SXC - Earnings call transcript Q3 2021

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Operator

Good morning. My name is David and I'll be your conference operator today. At this time I'd like to welcome everyone to the SunCoke Energy's Third Quarter 2021 Earnings Call. Today's conference is being recorded. All lines have been place on mute to prevent any background noise. there a remarks, session. speaker the will question-and-answer be After call now speaker Relations. [Operator would the over Investor Instructions] I of turn to Head Shantanu Agrawal,

may your You begin conference.

Shantanu Agrawal

morning you Good results. XXXX Officer. today President joining And David. Rippey, me SunCoke thank Mike Chief Thanks, us third morning. With this and to is quarter discuss Energy's for Executive

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

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

Mike Rippey

morning Good today. want of you them review discuss all and for I it highlights results joining our Shantanu a us few before quarter will who thank to third turning Shantanu. to Thanks, back in detail.

to safely efficiently teammates continued commitment our their and for to to high would I SunCoke and goals all to like of shared our First, customers. quality services working of thank our products deliver

quarter. performance the in to financial our Turning

delivered solid Hurricane operate our Coke caused disruption with Logistics across quarter, making continued We despite at both Ida. to another how segment the are the segments. delivered while teams capacity, Logistics full and pleased operations our by Coke

of EBITDA quarter we third record representing XX.X of third the quarter performance. adjusted million delivered For XXXX,

visible minor to our due resilient to operations the and and disrupted CMT commitment business returned and quickly clearly continued normal terminal the our from through recovered was Hurricane CMT operations. with operations mentioned The well speed our nature I results. which As perform evident of but damage to our employees Ida, initiatives export Operationally, only as coke at foundry minimal to were financial disruption.

In addition, was these positive into our markets timely. that are entry dynamics market proving

products well ourselves established by as we Our supplier in and quality customers, products markets. received are both have of reliable

gross Our stands at on basis. a month EBITDA leverage approximately XX times X.X adjusted trailing

exceed XXX the we're our to paying well over XXX full to the continue We and in remainder guidance on our Based steel strength to With the year, continued the in committed earnings adjusted for of markets, modestly to year. detail. I'll coal Shantanu? are and XXXX of quarter year our remainder of revolver expectation it million. EBITDA down review positioned that, Shantanu our third million year-to-date turn the to of performance, for

Shantanu Agrawal

Thanks, Mike.

Turning to X. Slide

million attributable net prior provided from the to year year the came during quarter SXC driven EBITDA a certain XX.X quarter, customers $XX.X The year increase relief $X.XX period. up supply in million third the period. by income per the prior primarily the absence Our of agreements was part as share the to turndown of $X.XX versus at up for Adjusted prior quarter. is

price year by higher Overall to base CMT. over driven efficiently. volumes, at quarter-over-quarter segment and performance million operations operate million product strong period. were X.X up Coke Coke operations diversified up XX.X deliver Our and was prior throughput continued higher Logistics

Slide domestic on to business coke summary X. Turning the

prior fleet as on Third higher the across turn quarter year $XX volumes related adjusted sales impacted was EBITDA million by The pandemic was period the turns. turndowns. per were X.XX

and see combined capacity when impact foundry utilization, Our to successful proving entry can full into we profitability. on export is market positive timely the and our with be

XXX the of planned will is million. guidance adjusted and year some in than of profitability million to the in modestly Coke quarter, impact included full of higher There EBITDA to facilities outages guidance. our Coke full domestic domestic year fourth are volume but which come expect are as XXX We range the

on of or The addition contract Logistics price which of X, XXXX Logistics The year price higher generated business the increase index, coal the Slide discuss at iron during benefitted third business. QX to prior quarter adjusted million a $XX.X to price is EBITDA coal higher Moving results. a have price is quarterly all The handling product kicker, ore volumes, adjustment, period. a as on and driven as million includes $X.X handling, the to which our compared CMT. based coal in by APIX

in We benefit well. QX as continue to expect the

Ida earlier, the fairly whole quickly. to mentioned of volumes a levels to Mike and The As back operating the limited was facility handled by on quarter during prior the as tons Hurricane throughput million compared normal X.X tons X.X impact the segment period. during CMT as million came of year

provided in second Our volumes the remains full for EBITDA year guidance quarter. as and Logistics same adjusted

QX. liquidity Slide in discuss to X, position to Turning our

you credit we XX.X $XX.X from and see quarter rate As of the on the revolving down quarter pay in We million coming of close facility. the flow with during CapEx operating our spent In share. third a dividends from balance generated activities $XX with at X of lowered million XX.X the $X.XX debt can paid to cash chart, the third of We cash ended reduction quarter the the the of million million. our per of form by majority million.

ended end total, third with to balance debt XXX million of stood I'll that, year. Mike. approximately million. of down at it liquidity the over a continue to position $XXX expect With the pay at and turn quarter balance of to total we over revolver the strong the In quarter we Our the

Mike Rippey

Shantanu. X. you, on Slide Wrapping up Thank

and further operational years. capital executing and look this against to will of participation made top and entered on progress year. to is new the mind very for pleased performance successfully We're always, As remainder continue base perform We operating with year, organization. future for we've we safety the continue our safely the focus and plan our the far while in customer of our in we so markets developing to

while full new was capacity Our we run to introducing aim when started products. at XXXX

the for the end working for are book and order As we're of balance third we next the the year year. on quarter, fully filling actively we booked

On with side, the revitalizing of market CMT the Logistics backdrop on made dynamics. progress good positive have we

We will continue to build on this CMTs foundation for success. long-term

our we'll front, On toward capital decisions the needs continue our reducing profitable to capital of allocation balance revolver evaluate capital work the allocation opportunities, the reward we'll the and need the longer continually we'll In the of for growth make year. accordingly. to business, our And shareholders. term

of to open modestly exceed our products, adjusted we're With positioned performance reliable million on and let's export EBITDA based for well foundry Finally, million of operating and up of Q&A. go XXX XXX and it our XXXX. guidance that, ahead for success segments, to

Operator

and Instructions] [Operator take our Okay, with Benchmark first from question Nathan we'll Martin Company. The

Nathan Martin

on Guys, quarter. congrats thanks for and questions the my taking

Mike Rippey

Thanks, Nathan.

Shantanu Agrawal

Nathan. Thanks,

Nathan Martin

you the guidance Thanks. for just ton And little also at And segment, updated EBITDA then or volumes about finally, looks your still hit outage to first again, quarter-over-quarter guide, million like maybe make expect be of of X some range. to expectation year-over-year? and lower is talk domestic compared that X.X work If profitability combined done. to that outage that's question your production just right. want then exceed I bit being is it what, guess work. Coke lower, sure prior due to a look is some there, This your modestly also with I

Mike Rippey

the out Yeah, This capital a all the scheduled fourth going And during lot fourth where year quarter. the right. and to The working occur that's it's of we've a and we is routine quarter, year. like quarter-over-quarter. lot that maintenance is during of work work complete to

Some to refurbished due challenge with the pulling work. be pandemic some installed and equipment by and and inputs complete to together of gathering of all needs it frankly, the associated design all necessary labor to that that's the and is capital the the

because do So the work and the of labor it's capital materials obtaining again, difficult unnecessary been inputs. difficulty of throughout to year

So of work lot being the quarter a is fourth here. pushed into that

Nathan Martin

probably that that's that you're you CapEx close and to - of for million gives the be feeling it Got might guess, going year. full I still what XX to

Mike Rippey

Yeah.

Nathan Martin

to moving over of kind Then Logistics. Okay.

obviously, bit driven Hurricane that little a was sure quarter Ida. I'm Third weaker, by largely

XX.X looks you fourth pretty You again you the guidance CMT, maybe you could million your unchanged. year would year guys that hit it at gives can of big still confidence that around especially apply what tons left like number? quarter discuss full That full

Mike Rippey

was The touched to disruption on related it. you Ida. Well,

there facility was at three damage Our better for in was part facility the we because weeks. were of the that not related run down electricity the no facility And the to rather unable to but region. that

the So to electricity to we be region. wait had restored for in

XX within a there. damages so of of lost quarter when power in. We is we So good and ready at teams good the fourth at some forward the news we to were restored. minor being the power They CMT. back look down was we're were operating repaired some volumes restored, And hours

Nathan Martin

looking kind number over million of you or you Okay, of and again, year that to can tons yeah, tons if roll just hit XX guidance more the you're around confident kind apply in CMT quarter, of X would million so fourth get because that full less?

Mike Rippey

with we've the confident guidance we're Yeah, given.

Shantanu Agrawal

around take I million QX, mean, good just so they're pricing APIX ton that Yeah, obviously, of seeing mean, number. volumes. it I X kind being should the you with strong, - be think I

So guidance. we confident our with feel

Nathan Martin

the that into stays know thing I as that quarter, Could APIX also third something price you is continue up you on that expect And it get helpful, price carry is then in required one above XXXX And that quarter. very required maybe to let touch Perfect, probably Shantanu, fourth guys. guys through beyond, level? and assuming just this mentioned brought you to kicker? to the what us could kicker, still you want that

Mike Rippey

is Yeah. into first details our the with don't To It question, any answer answer regard your the to could contract. of 'XX. share certainly continue we

to unable Or to question. question. answer that better unwilling am I answer So said perhaps that

Nathan Martin

the maybe one, about 'XX. No, then try Mike. the worries. kind comments going domestic it out Again, this of too. sold Last for you back real there? sold and at updates just tons XXX,XXX segment, mentioned And I'll year. or you see. Got fully to Any quick quarter, Coke last sell

Mike Rippey

No, hard now. volumes our we're working as sold out as for we selling 'XX 'XX at today. is we speak said,

Nathan Martin

it. Got and of quarter, Appreciate the best luck the guys. fourth in comments

Mike Rippey

Thanks.

Shantanu Agrawal

Nathan. Thanks,

Operator

next with Taykowski And Suisse Josh from Okay. [Operator we'll take our question Credit Instructions] Management.

Josh Taykowski

on congrats the guys, quarter. Hey,

some I intention and of their of call not your how Just their customers coal the on their of one commentary one big to react the week, vocal that play, that recent guess in from continue met guess earnings but pretty met continue quick last pointed to needs. coal to reducing that for to clear Maybe intention purchase scrap me. to vertical need. and reduce one integration back I quick, you do

Mike Rippey

to is before. or addressed it. that applaud a alternative fuel. a comment is to the this And DRI, natural it by actually matter not adding Yeah. extent the sources furnace, coal We or it's PCI We've blast The doesn't we HBI, reason gas fuel much one. whether new pulverized do

of All two higher for quality. has of very output strong in reactions to but also think we've require many additions value so materials, occur. the furnace as is the primary in the the furnace, lends does in one so in to produce process natural need source so of for ability the coke be to now, fuel furnace these itself coke the ever in that's years a discussed support coke allow the burden correctly a this furnace which terms what high the the of to in support be is furnace no When those values it have substitute. burden to of you requires a reduce the other coke coke in it's CSR, quality chemical as substitute that very our is is they and that to is Coke a about the other to furnace, a higher to of the

is replaced producer quality higher cokes the in increases need coke. for and So furnace that generally actually we're of the as a coke high more quality

okay. it's other energy furnace, So reduce metal forms perfectly our so that injecting COX and perfectly fine their footprint of to the by customers are looking to with us we're

Josh Taykowski

again. super it, and guys Thanks helpful. Got congrats

Operator

And Instructions] Masaga FactSet we'll [Operator to with next go Gemma

Lucas Pipes

Pipes. in FactSet be dialed Lucas I the me might all right. can This number you with hear

Mike Rippey

We you can hear Lucas.

Lucas Pipes

good Well, morning job quarter. Alright. and good the on

curious ask do expect And how today to Nathan from wanted booked. order The fully for quickly on how is then stand of side book be I question but question is Thank XXXX, where coke you be would you CMT first, earlier. the side, very the on clarifying order much. book do you and first there. up also So to course the your shaping a

Mike Rippey

Lucas. questions Good

active coke discussions now. the we're On front, in

take for and XXXX. quarterly we're take may commitments, annual make Basically, to and simply at time. of active may contract to into during or is a that know the did And cargos they quarterly we market the form fully few then booking of to market, prepared a cargo time. what commitments, or XXXX, form may XXXX. them present not they of a that's And all The be what cargo us commitments. today more in sold we have We required the commitments sales the be of at address is to be to appropriate be the

So as enter XXXX as we full. we've be said here filling just in expect to recently we indeed, didn't were fourth cargos quarter, we we selling that out full, But XXXX, been the And full. September. it

sell out position. intention, That's won't all not rather we be our to well XXXX. to in So sold positioned throughout enter but a XXXX out

active we run we be no We're here able XXXX. there's in to full today discussions. we in And sit think a So that few as to booked reason cargos. won't

about terms for we're for the not question an the where up down road tonnage repositioning volume we to levels - not guidance XXXX. dissimilar Your they more but we're experiencing the we're we're of you from would expectation today, to are but going are, mean volumes today relatively far way CMT, be not give were. looking XXXX what and in Doesn't assets,

Lucas Pipes

that's very helpful. That's,

Two, - does One, you on contracting I to has difficult be wanted to seen. your more would there prices to touched was this that really maybe business? ways coke what may your what touch current environment is ask appreciate it regular business? implications on, lead expansion coke it And in the price environment. margin I way topic coke price in make for your current just that Second ever I've the impacting this Highest wanted does business?

Mike Rippey

through are for most pass company. Well, for part, the a coal prices our

because some few It to part an to changed foundry as now referring take our over contracts. of lower pay and us. material coal the on of don't under approach higher multiyear activities, years. purchase though, they or does our customers, the of our So company's export impact I'm education long-term prices require, our amount these or isn't with past markets the to And

out and go to every have re-price We basically year.

than market. the they But talk they changes to prices seen coal coal Lucas. you, And So little procure I've the And at about rates, ever very and met to inputs we fact to We have them competitive I'm coal substantially. and have prices they're that risen prices, are. highest probably onto what we're a too. our the going older those are pass

marketplace customers come might and we'll explanation, So on on. coal it I products the coal and be when the strong, may certainly they will, fact that our most is, We time onto a very our and from in which and are been does those full compete a we require which efficiency coal on dramatic of ahead, with the pass so in and coke convert we'd either. changing and we understanding. we've don't years And coal to that expectation we you if price. benefit decrease we're rather market. way increased we add, place levels, so the prices that quality there that And very, from like the prices these passing effectiveness and our socializing, Rather, with won't down compete

Lucas Pipes

today follow coal of recall, prior, think question, coal conversion to dollars up efficient millions customer. dollars benefits has quick of to I your A of Thank in code? I that being Mike. and due tens your right prices to between accurate the these the zip you changes of still so, of kind of ballpark maybe and with millions some if coke shared you, tens is do in or and fluctuations from hold of Does it years of mechanisms and

Mike Rippey

debt We do of to from have it yield, or benefit doesn't into relates of turn year-over-year dollars. it as but tens a millions

Shantanu Agrawal

contracts have, of depending cargo, on we Mike what And there mentioned cargo contract doing I will Yeah. upon as kind impact, And of but like, more, kind though. as mean, more Lucas, kind is is, of prices, right. it Mike of think we provide coal there obviously, to yield what once we have magnitude. volumes and are finalized, obviously, increasing Yes, depend I by like And information. are of kind our going, it's provide that of good coal understanding the of but kind we'll not if when that XXXX guidance, said, kind we prices we'll of the where obviously, are

Lucas Pipes

best of you it. very Okay, and much, Thank I luck. appreciate

Mike Rippey

Thanks.

Shantanu Agrawal

Thanks.

Operator

our phone take question we'll And next numbers Matthew from from XXX-XXX-XXXX Kay.

Okay.

Matt Fields

think Hi, that, dollars United as think Fields. emissions appreciate of - comments less what wanted older, difficult resources, can use the I of sort a also more companies forward? of that the about mix on lot optimum coke, impact customers. Matt cleaner probably of to newer, that your which from versus cents you will their to coal - decision wise think move difference States, make the on to be but is the Do and SunCoke's, sort the is your do coke kind are aim these steel the decide And coke they you as that companies this you internal going sort touched in using of kind of behind to more I business? and of is to kind extent friendly, steel maybe I ESG as report kind kind a of

Mike Rippey

well might a Yeah, companies, because environmental where it, the a future do fleet we on the of whomever focused they footprint. that positioned. as the And to ESG earlier, we're touched steel carbon substitution coke. of well their properly age it our be, think And you for are they well Matt. centric furnace, on positioned it and and our positioned why that's we're very of look we really believe footprint example, about HBI, more producers, of into aluminum opposed fleet. We We're to as reduce, blast and talked for

the are standard. max we So

newest we're the We're fleet. very also we're So fleet most and environmentally, efficient. friendly the

capital So you of supply a want don't want We high that took. inefficient nice at it's the look to We're million left the don't cost and sit they're in one-to-one facilities in of When new, serve efficient, supply old we're continue spending be very to environmental that we the to we're you supply that these all going maintain curves, to to at curve you $XX kind level. to and invested, producer. and curve, the on in on very good efficient that the demand corner very we quadrant where we're year expect place this well remain going and market. be well macroeconomics, stead, right positioned

So in monies with of faced high of the And side very their the and the that last and And years, didn't the customers corner there less entered Well, some the you why with close closer they're Matt, their They're the which you market seen capital coke like investing right relatively again in We've seen we closures And does supply in investing Matt. was it other flat, might foundry both our the parts evidenced place applaud. now old supply left their to grow. be announced as Demand nor The righter leave? it but integrated decisions. in on facilities. foundry and left here a future. foundry few few really they're business, polluting market. that foundry to for you've producers as is that corner. want demand facilities, most cost be main for customers. don't at older that being announcements decisions The in to making remained into cokes

we'll to ready help we their in footprints. serve them carbon So to journey reduce their and stand them

Matt Fields

for use they're flow perspective. a of It flow you want on CapEx seems And below. what next of cash kind balance kind - touch million fourth to Thanks. seems use. at quarter, XX on that cash flow I side. flow, the for the maybe commentary that be kind is maybe guidance above revolver in the But about earlier Thanks seems implied like the continuing be you question hit free the the cash like fourth already, for to in guidance, with you're just up XXXX jump the free touch to free cash seems a the a fourth will in like quarter. pay of a despite will it kind already quarter made My of free like your it down reconcile

Shantanu Agrawal

the Yeah, I guidance mean, modestly we mean, since think in, obviously, could be it higher. where there's little bit, a I said that I depending upon come

So where little our I on think based flow cash could bit a EBITDA higher of be there comes generation in.

that what cash excess it will of revolver have that whatever the towards So we that's means. essentially, - kind go common will

Matt Fields

will you free fourth be flow think quarter Do cash positive a quarter?

Shantanu Agrawal

obviously, to purchase Yeah, EBITDA on right, depends upon in pricing, it CapEx coal comes on - ends positive. in we depending coal bit. XX. then a should what in And be coal move probably. be could at of, what the kind little as a and where bit they little A we could obviously, big delta change up purchasing, I the come mean, on have,

Matt Fields

Okay, of good on the year. great. the luck Thanks much, very and rest

Mike Rippey

Thanks.

Operator

over remarks. And now that session. or turn Mike question-and-answer any today's the back call additional comments to does for closing Rippey conclude I'll

Mike Rippey

ahead. as your look SunCoke. We the always, all discussions for us years interest morning this and Good. in months this forward in thank and continued joining Again, you continuing to

talk So thanks again soon. and we'll

Operator

And today's this conference concludes call.

may You disconnect. now

SunCoke Energy (SXC) 1 Nov 212021 Q3 Earnings call transcript