SunCoke Energy (SXC) 4 May 232023 Q1 Earnings call transcript

Good morning. Thank you for attending today’s SunCoke Energy First Quarter 2023 Earnings Call. My name is Bethany, and I will be the moderator for today’s call. [Operator Instructions] I would now like to pass the conference over to our host, Shantanu Agrawal, VP of Finance and Treasurer with SunCoke Energy. Please go ahead.

Bethany. Thanks, thank first us quarter and discuss morning for Energy’s SunCoke XXXX you morning this joining to Good results.

and Marinko, With Chief me Vice Mark Executive Rippey, Officer. President Senior Officer; Katherine today Gates, President; are Chief Financial Mike and

the we call your replay Following conference today, Q&A. out later will call on Investor be call management’s our questions of If live This Relations webcast available for section Relations free open do being website, feel prepared to to we’ll our the to remarks, on team. not the get is and please today. a reach Investor

Before today’s forward-looking non-GAAP we I available over make measures statements are filings apply in let The remarks expectations Katherine, remarks call you as reconciliations today’s to statements. me future our make are regarding SEC remind turn call. documents things the today. These on constitute on on to various regarding that we website language the our financial forward-looking to cautionary discussed

now I’ll that, Katherine. turn to With things over

Thanks, results. review Shantanu. results. we I’d first to turning to thank Energy’s over us in joining results our by discuss SunCoke announced Earlier SunCoke for quarter quarter today’s first it you call. for like our their want few on to employees highlights today, to Mark a all before Good detail. start thanking the I morning and of contributions to

with the as September our to full of we at Harbor continue we operated XXXX. extension announced Logistics the well EBITDA consolidated efforts, quarter, performed through during agreement our Indiana adjusted Last business $XX.X capacity coke domestic Our of week, coke new we delivered customers. collective also Cleveland-Cliffs our segment million. pursue Through and

the our with similar of renewal future. the current beneficial for Indiana extension Cleveland-Cliffs relationship The mutually the Harbor This to well positions key provisions are contract. and affirms

on year. remains foundry coke also time business and and perform for expansion it progressing to finalized on The project coke foundry the sales budget. with continues well, all full is Our

third a furnace was the blast of coke all perspective, are From quarter. blast of EBITDA XX-month approximately non-contracted for book the ratio is trailing the our gross on and a basis. X.XXx non-contracted at sales leverage leverage coke through furnace order Our adjusted our solid, quarter, end finalized

against remain to as full of objectives, $XXX we our adjusted well to XXXX positioned execute EBITDA achieve year we to continue million our $XXX million. Finally, guidance

first that, With in our detail. it turn Mark review quarter Mark? I to to will over earnings

Katherine. Thanks,

decrease a quarter coke contribution the primary million $XX.X Turning year the quarter to quarter first income versus Slide to first decrease X, $X.XX XXXX, EBITDA of share and SunCoke SunCoke net period. $XX.X the $X.XX both adjusted in Lower prior was EBITDA. was from to million, attributable income of down of XXXX. margin XXXX sales net export in the attributable driver first on Adjusted was per for the

sales coke our to coke X Domestic as $XXX,XXX, and discuss million primarily Moving adjusted $XX.X Slide quarter $X first period, by was business sales was EBITDA prior decrease driven in performance, domestic also coke through finalized export sales results operate domestic third fleet to blast coke impacted coke contribution the blast and non-contracted continues quarter. capacity The timing are full coke on quarter. of lower million was year to same compared adjusted this margin all sales. coke to EBITDA furnace non-contracted volume The at

finalized all Additionally, the year. sales foundry are coke full for

Domestic our $XXX we million of quarter first performance, million. solid remain positioned $XXX coke guidance adjusted our to EBITDA well Given to deliver

adjusted as volumes quarter to EBITDA due Slide Terminal. of $XX.X Logistics during XXXX X primarily Logistics to increase to compared the first of million was our generated segment. million period. on in the Moving The Convent $XX.X prior higher to adjusted our same at EBITDA The year discuss business in Marine

year to combined prior handled the X.X the with period, during handling compared period. tons CMT to of year as additional compared the as same quarter prior tons million terminals X.X XXX,XXX approximately during throughput volumes logistics million Our tons

from adjustment. to pricing modestly, continues CMT APIX the Although price declined thermal has coal benefit

Our full and unchanged. year EBITDA adjusted volume guidance are

approximately We spent Now quarter for $X.XX quarter. Cash at CapEx ended $XX.X SunCoke million to paid ended cash the quarter approximately total, flow turning a of position by during during rate was $XX QX in with with the impacted also activities strong and million capital million. changes. our liquidity approximately the to working QX, million. balance discuss the In liquidity of from Slide share generated position we X operating on dividends It $XXX of million. $X.X a per $XX

it back to turn over will I that, Katherine. With

X, Slide mind on performance top operational up is and company. Wrapping Mark. as always, of safety Thanks our for

to coke making We full our executing our and of operating safely on for assets. against utilization continue plan focus capital

As will allow SunCoke I to progressing with project planned, foundry The pleased performance coke expansion our meaningfully. participation are year implementation the of foundry as its mentioned previously, business. we its later and is this market grow

to allocation. As capital past, pursue approach balanced the we to a have opportunistic continue demonstrated we will in

capital structure of the business, evaluate and our to capital accordingly. will continue the shareholders capital allocation needs our reward to decisions need We make the and

our million EBITDA achieve XXXX. million guidance for to full $XXX year look adjusted we of Lastly, to $XXX

go and for up open With the ahead Q&A. call let’s that,

go Thank line you. question [Operator the comes Instructions] Riley. first of Lucas Our with Please Pipes ahead. B. from

wondered That’s lower much, the first And have met weakness? very Good coke alongside one. you. on My that prices. you question sensitivity frame quite They question is a softened bit number international you operator. up Thank to if the I coal could Thank markets. everyone. morning,

Lucas. Thanks,

guidance. we’ve in guidance into As we’re the affirming guidance, and year. full here, And we our built discussing fourth this weaker said year quarter anticipated said for our full we a in just that market export as We the our year.

into And markets of the coke roughly tons today? you amount what do export

I you as the of other breakdown I we don’t Well, versus question. think appreciate the tons. But provide know, our export

domestic of finalized as We But coke non-contracted all a said, is coke as through treated blast of sales have our all we’ve our segment. are QX.

business to for be you what it better XXXX? XXXX, see for of go markets? trying – weaker So quarter sense out today from international for helpful. we sales the risks if to then a this were typical Would what’s the coke the at international fourth be to in might That’s getting And get would finalize for time just duration? market

Well, expect I year, said, full the on think run our we’ve full. meet to we year. And guidance as for expect we our we’re focused to

we’re So now, focusing affirming our guidance. on those sales and we’re

So we’re markets. in seeing we’re comfortable what with all the

to for Got it. use pricing benchmark sales good What’s a international on coke SunCoke? for

is there Shantanu. so XX the But coke is met CSR, is benchmark mean, coke, this XX, is Chinese coke it of higher versus Yes, way way our And than one regular quality much Chinese kind is made. which traditional Lucas, much – there coke, the only generally, right? for met we price our Hey, out the coke, the obviously, right? I travels which better benchmark, the normal of is of coke obviously, the a way the

– versus with versus doing if and and And are us those you that of the we the the we we like customers, the kind of premium advantages pricing well. at the So are product those with indexes. are helps exports kind of that kind look mix relationships our demands of as building we have kind those

other sell benchmark So yes, things of as. the ultimately coke – those pricing, at that’s we plays there which what some are but into that kind coke

little Europe, And some on what would your helpful. Latin appreciate the or a of sending remind that? markets bit Asia, larger are Is of America coke you’re me, color very it That’s to?

and to the willing us two than these or now, Latin Like supply Canada Yes. markets the are but anybody Those more to non-contracted looking into within are or the we America coke this I are it’s the or to market. market Europe, sell now. all right? at America we is are that Latin export available needs or and coke mean opportunities export coke domestic Europe main open, – if the

it. trying better. to That’s just very little helpful. it. Got that a segment understand Got And bit

met So agreement you or afterwards. the for and the in supply agreement coal lock supply the the first contract met coal then the sales typically for

So does get in in you spreads simultaneously, to just that happen the segment? how sense that lock a for trying

it’s And doing Lucas, we since are able We buys. coal this annual I you into always run buy mean, more like mentioned we these think of a continuously be have have spot we supply used of went our need an So on coal to short-term to basis. plants. coal to markets, our I to a before. And

example, but So to coal differential, right? are possible. And first, book, much as a sales end is first through I match end of think coke of the when buys are export of price our at obviously, timing a happen trying does as coming sitting sale is always we booked with to always your QX, those sales the the for There our coal There like, the buys QX. differential. back gets question

produced is we here, days’ finalizing XX to or from So the lag the it’s sold XX like we’re when between time are XX coke when to when it’s sitting when sales. anywhere versus

trying we the lag are is a coke there So are buying we coal selling the to what of minimize but time is the at. variance we that, and are price prices of that’s

Very, but I guess? of very is a most that’s this Jewell. business I’m the of that helpful. for – comes Thank you misconception, And would you impression a say reasonable then under that. Am out – that or

like coke Well, of spot capacity book swing think business. to of smart combined blast and foundry it got our for furnace Jewell kind so business, Haverhill and you is

and spot out where of comes the So foundry places are those two a combination book of. business

is you you things could the on U.S. in the you check anniversary are key wondered you. switching things you X-year this are still the to with list share Then intent what that need point market. on a kind letter very Thank come at up if of much. City punch with there off will deal June, Very and helpful. Granite so of and maybe I the of topics, Thank we evaluating,

Lucas. Thanks,

agreement an it’s large We’re continuing with towards project. and This work Steel. – complex a to a U.S. reaching is

that reaching agreement So to punch just a continuing I work we’re per but towards them. say there with that wouldn’t se, list is an

best Well, Alright. luck. the of and update appreciate I Okay.

Lucas. Thanks,

Thank you.

the next the line with of Please comes ahead. from Nathan Martin Benchmark Our question Company. go

quarter extension. congrats Indiana everyone. morning, for in taking Harbor good the question my the Hey, and Thanks on

you. Thank

Nate. Thanks

those good end of more your returns try returns the maybe much and of what say let’s longer opportunity on given maybe did don’t just City there, you shareholder I’d that the change And thoughts pretty say Would moving transaction? Lucas but could a spin. a maybe take my potentially Maybe needing with list dry job like? a for I’ll hitting one Granite look powder on up different questions, forward opportunity. as that hypothetically,

I our on to agreement. that So and appreciate say, towards work I the to have but much an I question, focus reaching very to is say have continuing

and time, our do and say make focus capital allocation at is going going day, of on while based we that are and we’re said evaluate look every hypotheticals, shareholders. And to get continue really have now. will So the reward we our it circumstances really we the that into is that what to to decisions don’t long-term we we

to Got foundry it. shifting business the not Katherine. finalized, coke so, how the If production we all you the stance, have unsold the I’m in for the of do you trending I gears to export will sales coke appreciate kind left year Maybe assuming market finalized that contracted, XQ. of markets in get quarter. year. go as the the likely to latter domestic the fourth part again, export see

Katherine, said second update some still last Any the great. that expected half. improvements quarter that think I maybe would the you be in case? you Is

comfortable Yes, our I out very improvement. the guidance with certainly certainly, we It’s see expect as see affirming sit we’re for been we for that And hard some the here, say to year. question. ahead. do we what to but Thanks predict, Yes. we’re would

where is. where and market that’s we’re comfortable the with sit, So we really very

been much but it, think of I mentioned investment Got I How some How of any prepared is Just with that XXX% left? it. great. foundry? apologize. produce might progressing much how missed are CapEx so you the here has be remarks, in things this have Jewell thoughts then And would to other I your at spent,

Sure.

third CapEx, as $XX and but on the provide It’s progress and for we we’re million, We’re spend on numbers you made there. is don’t that’s budget. the on completed be very – project on the we we’ve to And $XX million our going expect the pleased and between time. to is specific know, with in expansion quarter. track, growth The project

Great. the rest appreciate time. I leave the year. it Alright. Best of for I’ll the Well, of luck there.

question-and-answer our would I Katherine conference additional now SunCoke of to any the back to concludes That remarks. President you. for Gates, pass like Thank session.

morning this you in Thank continued all your for us joining interest again and for SunCoke.

I conference today’s of concludes call. you enjoy all hope the your That rest day.

now disconnect You your may lines.