We- in the civilized world, we are the only ones. As far as car manufacturing, we are already a lot greener than the Europeans, a lot greener than the Japanese, a lot greener than the Koreans because we inject natural gas. As soon as we enrich natural gas with hydrogen, we're gonna be really green. We are promoting- w e are producing massive amounts of automotive steel. We're not producing press release with brand names. We are supplying the massive tons that the car manufacturers produce. We haven't seen a press release because we're seeing the massive numbers that we produce every quarter in our financial statements. That's why you don't see brand names and press release. Okay. That's helpful. I guess, second question just on the metallic market. You know, you talked about, I guess, 30 million tons of prime metallic demand in three years, up from 20, I think you said today. Obviously, you guys are in a unique position having captive ore. You, you did the large FPT deal. What is kind of your strategy going forward to either further leverage your metallic position? Would you look to, you know, increase your HBI potential? You know, do you see scope for more consolidation in the scrap market? Kind of how do you see that fitting in? You talked about Burns Harbor up for a reline in 2025. You know, is that, you know, capital you would spend, or would that free up iron ore to potentially, you know, further leverage the metallic strategy? Thanks very much, guys. Curt, look, I'm very comfortable with our situation right now, using our finite resources in Minnesota and Michigan for our own use. We like that. If we're trying to ask me if I'm going to build another HBI plant, the answer is no. What if you get Nashwauk? The answer is still no. Are you considering building HBI to supply other companies? No. That horse has departed the barn when I acquired AK Steel. I built that HBI plant to support mini mills that I thought they were really serious in producing flat-rolled steel with the high specifications. Actually they are in the business of producing rebar, wide flange beams, plate. That's all good stuff, but doesn't compete against my automotive. I'll keep my metallics for ourselves. FPT is the biggest buyer of prime scrap in the country. We'll continue to do these closed loops. We are happy with what we have. We only continue to grow FPT for ourselves as well. It's all self-centered. It's all enclosed inside Cleveland-Cliffs, and everybody else will be outside looking in. Very clear. Thank you. Thank you. Thank you. Our next question comes from the line, and it's Timna Tanners with Wolfe Research. Please proceed with your questions. Yeah. Hey, good morning, everyone. wanted to ask a little bit about the mix in my first question. I know that Lourenco mentioned that the big driver of improved volumes was the automotive market. But based off of the detail that you provided, I couldn't see, I couldn't see a big move in coated. I actually saw the biggest move in HRC. I'm just wondering, is there a cadence where maybe that ramps up more later in the year, or is this kind of the mix that we should expect for the balance of the year? Yeah, look, we did gain hot-rolleded as well. Like I said, when you allocate more to automotive and you basically fill up your galvanizing lines producing exposed parts and High-Strength Low-Alloy for structure, cages for EVs, things like that, you're done with your utilization of a high value-added galvanized. You grow shipments. You're gonna grow shipping where it's easier, it's easier to sell hot-rolleded. Your assessment is dead on. That's where the growth came after filling up all of our capacity of galvanized with high value-added galvanized. Okay. You're planning to continue to produce at these levels through the rest of the year? Just to my question, I think Nucor mentioned on its call that it was gonna manage volumes, and I think other companies have said they're gonna run full out. Just wanted your latest thinking there. We are running full out to supply our automotive clients. Our automotive clients continue to build more and more cars, as the recession has been delayed one more time, and with the Fed getting to the end of this like I call in my prepared remark, rate hiking marathon, we are going to see that cars will continue to be sold. We are the ones that will benefit the most from that. With our other capacity allocated to the rest of the market. We are also developing closed loop programs with our major clients in appliance and other markets. We are continuing to deliver more to these folks. We're in good shape with that, all that. My perspective for the balance of the year is very positive because it tags along with the growth in demand that's coming from automotive. Got it. Thanks, Lourenco. If I could, the last question is just on the guidance you gave last quarter was for net periodic benefit credits of $140 million, and you started out at a pretty high run rate. Just wondering if you have any updated guidance or if we should still be using that value. Thanks again. I'm sorry, Timna. Can you repeat the question one more time? I think I missed. Yeah. No problem. Yeah. On the, just a kind of accounting question, I guess, on the net periodic benefit credits. I have in my notes $140 million guided for 2023 on the last call. The Q1 was already $50 million. Just trying to make sure that that's still the right value for modeling purposes. Gotcha. Hey, Timna. It's Celso. Yeah, I think you're missing service costs and interest costs, which are on COGS. This nets to around call it $140 million after you consider that piece. It's still $140. Okay. All right. Thank you. No problem. Thank you. Our next question has come from the line of Tristan Gresser with BNP Paribas. Please proceed with your questions. Yes. Hi. Thank you for taking my question. Just have 1 last. It's on capital allocation. I think in your prepared remarks, you flagged a $3 billion net debt target that you expect to reach at some point this year, if I understood correctly. What's the strategy after that? I think you talked about the strong electrical steel market, but you find with your capacity, you find with the metallics you supply there as well. You flagged some decarbonization needs, but, you know, are there more investment coming or will free cash flow generation be more tilted towards shareholder returns after that, after we reach that point? Also, is the net debt to EBITDA reference point you have below one time, is it still valid? Thank you. We didn't flag anything that you said that we flagged. Let's correct the record. We talked about projects that are multi-year, and you are conflating everything for the cash flow that we are going to have this year and our target of getting to net debt down to $3 billion this year. The only thing that we said that we'll do, take notice, please, Tristan. We are going to get to net debt at $3 billion later this year. It's still this year. That's what we said. The carbon capture project is future. The hydrogen project is future because we still don't have hydrogen. The relining of Indiana Harbor is in 2025. We are in 2023. Again, one more time. We flagged that we're going to get to net debt $3 billion this year. Before Santa Claus came to your home, we're gonna be with $3 billion net debt. What else can I do for you, Tristan? No, sorry if my question wasn't clear then. After you get to that milestone, what's you thinking? What's the strategy? Your question was clear. Your understanding was wrong. That's why I've corrected your assessment. After we get to $3 billion, we'll see. We haven't said anything about it. I'm not going to tell you at this point. Usually companies at that point tend to increase return to the shareholders. Return to the shareholders can happen earlier. As my stock price is on sale in the stock exchange, as soon as the window opens, I might be buying stock. I, myself, as CEO, I'm gonna buy a lot of stock as soon as the window opens. Because it's on sale. It is on sale because people don't understand long-term. They believe that three months, a quarter, is long-term. It's not. In our business, it's a New York minute. Okay, Tristan? All right. Thank you. You're welcome. Thank you. Our next question has come from the line of Alexander Hacking with Citi. Please proceed with your questions. Morning, and thanks for the call. I just wanted to follow up on the cost guidance. I think in the last quarter, Celso, you were guided to maybe $60 of cost decreases in Q2 and then another $40 in Q3. Now we're looking, I think, at you know, $20 in Q2. I understand it's extremely difficult to forecast. I guess what changed in the forecast? Should we still be expecting the cost decreases to flow into the Q3 and potentially the Q4 as well? Thank you. Yeah, sure. Hey, Alex, let's drill down on that 'cause it's important. Since we gave that guide, scrap prices, for example, have gone up around $100. Things change, right? And like I said, you know, we guided to $50 cost reduction in Q1, and we executed $60. There's a little bit of pull forward there. You know, and we, as you said, had guided to another $60 in Q2, and now I'm saying call it $15 to $20. And the bridge between that $60 and $15 is largely driven by that change in scrap. But beyond Q2, we will see further cost reductions as well. You know, even though I'm seeing $15 to $20 here in Q2, Q3 is also gonna have further cost reductions. Call it another $25. It's still significant, meaningful cost reduction. It's just the timing, like you said, it's hard to nail down. Okay, thanks. Appreciate the color. I understand, you know, metallics is a moving target and hard to forecast. Then I guess just on the shipment side, you know, obviously extremely strong in the quarter to auto and also outside of auto. Is there any part of that you think is restocking or you think this reflects where true underlying demand is and the weakness that we saw at the end of last year was really just driven by destocking? Thank you. In our case, Alex, all the fluctuations that we are seeing are coming from end users, particularly coming from automotive. Automotive is buying more. SAAR is higher now than it has been in a long time. It's not back to where it should be. The consumer continues to buy cars. They continue to produce cars at the OEM level. They continue to push cars into the lots of the dealers. We continue to sell steel for them to build these cars. This north of 4 million tons a quarter pace that we are in right now is supported, basically, I would say, exclusively by automotive demand in our case. All the rest is just gravy. Service centers are continuing to operate at low levels of inventory. If they see something different coming next week when the Fed will speak, they probably will buy more. I am anticipating car manufacturers continue to buy strong, and service centers will be left behind if they don't start to change their pace. It's not bad, but it's not great at this point. Okay. Appreciate the color as always. Thank you. Thank you. Thanks, Alex. Thank you. Our next question's come from the line of Sean Wondrack with Deutsche Bank. Please proceed with your questions. Hi. Good morning, Lourenco and Celso. Just first question. When you think about sort of green energy and some of the opportunities you're pursuing, do you see any other tangential opportunities, whether it's within solar or wind or even charging infrastructure, that we could look forward to in the next few years? Thank you. Yeah. Look, we sell to clients in this submarkets, and we are seeing demand coming from them. We believe that money's coming from Inflation Reduction Act will and the infrastructure bill will support more and more investment in these areas. At this point, it is still very, it's still the very beginning of the development of these submarkets. One thing that I believe will pick up steam very quickly is the deployment of capital in charging stations, because these states are starting to move faster on that, and that will create more opportunities for us, not only for Grain-Oriented Electrical Steel, obviously, but also for other types of steel, because the charging stations consume steel, not only electrical steels, but normal carbon steel that we produce and sell. These are mainly the best points of increased consumption that we see right now. Thank you. That's definitely helpful. Then, just understanding, you know, you've done a good job paying down a lot of debt and your top priorities remains debt reduction. You know, that aside, you've been out of M&A for a little while. Is there any opportunity or appetite for M&A, or are you still favoring organic improvement as you've laid out on the call? Thank you. Neither one nor the other, because M&A is opportunity. You don't see a small iron ore company buying a steelmaker and then buying another steelmaker and going from $2 billion in revenues in 2019 to $23 billion in revenues in 2022 all the time. You probably never saw in your life and never will in the future. So, M&A is opportunity. At this point, I don't see any opportunity on M&A. I did not commit to the greenfield growth anytime during this call or any time in the last two years. There's no real greenfield opportunity for us. For us, it's paying down debt. Once we pay down debt, we're gonna do something with the money good for the shareholders. That's all you can get as a commitment for us at this point. Okay. It's very clear. Thank you very much. Thank you, Sean. Thank you. There are no further questions. Like to hand the call back over to you. All right, ladies and gentlemen, thanks for being with us for the last hour. We appreciate the interest in Cleveland-Cliffs. We'll continue to keep you posted. We will continue to deliver the results we are committed to deliver. Thanks again and h ave a great day. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy your day.