SXC - Earnings call transcript Q1 2022

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Operator

Good morning. My name is Chris, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the SunCoke Energy’s First Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President Investor Vice Finance Agrawal, Relations. and Shantanu

may begin. You

Shantanu Agrawal

today thank Good quarter us me Senior President Vice you Officer. Mark this Chief Officer; and Chief XXXX Mike Executive and morning With President first joining Marinko, Energy’s for morning, and Rippey, SunCoke to results. Financial and are discuss

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

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

Michael Rippey

Thanks, Shantanu. joining we on results. highlights. in results for to SunCoke a you Good want thank discuss Today, to quarter turn call. few And will and Energy’s first I it review the all announced before today’s over us who morning, Mark, detail, I

for their contributions, I start SunCoke. of and As SunCoke by commitment to want employees was all always, quarter a thanking what for record our

foundry coke Strong wet rising our backdrop winter and unusually is excellent a continued behind products results for and fleet challenges to Coke our export demand to the this year, delivered markets. the main in provided due Domestic the excellent despite driver markets start weather. for favorable quarter some Our results an commodity success these and

forward and weather. We are full run our period look to operations have dry to a to capacity continue at pleased of

our at new the price but perform domestic adjustment increased APIX volumes CMT. segment benefit customers Logistics well, also continues to at terminals Our from and

at quarter, rate potential CMT, we adjustment the contract base with coal upside XXXX handling provision. APIX continued through During from the price a also higher extended our and

Looking stands gross X.X to a EBITDA our approximately quarterly pay times we ratio trailing our leverage dividend share basis. capital our and at XX-month at on $X.XX structure, continue adjusted per

We balanced will a pursue continue the capital first financial a provides the in allocation. opportunistic yet our of to solid to on build approach foundation performance Overall, to the balance quarter year. for strong

I’ll to positioned exceed XXXX full With million. are that, first to over Mark? to quarter EBITDA Mark review to $XXX modestly consolidated our turn year $XXX of adjusted in We it million well guidance detail. earnings our

Mark Marinko

Mike. Thanks,

Turning the $XX.X first Consolidated export up was X, income for first APIX to on attributable was EBITDA up quarter $X.XX first margin versus higher net the was XXXX. price coke versus sales. to adjusted million quarter per sales prior the $XX.X benefit quarter by the at XXXX share, driven increase adjustment export CMT. Slide by The million, year driven SunCoke primarily period, $X.XX and

detail. to in to Domestic Coke discuss X business Turning Slide our performance

and EBITDA coal million the weather onetime a winter which tons This of period of driven [ph] quarter. the over period impacted $XX cost increase benefit we during was EBITDA first sold across lower sales, included adjusted normal XXXX. margin coke adjusted higher quarter First carry coke export by over than fleet Wetter XXX,XXX on was coke. from production

production change impacted between over was due coke Additionally, in and the period period mix furnace blast foundry coke production. to

blast a replace tons furnace foundry tons on basis. do not ton-per-ton reminder, a As

of blast furnace differences coke For the X example, due ton to production process, replaces approximately a foundry in single of coke. tons

now exceed guidance range to EBITDA expect quarter million of of the the domestic first performance, million. backdrop $XXX adjusted On we coke $XXX modestly to the

adjusted of business. in adjusted Logistics our $XX.X increase benefit due our prior as million higher discuss first The volumes of price compared period. to to at the adjustment EBITDA domestic quarter X Slide primarily terminals. the million the to at year $XX.X Logistics CMT and generated in EBITDA was Turning during The XXXX to business APIX

of increased handled coal business handling X.X during compared services XXX,XXX saw volumes during CMT a period. Logistics prior from in to X.X Domestic driven rail throughput period, Our million uptick the as and delivery mainly year handled the good volumes, terminal tons versus new demand the tons driven of quarter approximately tons fewer issues. by year customers. million by prior supply

first annually, is our we contract liquidity take-or-pay coal extended Slide the coke to guidance the remaining volume continues price unchanged. provision, Switching potential. million position adjustment through CMT now million, rate Logistics XXXX, increased. which like The about The let’s now QX, provides for quarter APIX base to to good Similar During contract the ton expect and X of segment, at our to the include XXXX. to $XX would volume upside modestly take-or-pay handling the X. guidance we range was to agreement $XX EBITDA turn adjusted talk for with exceed million I the gears, the

timing the due debt we cash spent CapEx coal $XX million, flow from it of Cash increased approximately first close We As coal million. was during our $XX in operating receivables, $XX working inventory requirements. million, to the in increase activities see quarter, the $XX and from payment of terms. approximately you ended balance to mainly by capital on impacted and by million changes chart, can generated a quarter the with

position $XXX the it strong also I to will share at Mike. that, of We turn with rate in ended In With per dividends the $X back of $X.XX during quarter. paid million. a we total, approximately quarter million liquidity the

Michael Rippey

X. up Wrapping Mark. on Thanks, Slide

top mind organization. As for of performance and always, our safety operational is

on Our safely continue against to plans. capital executing focus efforts our operating will and

our continue agreement of for strengthen and to pleased to handling The domestic to foundation We coal our CMT. new the at market services CMT, logistics are commodity see provides terminals. backdrop a further customers strong extension positive increased the at demand that’s and

pleased the foundry in success at we’re coke with and this mentioned markets. our As export I the beginning call, extremely of

The first further and into are our was quarter entry opportunistic. timely these proof that results markets

further looking market optimally into coal full relationships to We markets are continue at run Sales to our increase build to utilization. allow plants customer continuously share. and these

On we continue bring initiatives our balance as expect our look to revolver deleveraging allocation to further. the down front, we capital

at in growth organically marginal opportunities M&A. for company long-term we We’re and understanding through for sacrifice we looking creation shareholders both to before, it disciplined, short-term And gains. value not as the interest remain will is said have that our

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

million. first markets project to our to million EBITDA continued leads excellent our earlier, year us as adjusted commodity guidance quarter Finally, results combined I with to stated in full results $XXX exceed strength of $XXX modestly

updates go the With will earnings Q&A. We ahead we have second open that, guidance, to more year regarding further as and the call. clarity half let’s of provide call the our next in the for

Operator

Instructions] question Blunden [Operator with Karl first is Our from Goldman Sachs.

Your open. line is

Karl Blunden

much Cost of good – your for year? how And both topic I’d the reiterated big right now, earnings OpEx time. CapEx your Hi, a has rest of in your what season. business through the interested standpoint? very been that morning. that Thanks. for encouraging in the you’re you an then be they’re focus it’s CapEx, where inflation very thoughts out in seeing Thanks guide, plays on interested from

Michael Rippey

question, That’s Thanks. Karl. good

fully in in we relates into second are some particularly unexpected our talked side, put the year of planned. that last half capital we the inflation of it year’s experiencing work to that the XXXX, On impacts earnings of then in we the the beginning expected calls we forecast inflation. CapEx project And

anticipates year continue the we plan to So inflationary the our impacts CapEx absorb. for that

On to our and impacts offset indicated in impacts where that the begun OpEx efforts might last we we earnings the call possible any side, saw inflation of we have see. our affecting business that inflationary

coal most really have we’re work, sourcing hard closely any in commodity now we exposure the market we price as decisions in driver look increases, we to So so costs. into know, is markets our notably as we pass-throughs to of coal And to coal. everything our our inflation it with we Coal accounts. and important see export company. for not these well the all the our markets, have offset our And export as there, principally sales most inflationary match working contractual the in our operating you undue of for do, to particularly

Karl Blunden

a mean there strengthening some now for repurchases. that’s that have balance a on EBITDA Should perhaps to Or discussion or of shareholder discussion going Makes you’re for take later sheet higher forecasting that? a that free Excellent. by and you for now returns year cash didn’t organic the flow, hear either And M&A some growth opportunities. and sense. to be dividend time? the around shareholder cash to is higher we then, and is discuss room I at much focus

Michael Rippey

always, balance indicated, opportunities sheet, other to As in our board is the is continue whether And some form, focus the there the work shareholder ahead. or as continuously the that’s return the on but increased that’d to be we’ve route dividend evaluates to delever revolver.

Our is deleveraging. on now focus right

Karl Blunden

it. Appreciate Mike. Thanks, Okay.

Michael Rippey

Okay.

Operator

Martin question Company. Nathan next from Our is Benchmark The with

Your line is open.

Nathan Martin

on looking real least expected prices $XX, while on Russia-Ukraine in the and remain for extended EBITDA for Domestic Congrats ton taking elevated I’d should the Coke especially delays. year higher logistics like everyone. morning, Hey, questions. adjusted looks a on record conflict. they was at going my some what’s APIX the good given Congrats quarter. per take-or-pay. like given Again, starts which Thanks record shipments than

out to So, from there’s raise see the seeing what X you your that you quarter are need or quarters make do EBITDA next comfortable something maybe you officially detaching I the guidance? enough next to raising to guess, there over that guidance, guys Thanks. over full-year

Michael Rippey

questions. you. all good thank those And Nathan, are Yeah,

guidance As at quarter. we indicated, we’ll second of the end the the review

to of and and for end the markets back to year. on relates half the sales [ph], the it clarity second [export principally of export markets the enter coke] third into those more as as and quarter the you particularly uncertainty it have full We relates global our as sales touched we

So we’ll year the of address end the quarter. second again full at the guidance

back more have into the activities. half export We clarity

Nathan Martin

on number? $XX. kind that trying effect Was side I quarter to at a the fourth clarification all? that like [ph] And [some think, net I heard we EBITDA number ton there quarter what of] question first of then mention Domestic from adjusted Coke higher maybe driving were something just per was

Michael Rippey

as was from you think Yeah, things we XXXX, million that excess it point benefit, in And it there. did. and some of properly into the out, and had from about of over benefited onetime XXXX market, then in the coal in when having quarter. the There’s kind slightly carry we’ve export success you X $XX

Nathan Martin

maybe I transportation, somewhat updated helpful. things kind if then side thoughts any of improved the And something on then months there Can gone which second. logistics, we’ve what of to that. going the get touched rail things, you’re quarter this a seeing That’s maybe Okay. we labor maybe update And we for appreciate is back well? first that on throughout very and transportation few last your just quarter, as on as there? of

Michael Rippey

supply issues fully [always say things certainly, understand But logistics fully, because have in resolve on are from wish I Yeah. improved. bit – labor. quarter your we’re early The I chain hadn’t. to I hesitate] I the say what a that, experiencing don’t first know themselves no I I sooner that question quite [ph] what

Nathan Martin

are I concerned the pressures on seeing last maybe that far touched [have contract quarter inflationary as are that still higher workers [ph] you earlier? going Are think case? as on to mentioned not had you you do] labor some before there’s that as with costs is

Michael Rippey

particularly. Not No.

are SunCoke we’re seeing general the to economy So others that inflation nothing wage there. in specific

Nathan Martin

information. leave of Got there. I’ll luck. kind Appreciate Best your it. it

Michael Rippey

Nathan. Sure. Thanks,

Operator

[Operator turn no Rippey for Mike questions over further It the call remarks. at any I’ll time. we closing to have appears Instructions] that this

Michael Rippey

us and the joining forward as And morning. this in Again, for all your thank the we’re on you doing look to SunCoke always, things call interest we all continued here.

your and a appreciate Have time I interest. day. good So

Operator

for conference today’s you participating. concludes this gentlemen, and Ladies Thank call.

may disconnect. now You

SunCoke Energy (SXC) 2 May 222022 Q1 Earnings call transcript