Cleveland-Cliffs Inc. (NYSE:CLF) Q2 2022 Earnings Conference Call July 22, 2022 10:00 AM ET
Company Participants
Lourenco Goncalves - CEO
Celso Goncalves - CFO
Conference Call Participants
Curt Woodworth - Credit Suisse
Lucas Pipes - B. Riley Securities FBR
Michael Glick - JPMorgan
Emily Chieng - Goldman Sachs
Timna Tanners - Wolfe Research
Seth Rosenfeld - BNP Paribas
Carlos De Alba - Morgan Stanley
Karl Blunden - Goldman Sachs
Operator
Good morning, ladies and gentlemen. My name is Kevin, and I am your conference facilitator today. I would like to welcome everyone to Cleveland-Cliffs Second Quarter 2022 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 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 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 available for replay. The company will also discuss results including 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 Celso Goncalves, Executive Vice President and Chief Financial Officer.
Celso Goncalves
Good morning, everyone. Our second quarter marked the continued execution of our key capital allocation objectives, including the largest free cash flow-driven debt reduction in company history. During the quarter, we generated $633 million in free cash flow on $1.1 billion of adjusted EBITDA. This cash generation in Q2 is more than double of what we generated in Q1, even after paying around $300 million of cash taxes in the second quarter.
Consistent with our stated priorities, we use this cash to aggressively pay down debt and opportunistically buy back stock. During the quarter, we fully redeemed the remaining $607 million of our most expensive secured notes, well in advance of its maturity, and took advantage of volatility in the debt markets to attack other tranches of bonds in the open market, repurchasing another $307 million in principal outstanding notes at an average discount of 8% to par. These repurchases focused on our 2029 and 2031 guaranteed unsecured bonds, as well as our 2026 secured notes.