Lourenco Goncalves : I like the footprint, Karl. I like the footprint. M&A, we never talk about in this company. We never talk about M&A as a theoretical exercise. So as a theoretical exercise, I like my footprint. That’s all I can tell right now.
Karl Blunden : Got you. That’s helpful. And then on the debt profile, you’ve made a lot of progress in paying down debt, both the bonds and then also the ABL. As you think about kind of the optimal cap structure, is there an interest in also extending that beyond just paying down? Or should we think about the focus being primarily towards just debt pay down for now?
Lourenco Goncalves : We will continue to pay down debt. It’s still our main use of cash. This being said, with all the conversations about debt and pension/OPEB liabilities and things like that, think about 2 years ago, we were 4 point-something billion dollars in pension/OPEB liabilities. Now we are at sub $1.8 billion and something. So we take care of these things. We don’t talk much about, we just do it. And sometimes the underlying number, the ones that trigger trades in a minute-by-minute, play-by-play based, they are not that great. There’s not a lot of EPS. Cash flow is higher than EBITDA. This is a company that we are running for shareholders, for bondholders, for employees, for people that are vested long term, and we’ll continue to do that.
Two years is a long time for us. We proved that when we acquired AK and then ArcelorMittal USA, and then FPT. So two years ago, we were making $2 billion in revenues. So now I’m making $23 billion in revenue in two years. That’s not a crypto company. It’s real. It’s Cleveland-Cliffs, 175 years old company. But we’ve got to have to take a step back and look the real picture, look like how things really are in the marketplace. The most important thing that we did in 2022 was not even fixing the assets. The most important thing was fixing the relationship between the steel company, a major steel company, a major supplier to the automotive industry and the automotive industry itself. If you look back to the root cause of the bankruptcies of Bethlehem and LTV and Armco and Inland, Inland didn’t go bankrupt, it was acquired by Mital.
So it’s not a good example. But the vast majority of these names of the past, you go back to this value destruction that the automotive industry promoted between steel companies. And as of 2022, 2023, we’re still facing that. We go to negotiate with a client that the biggest thing that they had last year was microchips, supply chain. And the only thing they want to talk about is price. So I was really ready to not renew a contract entirely with a car manufacturer. But at the end of the day, they all renewed. They all appreciated. They all understood. I’m being very polite. So things will continue to be good, but that’s the biggest accomplishment. And I got very few questions about that. So that’s why I’m emphasizing what I believe is the real game changer.
It’s like an iron ore company becoming a steel company, it’s a real game changer. Now a supplier of automotive not begging for orders and offering lower prices to get it, it’s another big game changer. So stay tuned. 2023 is just starting. It’s February. So we have 10 more months to go. Okay, Karl?
Karl Blunden : Yes, that’s helpful. Congrats on the continued debt reduction.
