SXC - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Adam and I'll be your conference operator today. At this time, I would like to welcome everyone to the SunCoke Energy Fourth Quarter 2018 Earnings Call. [Operator Instructions] I'd now turn the conference over to Mr. Andy Kellogg, Treasurer and Director of Investor Relations. ahead. go Please

Andy Kellogg

SunCoke thank Officer; discuss and earnings, joining this President President Financial Energy us guidance me Chief Transaction. Good Mike and Fay are Energy's you West, fourth to Rippey, and SunCoke of SunCoke the Chief XXXX Partners quarter morning Simplification and With Executive morning and announcement for Energy and and Officer. XXXX Vice full-year Senior

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

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

Mike Rippey

morning thanks Good this morning. all for of you us Andy. Thanks, and on to joining the call

this and all transaction have approved a and results of SunCoke but the that the also by operating SunCoke we Committee financial Conflicts a did of are by Energy units the merger for developments common for SXCP. Boards going XXXX, few agreement was post forward. to SXCP exciting we The talk to the and announced signed owned We will SXC stakeholders SunCoke strong now SXC. quite merger create currently both all morning that Energy only Partners has and acquire about today, a not quarter value transformational full-year

of whole simplified SXCP. continued has announce conditions, elevated years, improvement even the ownership of all a number a Healthy and remained consolidated simplify performance a of the to pronounced operational longer structured and today challenge and equity will a structure, has SXCP's unlock benefits are cost stakeholders. By We for market provides stable effective this to the able numerous material benefit capital. we and SXC market as advantage for pleased potential an no investors. transaction problem and believe to With broader it'll in to full which enterprise to yield and cost SXCP of provides remained be more

stand-alone to initiatives. streamlines to and operating merger generates trading shareholders positions float our immediate the unitholders, and funding that lowers Importantly, and our better cost company structure, a larger execute strategic of us with creates liquidity increased accretion corporate both SXC SXCP growth

been the This have interest optimizes cash growth and whom significant Transaction. opportunities pursue and listening free will flow, shareholders, have SunCoke's to SunCoke's Simplification we capital addition expressed many In completing to the shareholders. in of strengthen transaction sheet return balance

to premium premium of weighted each X.X% receive Moving X, February utilizing unaffiliated unit, the shares price, to for of will SXCP's XXXX average to SXCP's as price. a unitholders volume common Xth, XX-day closing common represents SXCP's which terms the X.X SXCP and XX.X% SXCP Slide agreement, SXC's part SXC a

the continue it's to merger agreement, this remain no be unchanged the expect in SXCP a all-equity be pay of longer not change while will at provision publicly rights $X.XX rate and quarterly completion The the distribution the transaction, will Following SXCP's closing. Provided current in debt of closes. structure will we expect transaction traded trigger to distribution unit control terminated. time transaction we and incentive per any to

an capital transaction quarterly initiating on regular annual dividend share or per intends to common the Additionally, to following $X.XX by return the share per shareholders a basis. SXC of close $X.XX

first of or the expect the SXCP unitholders, third XXXX, second in of perspective, We quarter SXC's transaction successful customary Simplification subject transaction as is late expect although quarter From of the the to SXCP ownership majority close quarter close we following the the quarterly Transaction. both early to will SXCP timing the this dividend sufficient full and a to shareholders closing approve well approval SXC on of conditions behalf unitholders. as initiate

Benefits Turning and in significant on provide Energy are to believe will key drivers. the four long-term the Slide transaction SunCoke position benefits transaction We X, SunCoke we'll of stakeholders to will now discuss value detail. for this success. anchored

providing its the unnecessary to markets. transaction SXC by more capital more eliminating the structure. and transaction shareholders no purposes access The advantage SXCP simplifies of unitholder a cost complexity created of interests. equity also First, closely original serves SunCoke dual-company and MLP longer aligns by The MLP

most of Second, M&A cash $X year to flow, shareholders The SXC value. attractive pursue sustainable transaction meaningfully an also organic shareholder reducing accelerate two us to of year. capital flow and cash our shareholders company value-enhancing to the the intend and accretive to increases in utilize excess quarterly is maximize with $X dividend, We SunCoke's way. savings Simplification for both per from approximately our of ongoing flexibility opportunities, opportunistically measured favorable million million the cash a and to allocate companies to leverage, well capital return elimination flow Consolidating public us due in the available investors. distribution. impacts tax largely per activities positions incremental from public to significant SXC as of growth Transaction better in benefits increase free projects objective provides SXCP cost as estimated establish SunCoke and the

to customer our leveraging retain growth. more Third, simplified that to pursue capabilities used SunCoke strong growth allows internally organic flow assets, pursue acquisitions. unique cash then fund can generated and be we focused structure The remain relationships to projects existing and attractive

equity Company's include a technological structure MLP single potential and to we in adjacencies. set, Additionally, expands targets that customer eliminating float performance. base, Fourth, and equity in this creates broader transaction stable increased the attract a income expertise which liquidity, growth market more opportunity greater have investors. C-corp. will we capitalization, attractive a we qualifying resulting our acquisition trading limitation areas projects appeal will company existing the and/or believe trading potentially combined the broader With believe institutional larger universe to investor

Turning $XX materially transaction or X, simplification XXXX basis, cash cash adjusted for flow the cash both at and XX% flow the the increase. the to Full-year improves cost flow reflect accretion a $X.XX synergies, to from shareholders. the coverage per company and of year which free as generated flow shareholders. the increases combined The Slide cash unitholder and and approximately level; synergies benefits. share acquisition free undistributed flow savings cash SXC results materially includes distribution drivers; now public approximately known per SXCP This partnership increase acquired SXC cash both tax excess two million primary by total

information, detailed reconciliation we provided appendix further XXXX have in which the on For is a based guidance. our

key to previously flow the of of discussed, to increase flows in and highlighted. resulting SXCP the our benefits X is capital Moving on simplification that consolidation I the just cash the one allocation priorities, Slide from SXC and cash

initiate common our long-term again, return Once following to is for the management While able historically has and we flow, to with our simplification, believe intends provides the most to an what additional close investors. transaction be dividend to deploying value-enhancing from advantageous that manner in more business benefit SunCoke cash cash our sustainable flow and strong incrementally a committed generation, retain of is cash SXC the shareholders. will attractive

are debt-to-EBITDA. sheet and Additionally, to to simplified debt complex committed strengthening of structure reduce an continues now remain the a leverage balance of top allows our times We SunCoke by gross debt leverage reducing priorities. consolidated one reducing ratio rate. at be X the The to accelerated targeting

simplified grow ability Finally, structure and our to execute the improves on our business. goal SXC's diversify to

While to more we our C-corp. flexible a pursuit and enables competitive maintain opportunities attractive organic disciplined capital a to structure growth deployment, be will us to of continue M&A single projects. and the approach in

as key we X, there this to to work transaction. several Moving are finalize Slide ahead milestones

filing registration we timing, in statement targeting March. Regarding a are

SunCoke expect We quarter over SXC XX, effective. in XXXX. second anticipate very the transaction hold and will the we transaction benefits pursue that statement third shareholder excited to to on of coming SunCoke quarter to and we will about more close four of on our focused opportunities declared business growth strategic close as late early Slide to simplification. the or working initiatives. is simplifying meeting enable be us be enable We We universe competitive will and the expanded execute is are financial largely months registration growth after structure which an numerous an firmly the believe of strategy

operations. our production, is and be continues to to coke First, core it

operating Harbor. as portfolio evidenced Our It dramatically commitment rebuild opportunities, position are positions organic the our our the strong facilities coke our fully Indiana to significant upon to To build to we producer. of will us and growth platform. due performance a premier look at expand by further is extent world-class potentially has there plant. improved that generated cokemaking This low-cost

Second, our markets our we capabilities. a to the access concentrate CMT for customers. state-of-the-art terminal seaborne will strategic located continue with unique logistics provide capabilities for maximizing fully to on is

We handling to have to our are the liquids. products terminal. fully maintaining on To price date, acquisitions realize aggregates pursue products well to strong To additional bulk liquid actively remain to products the discipline. diversified CMT's opportunities by additional and adding will platform, pursuing grow as accretive mix continue complement and We logistics focused while bulk as handle we potential. petroleum product coke we

carbon evaluate additional us member our steel additional we opportunities. meaningful income have strong position value businesses and we product we which Third, produce, well. enable handle shareholders. and our flexibility of carbon and offerings to constrain, That's we'll and for to and it expertise technological greater as will operating We markets. relationships, do products. customers and to domestic are customer whom given do the the integral create what steel should our understand value These within chain develop removing ship an adjacencies with customers By leverage markets what and we our have qualifying the

technology explore arrangements Finally, to our licensing opportunities we engineering our maximize expanding to by capabilities our global and coke markets. select international will

production many around electricity. high desirable Our converts technology is heat in globe. countries industry-leading energy cost energy steam into highly waste or cokemaking Inexpensive the

for use enhance us for licensing closely to shareholders. a our look These with align Brazil as template core and will opportunity. We to our allow our international areas successful value future competencies model long-term

cost improve be have to encouraged of help unique our about our As continue fundamentals The our capabilities. capitalize financial will our business. flexibility, funding streamline us we highlighted, business and Transaction to on significantly and of fundamentals the Simplification reduce corporate structure, our strong I

XXXX full also year results. strong and SXC's Turning fourth announced performance, now quarter we to today

to in want highlights. it few the Before Fay I who a results over to will hit turn review detail, I

out set by financial Slide drove of thanking you see that the we the On that the our see SunCoke strong how dedication at and you results today. throughout of performed their merchant and Commitment all our First, key against of these can initiatives employees year. we I'll contributions start year the beginning team the for objectives. operational XX,

Harbor EBITDA I'm beat Third, look delivered have the versus as I'm year largely $XX of was the realize and by ovens to perspective, operational delivered million. A-battery fleet at primary tons the full financial are rebuild and two Granite flow, EBITDA an in our million expect pleased $XXX.X Indiana Operating our of these finished accomplished financial rebuilt of pleased at top In Harbor completed safe schedule From of facility. with with $XXX exceeded extremely over We to We operations to due performing materially measures strong we annual financial Adjusted an success adjusted range flow Company's Both the goals. what exceeded million achieve successfully met adjusted our and end $XXX.X we over increase optimal across our over production. and efficient as If strongest very cash also and facility. our our our million in we improvement or guidance ovens operating for we guidance results. performance our performance we range. the $XXX operations of year look cash Indiana million XX was City of and million. measures, of the facility six our the EBITDA performance $XX XXX,XXX realized This last to of years. XXXX. ahead year entire of we've XXXX, our at range expected. at guidance significant

target our revolving achieved $XX we by further the XXXX. on balance down million to facility. strengthen sheet look We SXCP's paying additional sheet, balance the down debt in to pay to credit Turning

our XXXX business to as continue diversifying growing mix PetCoke team's business and Finally, and year we with in and to logistics in product are our customer our expect to and base initiatives. increased achieving in the progress continue this volumes XXXX. our make All-in toward we pleased success we all, grow Aggregate

We to and over I'll our that, fourth goals year are in well positioned Fay? to review achieve Fay XXXX. full financials. things quarter our With to turn

Fay West

good Thanks, everyone. morning Mike, and

Slide XX. to Turning

and that respectively. million higher impacted as year volume quarter was The in Our the revenues as impact in revenue fourth the therefore deferred tax was and full $X.XX record the operating which million. not customers. year shortfalls basis was year customers recognition was between coal and our business, per these period. in did performance and fourth any the significant and export Indiana that EPS in share, per respectively. not of of the per of over by quarter contribution revenue for ton EBITDA in throughout contractual XXXX, quarter volumes quarter XX the full strong XXXX enacted recognize we expense higher obligation. The periods on recognize CMT year from of year-over-year depreciation adjusted a export million $X.XX per $X.XX Variability achieved the year well in the reform legislation on recognized the XXXX share, our XXXX. full two was share their This facility. shift current items Consolidated the did we This increased a share. also coal EPS from reflects versus deferred our reflects $X.XX by across reflects $XX.X $XX.X Harbor $X.XX also In our current It any fourth resulted quarter fourth take-or-pay

delivered full of XXXX full While million with $XXX compared adjusted XXXX up $XXX.X million EBITDA basis our impact referenced, $XXX.X was comparisons, a as a which, over this On impacts Mike EBITDA million guidance adjusted no basis. we there significantly above year $XXX of quarterly range is million. XX% on of as year and to

XXXX. is quarter up XXXX million Slide to and $XX.X Turning fourth $XX.X year. Harbor's adjusted EBITDA quarter EBITDA million of million the versus at adjusted $XX.X our of fourth was in to XX million quarter expected. We the rebuilt Indiana looking performance, successfully further compared ovens prior well fourth and ahead QX driven as an schedule these significantly as financial increase ovens rebuild production, higher overall improved This increased XX O&M as in of yields and O&M A-battery completed reimbursement, performing costs. was lower of performance by are $X.X

which extended discussed Excluding Indiana call, Haverhill domestic million. at $X impacted partially Harbor, offset versus fourth This and Granite was by outage lower the maintenance the we our approximately by our down XXXX. on slightly quarter business and in quarter Middletown. coke operating of City was expense The quarter we which third at results achieved

impact that Turning third the XXXX. realized up to adjusted of a continued million as of and bulk to our was In customers see consecutive can quarter strong fourth quarter the from of million. the approximately $XX segment through products variety than of we demand move core to terminal. total, operating recognition, in throughput our for revenue volumes of CMT logistics more were you we the with X quarter tons excluding see its line EBITDA

with export in million deferred XXXX. in no our throughout volume incurred the lower on since above actual during customers year XXXX, recognized revenue $XX.X revenue compared the higher Once had coal QX we volumes contractual GAAP again, XXXX we QX the recognized and shortfall year. obligations Finally, shipped of instead take-or-pay

year. Turning adjusted now $XX prior million was the year full EBITDA year million, EBITDA $XXX.X on compared our to Slide XX, performance to up approximately adjusted full

production yields, a both in EBITDA and Harbor's compared increased up driven resulted and in adjusted adjusted growth is by the production $XX adjusted increase Indiana Indiana was million year-over-year million over Our in approximately improvement prior exceptional EBITDA an which roughly was tons This $XX driven higher increase EBITDA. year. improvement. primarily by to Harbor XXX,XXX

in reset the approximately due received contractual Harbor $XX with of to sharing O&M reimbursement million the Additionally, higher cost our O&M customer. mechanism Indiana

outage XX% across versus on Indiana in $XX domestic which up domestic notably outage was total, Granite significant highlighted As adjusted occurred fleet, most by our entire $XXX of quarters full work was our guidance. increased City approximately of EBITDA Harbor, coke was The the EBITDA excluding impact lowered or the down across chart, million was and domestic extended over that to this our XXXX $XX.X nearly above year. fleet, business, million third our coke in million, adjusted driver most the the year million was communicated In previously fourth XXXX. $X coke

high Moving increased adjusted up by on our was in costs due record incurred operating was EBITDA business, $X favorable logistics to maintenance The water to and volume. volume throughput $X of approximately benefit million offset approximately year. million the CMT costs partially

Our X In tons export from tons over customers million total attractive million handled netback benefited worth CMT economics. increase X an million CMT. very tons increased logistics who XX business at of including XXXX, throughput coal by

continue customer bulk and products product through progress we to to million approximately of mix we further CMT. make Additionally, X tons merchant as diversify moved our

other our was by segment $X.X Finally, corporate and favorable million.

We disciplined. cost through remaining and have streamlining realized improvement significant year-over-year our organization

expenses We we year-over-year results of also XXXX. absence In very financial and XXXX. in the benefited we summary, with that from achieved pleased are growth the the in one-time

strong oven sharing XX, on operating our Granite primarily $XX was Turning our $XXX guidance increase rebuild to capital of operating to above our and year. million our million and the approximately line million million. performance initiative Slide was driven was during million in cash CapEx This deployment approximately of $XX to of our million $XXX City included with related this project. full year year related Indiana $XX our gas $XXX generated Harbor flow to guidance by very which we strong range

strong strengthening XXXX. expect reduce on to to remain continue achieving we debt XXXX $XX this liquidity SXCP's million. with We on XXXX. reduced ended Mike? the balance and balance to in to for includes revolving million. and XXXX of the on our $XXX turn million and I views objective would credit coal down by debt the $XX time $XXX During to the over to we of our cash At call back total, like million debt year Mike share approximately a facility. In focused This sheet markets outstanding steel pay by

Mike Rippey

Fay. Thanks

of on brief get enter the the balance new steel, guidance, wanted market. On from our material of we XXXX improvements provide few and we we I thoughts saw price domestic the we increased the where a year. XXXX into as things in Before benchmark market ton to APIX at $XXX XX% approximately beginning see from per from approximately overall short approximately approximately of the average price XXXX. per up XXXX. year. XXXX in year the ton at XX% the shares short to XX% Utilization $XXX XXXX, Import the an averaged beginning of decreased to market in XX% in in

stand today we XX%. stable we around utilization rates see demand with As

While from solid slightly the consumer industrial, with to energy demand see slow and we growth generally we auto lower. across expect sectors, steel anticipate sector, to continue construction,

the in supply at generally of Looking believe market a imbalance state or coke result pick-up and short market. coke reduction demand any the current in we market, meaningful is the in may

We demand for continue see high-quality, to customers low-cost strong products. our from our

export On Asia Europe and a robust XXXX strong on strong back volumes prices, the for Newcastle APIX the with in and demand the side, coal were thermal regions. of export Mediterranean

macro believe from netback both customers material While be in our low stable attractive lower we anticipate continue a be XXXX to in In to in and have we cost economics. do logistics seaborne environment XXXX. summary, expect basin for businesses. are we volumes advantage to versus slightly structure. to participant coal significant trade, coke due the the to continue They US expected to Illinois a we benefit a are their

our our benefit outlook growth on long-term environment our expect continued increased to take-or-pay we will us. nature a to back the a of XXXX XXXX, long-term at health to contracts, of solid the In improvement to our Harbor. does produce business impact due While customers have the material Indiana production to macro not be

Fay guidance. Now I'll our to over turn to XXXX it review adjusted EBITDA

Fay West

reflect are expect will some EBITDA provide XXXX the detailed guidance see material not not announced to The in additional of that EBITDA I range adjusted Transaction the million Transaction as-is On on later the impact today. to that a grow million. we Simplification an $XXX are on Mike. adjusted you information guiding presented EBITDA presentation. Thanks slides to $XXX is could in consolidated and of basis Simplification The XXXX and that XX adjusted we impact to and XXXX Slide do

a the incremental $XX provided, year-over-year range. Our EBITDA bit we of are guidance production facility the an increase guidance City providing feel increase, at we of to range XXXX. will in continued performance Domestic increase. historically Indiana fuel Harbor Granite main at million $X but stability than comfortable what have given of of coupled improvement of this in tighter within the operations, balance at with the majority drivers in and coke our is Indiana which adjusted operations the Improved will the million our Harbor contribute this the

that operations, will result we expect to which return reduction EBITDA run Looking adjusted in normalized in XXXX, a at to in after production rate a our Brazil they will year record a slight XXXX.

finally, Turning XXXX expect to segment slightly primarily we and in EBITDA modest And take-or-pay on to expect incremental higher due employee-related down to costs will we our legacy compared to higher due ton corporate volume. and be as adjusted XXXX. other our in business, our XXXX in logistics annual costs growth base rate per

at maintenance The energy Harbor Indiana due Harbor. will has the as $XXX years, million. over coke result Slide between rebuild expect coke business and domestic successful well lower performance in last Moving XXXX oven our costs. of domestic Indiana $XXX City revenues, improved is be XXXX Granite at the EBITDA and program in on delivered million to operating facilities, and we The our production increase the generating to is operational in which higher adjusted increase EBITDA and adjusted an as growth XX, our EBITDA few domestic coke adjusted

a the from these PCM the operational XXXX, of XXXX I Indiana City will on our Granite operations expect Harbor's affected during absence outage operations benefit significantly fire we a our discuss improvements While slide. major and next events. to

and on our at Our and XXXX guidance heat work recovery includes Haverhill systems extensive Middletown. generators perform a both flue-gas to desulfurization plan steam

that the in multiyear from City of will performance work a performed as best implement part deploy learned and of at XXXX the assets lessons operational and knowledge fleet. program and improve FGD across the reliability the Granite practices HRSG long-term to we apply and will We our

Additionally, Haverhill EBITDA we slightly SDAs the our equipment to adjusted Overall, in outages or to expected absorber to favorable be in will of for outer spray XXXX. shelf is the plan Middletown XXXX, CapEx in the impact year. existing of replacement outlook the finish one-time of dryer and but our impact

XXXX projections prices. higher-yield include Our from domestic coal also our fleet met across gains coke higher

As pass adjusted a through cost the of improved from while EBITDA do to coal reminder, yield we gain our higher calculations. customers, due incremental we to generate prices coal

quarter rebuild the XXXX. have oven XXX we last end Harbor XXX by will X.X mentioned Lastly, multiyear which rebuilt we initiative of approximately to look expect XXXX million approximately Flipping date, Harbor, tons we our next at of XX,XXX production earnings we complete the page the to Indiana phase tons, at be of than the successfully is third Indiana to on call, Indiana results. as higher To Harbor. ovens

approach time deal through rebuild We great have refined performance improvement over and multiyear a has in this yielded process the plant. at operating dramatic which learned have our a

in capital will and The the equates experience, execute on remaining current ovens. understanding or This these is XX% CapEx. to of production. estimated success Harbor increased the can improvement we which Based an fully achieve B-battery million The XX% current result our improved adjusted we run-rate million those year-over-year A-, XXXX will Indiana between Harbor EBITDA continue plant at benefit included Consistent on approximately been million our and $X Indiana $XX of the XXXX expectations. adjusted C- our $XX In remaining tons. We conditions, of of that D-batteries on meet experience million rebuilt, adjusted performance rebuilt oven $XX to EBITDA to full same demonstrate on to annual in operate be expect and a approximately a anticipate expense. be ovens $XX expect comprehensive spend final $XXX,XXX will remaining X.XX capacity between total. coal operating rebuilds be year XX tons rebuilds our complete we XXXX for expect level $XX of on amount to is from to and expect to $X,XXX,XXX of of approximately per of we XXXX, $XX the achieve million B-battery have After B-battery and guidance. million the we of $XX approximately $XX and and position to The ovens that performance to million sustained nameplate million with basis. million approximately the will expense EBITDA million production in

tonnage coming with to XXXX. a record very expect stable In remain off demand million think volumes we line in Turning XXXX expected the now to million $XX our strong of $XX logistics will tons between handle next outlook year is adjusted thermal million be XXXX. XX.X with to EBITDA and and we customers. XXXX, slide. for CMT, logistics are on expected in with our At coal we export

While annual met projected to to in in for contracts. expect XXXX production an At to could expect XXXX results higher due volumes customers, continued take-or-pay will generate coal KRT, coal coal dynamics transloading we from tons of Terminal, export on throughput incremental anticipate increase some lower as end provide in market Lake our potential Indiana adjusted remains be attractive At slightly our and XX.X Despite we our XXXX for stable. demand XXXX beyond volumes due business higher base with rates export stated guidance. we thermal in both line million coal we the Harbor. projecting are EBITDA export volumes, that CMT upside

our diversify opportunities actively have we to and we opportunities XXXX logistics our the highlighted mentioned, adjusted to exploring incremental At on XX customer product our continue across fleet. mix. CMT, Mike EBITDA As On generate focused pursue to we capital Slide plan. remain

rebuild between oven spend toward to final significant XXXX. and capital $XXX spend expect Harbor phase the in A of portion Indiana completing will of project. We this the $XXX million go million

component I capacity. expect this just at and will As to of plant the discussed, nameplate project $XX approximately capital million to produce million be the we completed $XX once

that estimate project City expect the $X of also million to year. of the we this final June phase we gas We will Granite by and spend approximately sharing complete XXXX

plan CapEx and certain our performance assets improve to We operational in at while maintenance FDAs order perform and Middletown finishing replacement plan and our reliability XXXX. FGD our long-term HRSG Haverhill on upgrades the of in Lastly, upgrades to assets. the include the one-time work to

normally complete these outages throughout scheduled during will year. the We upgrades

XX, historical metrics Slide as XXXX review as of the to many our the actual provides summary performance well slides of guidance. Turning across

Before adjusted production since turning coke to we adjusted XXXX. coke successfully highlight to and EBITDA consolidated domestic back would Mike, it like domestic increased materially I have per over EBITDA, that ton

million XXXX, between adjusted improvement and be as which well the $XXX million increase is the our $XXX over Indiana significant EBITDA approximately expect stability This results. other This of contribution operations. increase XXXX of a and as highlights long-term to Harbor Xst The XX% We in a is represents we growth ongoing provides to long-term and our the XXXX. thoughtful Simplification approach taken on value operations XXXX guidance of commitment slide for creating assuming improve on last shareholders. have steady to July validation Transaction closes column this of

consolidated to it transaction attributable Transaction a significant the have will While complete. With be adjusted the to back increase impact I on to Mike. not will SXC is there material Simplification a hand EBITDA does operations, once that,

Mike Rippey

XX. Slide on up Wrapping Fay. you, Thank

businesses, on and Harbor executing operational logistics across further plans phase capital rebuild executing final always, operational both our our improving performance is mind excellence for organization, successfully initiative. Indiana and top against As coke focused our of while the of

Transaction. completing successfully we Simplification are keenly Additionally, the focused on

for important the As SunCoke create SunCoke I we which all on transformational it's value stakeholders. merger believe call, earlier laid and for an will out

shareholders. core on organic the knowledge pursue focuses for value and work create our and strategies verticals closely can competencies as We with strategy our additional earlier also on align growth call, business that M&A will to expertise our our where outlined

focused executing on today. call With by go Q&A. up open achieving that on financial to we that, shareholders Finally, our our the out targets full laid we'll year be let's and ahead again commitments for

Operator

[Operator question your Matthew, comes is Instructions] America. of And open. from of line your Matthew Bank first Fields now

Matthew Fields

Transaction. don't conference list Congratulations you extra I of have on to the guess the one benefit announcement is calls anymore. two you didn't do Simplification

Fay West

That's right.

Matthew Fields

any or the had with that through Is that's go the of can reason of that will time deal whether issues regulatory there get think we won't Directors that any independent reason that you've blocked? things Board this last

Mike Rippey

transaction. foresee voted the the No, we the unanimously to approved perspective. Committee recommendation Board that took any from Conflicts SXCP unanimously SXCP The don't and SXCP The transaction approve issues.

unanimously go to customary all will approved go without that and As the SXC out we go including filings with of you Board for laid transaction. where well can the you timeline with the We through, the through SEC we the activities a the issue. news expect SEC

to approve So those after transaction later we well. no, we issues we'll quarter we we've at either We'll all. third But as any close SXC have filing, to common obtain don't foresee second proxy the as a asking be expect shareholders filings. or indicated,

Matthew Fields

So the so only thing that's vote not point? locked speak SXC shareholder the to this down at is

Mike Rippey

correct. That's

Matthew Fields

forma - know is on let wrong when here, on that know, consolidated you to looking leverage And goes it you from looks sort depending basis, about pro X.X the of correct? X.X you then I'm if me this, a a at times but to times or the collapse on it just times kind for bonds, please transaction, right, of like calculate consolidated how about X.X

Fay West

right. about It's

Matthew Fields

a So, probably about there ton half then.

this, I'm into public exchanged only get that will the please me help units right? if SXC shares, understanding Just is

Fay West

correct. That's

Matthew Fields

held The XX.X units public. million SXCP by the

right? is share about So forma that be million XX count shares, SXC pro should

Mike Rippey

Right.

Fay West

We're Correct. XX issue around to shares. going million right

Matthew Fields

the at pro million, per year million. will about $X.XX forma $XX dividend be $XX So future

Fay West

Your math is spot on.

Matthew Fields

$XX some it? way right $XX leaving getting the but were you million the run-rate SXCP on that that of - distributing basis. about was Obviously that I think Versus was think complex, parent, about a the about million at before is

Fay West

you're thinking exactly Matt, about right. it

Matthew Fields

of to on is Indiana rebuild XXXX? the at Harbor, end the done Moving project

Mike Rippey

Yes.

We ovens the which XXXX in would entire been rebuilt. rebuilt after have have remaining complex to XX be B

Matthew Fields

this, to the your up to whole CapEx XXXX, if changes, million to million equal? then spending $XX being $XX million about to less from are you the being EBITDA million $XX and CapEx extra Indiana the XXXX about $XX and Harbor nothing guidance all million way given $XX EBITDA then else on of equal, is think million to else complex So right $XX from else of all for

Mike Rippey

I think that's right.

Matthew Fields

free target at you pretty earmarked sort leverage you of cash about get right flow which the to what's the much together cash almost add flow. Xx using that's if to about of What's this once you're $XX So million $XX extra now? or your that million free thinking

Mike Rippey

you're Well, correct.

quarter transaction. At we'll in transaction completing the be, indicated of as begin rebuild time close first that's de-levering. significant on post same We focus on, Our payment the course to be on a of the common one will the this be year and B. we'll the we'll dividend focused of the you touched growth organic opportunity

this will year be focus Our successful that rebuild. on

of we'll variety if list, a M&A through or develop opportunities business trigger you time will, either a rich of begin very to our transactions. to organically Beyond which

way. that building a to we're so thoughtful pipeline. So going do in We're

like that in and good will producing - manner. in products for have we earn very and sound selective which that expertise high-quality not we'll may where But reliable begin we to hasty we're buying high-quality Company with we believe today. Our we assets believe, not but believe opportunities And assets fully nicely operation overpay. reputation customers them have with be a in look act repetition delivering where has this way are might We'll for technological our modest, grow. to to areas to we a we that fits toward going a we

we'll So the present post that our that because some with do the eliminated But prior approach. limitations unlocking of simplification. simplification very, opportunity in were very to will this disciplined we're be be

Matthew Fields

creating steel's shored like It have one you bullet says Well, North up. see? well seems producers their a - coke is bigger the market. share American Slide market steel on is growing focus that which grow do And your furnace coke of problems Where of XX of are you kind if the first see your blast those opportunities your all, of opportunity pretty US strategic supply not share? to picture, most, in

Mike Rippey

about good we No, market of very you've But current Clairton. read we have continued issues see customers. what publicly the our for

in increase So demand if expect the as coke we're completion there of at ago million as business for annually end suppliers, being Harbor's we about here that them, a products satisfy and there is tons. we'll to organically opportunities steel Harbor. for would coke, demand talking we one we well demand rebuild opportunities used our to at are for making X.X a naturally meaningful rose, Post year way. XXX,XXX tons were a Only

as growth. in us organic low-cost high-quality expect capture to we available producer a the to And there's growth the So market.

Matthew Fields

of permanently down side that, AK given end contract And shut Ashland, at then to your on of the Steel's Haverhill is other decision the XXXX.

with of Dearborn needs So of you into all do that Haverhill, see beyond you need this do of coke point, their But need down Is and yourself do - - less, anyway. even if XXXX? more, essentially us? that given cancel, you can need as about to fit you dovetailing kind talk they you for Middletown extension the do how contract they at XXX,XXX overall sort tons that at they that they make end contract they do are

Mike Rippey

a correct since wrong Today the think now extension to output of somebody remind the Well, I full the this years. number while is Haverhill. but may me, it's announced later ways off we Ashland be and XXXX. their My been they of close ourselves a has need intent been year, permanently taking they're to furnace for down down memory

market. So that out the been capacity's of

Ashland coke part supply the that our some between we talk when in time. for hasn't roughly a that believe demand and been equation market, So good balance of there's about

permanent present of the in marketplace. closure announcement the a impact of that's doesn't that So demand amount

look think but reason There's terms in in three that City that of marketplace, demand year of if taking continue wouldn't at I relationship more think perhaps years importantly want that restart they today. out, to we're coke I blast the this is Granite the you no renewal furnace going at forward. coke the

Matthew Fields

for out. much the I just all how questions. stay negotiation for plays we'll tuned very that Thanks guess contract

Mike Rippey

Sure.

Fay West

Thank you.

Operator

open. question is comes Riley next Pipes line from Lucas, B. Lucas Your your of FBR.

Lucas Pipes

like strong of Simplification my everyone, follow to add and not Indiana you results the up Mike, thank Yes, very only Transaction the say but congratulations much I CapEx out and to on the wanted on Harbor. I'd morning side. good

for that the So, million, opportunities expectations maybe et million side, we incur of Or to is that that some upward guidance you. sharing XXXX, like $XX on maybe there there kind example? cetera? be gas are know for Thank a to ongoing it further? on should Is to even more continue pressure, XXXX our things $XX number for XXXX,

Fay West

Thanks, Lucas.

perform the range regulatory FGD Granite during million when call, upgrades our we gas spend on It this to on the and million, mentioned sharing. is those outages between which our City residual million between HRSG and of the is includes So guidance some in XXXX. some last also phase million gave upgrades on Indiana I includes, we'll our and scheduled as $XXX Harbor $XXX CapEx, $XX for XXXX our obviously and assets, $XX

long-term long maintenance required business ours, performance of our work the focus think heavy health any is and to is manufacturing assets CapEx with our repair I on the and assets. like the and integrity term maintain capital-intensive of events,

years, run just time we the on over I when to accommodate doing CapEx assets work our important to in very the off do about you're of concluded that are planned you to some of of always in it of of kind XXXX, was rate, that think our XX horizon. But pull do spend forward this some looking XXXX in we did work that at we're and our want we that horizon here, on looking this longer we've So did an so XXXX we've review elevation a I we've work planning seeing extensive that incremental to future work - work in our pulled that in the that that at of here piggyback based forward.

Lucas Pipes

of outside going good but sharing, $XX forward? - million that and Indiana be use $XX number gas So a million rate run Harbor versus could to

Fay West

to think that's number good a use. I

Lucas Pipes

there to being that that a on all-cash the of synergies to basis we SXCP a wanted component benefit of then possible non-cash be is unitholders the step about as breakdown then should and thinking then, million. $XX the this to deposition it up to follow or up? Would And tax provide yield tax I well? taxes And from be

Fay West

up items, will up So, is the the a made taxable of the its transaction, step SXC are Because this a two tax synergies in tax basis. is basis. in receive step up first

And so that's component. first the

we that tax something of tax no stand-alone referred taxable The the we remedial certain That's formation and SXC SXCP. longer receive remedial allocations is, that the from that on resulted to income that entity basis. in will income a as second longer income as increased no an will our receive

continue would've XXXX. partnership until of is kind this rules it'd based and so And - on this tax

are the year when you think we're XX-XX, it's time two talking say so basis. probably about And that components. this And And some I over period, a could the from those cash more, about elimination some remedial XX% of roughly year XX% of of step-up of on roughly But kind it the it's it's from income. period, it less the the over $XX specifics. from time depending million and

Lucas Pipes

what last late? this out curiosity driving been is experience the be weakness long industry, maybe to as has think in in and Mike, to steel the prices And of one to of HSE do question your in. And sneak

Mike Rippey

me you've involved we pricing. off I'm scrap Big gone been. speak. And now. most dating that's There's I recently are distributors inventory think have It's You're being The steel of implemented announced But the might've or $XX. Lead good themselves round come as now. overhang. bit. they sure they are buying inventories since increase prices been more have in was that weakness back positions directly little I a some a products. a in a while as and times mills heard But shorter in little selling than ahead what of

So perhaps a we bottom. found

Now quarter. it some seems there's into weakness that years going fourth cyclically some the

of some saw this probably that we think I again year.

Lucas Pipes

and the I you. again, a great a very outlook. and all color year strong Thank on congratulations appreciate

Operator

comes open. Securities. And of is Seaport your Derek, your from Derek Hernandez final Global line question

Derek Hernandez

I quarter the had today. transition you concerns risk is the in forward. that SXC the know that support like congratulations going on also have announcement fourth overall Very I ask the my any would job transaction. your said you if view for to for But the been the to from to and I just moving positive. want give that indications regarding you forward? good results shareholders transaction

Mike Rippey

and supportive, believe we why that's SXC be shareholders that No, this the it'll good we very is unitholders. fair SXCP to believe transaction it's very for

So, at no, see any issue we all. don't

Derek Hernandez

was near-term in pursue that event, And consolidated how up levering this against to potentially have target any that or a near more measure since leverage you you would organic the call it come opportunities may the is priority the noted earlier do in idea of term? growth potentially inorganic

Mike Rippey

not that generate, We lever to growth growth. organic up X.X as both believe and accomplish cash inorganic opportunities. with pursue well can target will priority that be will we the free leverage ratio, Our to strive we to flow the pursue

leveraging pursue So current to things up list of growth is in our to do. not

Derek Hernandez

cash And SunCoke's kind a then with should as for same target, the balance sheet of minimum following what normalized be consider the transaction?

Fay West

could targeting we're be think right Derek. there, cash kind slightly of It balance, right I right right the $XXX but around million there. around lower, around just

Derek Hernandez

And be Brazil you market idea in of your potential have may opportunities mentioned an for and your Do for scale implementation opportunities model. you of there? presentation these timeline potential what the

Mike Rippey

be off will US built consistent plants Scale we've here with that as other Brazil. in the and well

we quite Other a they and Brazilian are in our United available as the look costs And of of well supplier that technology quite stream operator constructor, very valuable. works to considerably and scalable. byproduct is the for is higher than But States. the much the implement model process mind as electricity are are that technology of world. we us Our world, model resultant parts energy throughout is would

our technology there our know-how. is of one applicability in we Brazilian good parts we other look pursue as global the world. applying model to is through technologies there and believe of we The that So look more would

Derek Hernandez

completion XX D-batteries, risk the rebuild rate would the X.X follow-up be of would the Excellent. XXXX? going expecting beyond XXXX? basically are run Harbor following on you there to C- A-, of potential any your at Indiana production normalize a the rebuild there, and tons view or forward million of this be and with your few you do And around schedule then a which for kind the follow of completion November switching to as anticipate years, over quick to of ovens the Indiana of And last then last Harbor, timeline the

Mike Rippey

B, No, we a run correct. your achieve rate very million much post-rebuild. of and X.X is tons sustain timing expect and to

One - more rebuilds to the what thing as complete November that mind you quarter any. case end the those expect keep of in though is and was A. that fourth expensive in in of is XXXX, as should the the good rebuilds We rebatteries are

the end fully a for which at up those guidance back fully be we have this service and of we'll that's provided period we'll in November, ovens the reflected longer out year while - So of you.

Derek Hernandez

I guidance XXXX? quarter-to-quarter fleet. then give across see. if kind production us ton Thanks. target And just the of weighing to your from X.X year bit was also I reach the mentioned how to across could a little million be the you as you of outages for may wondering

Fay West

going work done and quarter with in of be, year-over-year. the work don't fourth you give know, to we guidance. your third of in that therefore majority quarter. the fourth But quarter they've is XXXX, some I plant-by-plant, quarter-over-quarter, scope quarter. the it's in the when consistently timing And second outage Middletown Derek, slightly But outage the work kind at - work quarterly look of and Yes, at outage varies

I see There's the more of it quarter. some inclusive nothing planned of second have see you'll have quarter. won't kind We production. in operations and did energy impact last in well kind think So versus the on you'll quarter. first third when production, first of That's anything year kind of as in work the as we

Derek Hernandez

and helpful. you great announcement great Well, for for very questions call taking time and my very, thank very the It's again. that. today Thanks, much all today. Appreciate

Fay West

Thank you.

Operator

are there And at this further no questions time.

CEO, Rippey. and over So I'll to President back turn the call Mike

Mike Rippey

participation all our your in continued Company Okay. Well, for your interest and thank you today.

in might or today we'll think of answered be and please any fully questions to you additional you pleased information be that If you provide requesting. weren't have touch later, be

and for thanks day. a Simplification of a accomplishment the great very, again, participation XXXX, good Transaction. look the very your including your forward have interest. we So And and to Thanks

Operator

does today's this conclude And conference call.

You may now disconnect.

SunCoke Energy (SXC) 5 Feb 192018 Q4 Earnings call transcript