SXC - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the SunCoke Energy Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you. Shantanu Agrawal, Vice President, Investor Relations, you may begin your conference.

Shantanu Agrawal

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

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

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

Mike Rippey

of in who to Thanks, review thank turn for a our goals Today, today. it to us employees before Energy's you working to results. all announced Shantanu. SunCoke over Mark, want and services joining safely we for deliver discuss second few efficiently results products I want all to the to quarter morning detail, Good SunCoke and shared I and I thanking And of their will contributions our highlights. start by our commitment high-quality customers. and to

supply the CMT easing in our rail increased are delivery coke our to domestic continue to at coal seeing impact see and issues. positive easing -- and Logistics terminals, foundry well, we continue we Our and while of the from initiatives segment, export financial from benefited results. In volumes the perform

SunCoke. second record of results, quarter's million. for the been first with this a has we EBITDA delivered adjusted $XX.X of consolidated the half quarter XXXX, For Combined first

we term. to quarter of initial principal facility footprint, of it per also stability dividend announced are half with U.S. the date. share quarter, of that a the businesses. XXXX, our increase adjusted next a million-ton iron build second granulated of the letter which enhance the coke of signing diversified Steel proposed significantly also metallics Board to with blast SunCoke's XX% $X.XX Granite and steel we Steel's of our and XX-year SunCoke current project quarterly approved allowing acquire a terms industry. would furnaces nonbinding Directors upon $X.XX announced pig increase in become year During This out and per the a X a leadership's for the million. us Today, turn U.S. million meaningful both conditions sets City for intent in that our record first from payment supplier Mark continued export softening I EBITDA review performance and to guidance market coke from million increasing underlying progress original the $XXX that, second in full With and detail. $XXX our effective demonstrates will for conditions to to earnings $XXX million $XXX X, guidance the September core senior Board's over second our year, our Recognizing quarterly confidence in to the year This we and to Mark? half will

Mark Marinko

Mike. Thanks,

X. Slide to Turning

sales share, in higher the primarily partially share and second quarter adjustment the XXXX. volume coal and $X.X on up in timing up lower product prior increase The per $X.XX refinancing at absence primarily due came in of outages. by year net connection $X.XX quarter CMT, driven to driven the versus SunCoke price of debt the APIX by benefit the period, XXXX attributable was coke of income XXXX. million of second sales the quarter second million, EBITDA margins second with quarter was The extinguishment-related to at Adjusted per $X.XX mix export for $XX.X impact charges offset versus a by

Turning for to to our discuss QX. liquidity Slide position X

see quarter by can $XX $XX we with close chart, the balance We from from spent of $XX million. activities approximately and the cash second ended $XX debt quarter, our a flow operating during CapEx to million. you million. As on million generated approximately Cash decreased the almost

ended $X.XX paid We strong position with a rate the share of $XXX In in total, also $X the million. per dividends approximately liquidity at of we over quarter. the during million quarter

is mentioned, our strategy along As long-term a our of allocation consistent strengthening XX% the continued Mike we capital announced balance our shareholders. which of with dividend, sheet, rewarding quarterly in increase with

turning X year business outlook. Slide revised performance discuss to full Domestic Coke and to Now our

and offset quarter year period was adjusted mainly increase coke period-over-period and $X.X plants due the adjusted was negatively X of by production million, sold sales planned foundry million The over in coke on as lower of margin sales, our was change prior production compared between sales mix blast timing we at and volume. coke production. The just coke. well in coke as Second outages $XX.X and tons EBITDA coke by by to partially the EBITDA million same to export higher as impacted furnace driven

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

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

Coke million approximately half conditions, original of unchanged but $XXX from guidance first sales to to market also million million are to Domestic Given the $XXX million we record recognizing guidance the Coke $XXX softening X.X guidance tons. remains $XXX our adjusted at coke increasing EBITDA million. performance volume export

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

coal of segment negatively the during margin compared period. fuel quarter by our year, The While terminals the million quarter same handled throughput during tons as tons higher to this volumes was domestic impacted as higher prior year costs. the CMT quarter million period. X.X X.X and quarters, QX volumes volume issues, to last compared the visible to handled that to The compared as and handled is in impacted and prior to QX via similar seem of delivery volume off, over supply as couple uptick the be CMT last XXXX easing compared year rail same XXXX. which

prior services terminals of more domestic handled Our customers. by increased approximately from XXX,XXX than same the demand tons period year handling driven new

an our Logistics we million. million full Given to for range and optimistic balance to the EBITDA increasing adjusted $XX year, of XXXX $XX our half are guidance first outlook the strong results year

in expect be between $XXX EBITDA XXXX compared as to $XXX X, to now second segment the This coal and the incorporates the million half million. consolidated through price adjusted the benefit year. guidance. CMT at Slide and to segment APIX from to profitability of of our Turning sales continuation of updated Logistics which expectations guidance the in adjustment our summarizes million revised $XXX coke $XXX export We million the original

at Our approximately guidance million. $XX capital expenditures unchanged is

will working coal an inventory flow back stands compared original over $XXX values it anticipated due now million and change to cash million in payment originally guidance We increase higher to now free of $XXX to as at I expect in turn than draw to Our guidance coal million With to capital that, $XXX terms. Mike. a $XXX million.

Mike Rippey

up Mark. Wrapping Thanks, Slide on X.

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

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

for a in see customers And new We current terminals. expect our projections, continued are our growth based facilities. pleased and second half logistics to demand for services on at we solid logistics

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

to similar While year a realized now markets export price coke contractual stable market expect in which half a of the furnace our foundry export second more revised of benefit the is coke is limited guidance. market risk and factored cost but the the much our export volatile. softening coal during We lower commodity into half, sales, first is blast sales with of the

Importantly, these capacity. plants markets coke our at sales run to full into optimally allow

a Granite work continue manufacturing City the quarter. strategy with continue capital perspective, GPI agreement U.S. on an we opportunity. Steel allocation during We make to growth the on progress From our towards to

front, our our look to balance. Board revolver declared down continue increase as dividend. to Directors on of initiative finally, Additionally, our expect deleveraging the meaningful bring further we we in quarterly debt a And our

As a continuous on we we evaluate to our capital will business, our shareholders continue commitment and the of have needs reward capital capital past, in structure basis allocation the to done accordingly. make and the decisions

to and EBITDA the achieve XXXX. of Finally, our to the in look and adjusted our based second $XXX performance go ahead export conditions market operating for the in revised $XXX on call that, we million Q&A. half, With let's open million for factoring of guidance reliability while segments,

Operator

of Lucas Riley first Your B. Instructions] comes question [Operator Securities. Pipes the line from from

Lucas Pipes

how might and right? Mike of the guidance. about and City ask Good well? looking we City should the Granite job first And in deal. we that at to the Is take, as SunCoke the on structure Granite wanted locked quarter I commodity the would specifically, sort to risks costs, a you margin. about pass-through raising be think Historically, team,

Mike Rippey

we're but -- you we're the other anticipating And City, question, opportunity I which Granite still ask it's thanks. there's as Lucas, can investment I'm why done. this, comment the to already at hope appreciate we've regarding an beyond at point excellent questions and publicly this premature But always. you and evaluating sure

Steel's U.S. We converted extremely believe to looks think that saying without supply is pellets ore shareholders. City, chains. as an chain our into GPI is these and is a this company should currently it down, And for iron company to win ourselves with coke, the then EAS win-win our chain. utilized I Steel. bringing we're think for profitably a that's in a we supply really goes our And about probably go which our into of see a this both what Granite without for at insert And saying U.S. do, manufacture it I we win strong supply ourselves and excited segment, opportunity. combined very

if we're come this a said all that to our shareholders. I approach. to can be but Lucas. selective that So years, at opportunity little very And appreciate as our this this many we've say years for disciplined a we again, it expect time, frustration, consummate many we for But were for growth and will is now transaction, profitable we perhaps in

Lucas Pipes

I how No, go. understand. things that's

said, transaction. out, that like major the transaction mentioned for items like just You still are are up a if few are negotiation like if be iron kind closed -- or -- you this of we What still some few need things to close? that the before of there settled are to there could

Mike Rippey

capital There's U.S. still one be course, that that agreement need the viability between to we the can a of what commitment presence things. both will, be One produce the Steel. the we've those things learn of in to overall of There's made imagine And to project. that it's complete so will announcement necessary about ourselves cost product. determine of this principal and capital public can we investments the the better

statement now presence to we're a undertaking. required of in So the in what's public looking fullness ascertain truly to our beneficial make actively this

Lucas Pipes

quickly, coke major changes export, sales XXXX That's really of And your to domestically. theme sales market? Okay. book my coke foundry -- in then roughly coke helpful. is the furnace Should XXXX? between and mix we the foundry then in blast What's furnace split any coke domestic second blast anticipate

Mike Rippey

business, It's we're foundry. There's question, to and our we've any that opportunities. contractual not look more into export Lucas. involved business traditional the and the between great coke been change a XXXX now starting And between really

to exploring the is side meaningful What we've we're our no foundry success grow change in business, to good So opportunity date. -- contractual the and continued no had change.

opportunities continue to company. for our those expect We

customers very them. bring value Our the appreciative quality of the supply our reliability of and of we are product,

in that foundry to start growth look the the of 'XX, could at export one And expense would we into as some market. imagine So sales. come continued

Operator

the And from Company. line question your Nathan The comes next from of Benchmark Martin

Nathan Martin

Maybe that now. Domestic at that but hit couple per imply business, questions. you Lucas City leave half. kind the a about ton in your did so first Obviously, If the in to on of second if full I I'll I'm seem per your looking a Coke opportunities, of think year modeling Granite alone EBITDA for $XX was $XX raise guidance quarter, $XX second the the quarter. would the $XX falloff to pretty decent to ton, in adjusted

If correctly? that so, expected First, any little conservative? Or I decline? a maybe bit appreciate be still could thoughts. thinking that am the about behind what's range I

Mike Rippey

coal benefited, an we excellent in the the Clearly, into first as export what Nathan. market. by It's lower quarter, our call, of indicated we question, a rising quarter first going in presence costs was

we And In go coal So in into now prices. in first year market that was nice what export that we a reduced the opportunities. didn't half quarter, tailwind coal the benefit of of the see quarter. some the we as the experience second softening is back

the reflective the price availability deceleration in in export of So the the second and half is market. of change the

good a helpful and I that's a So answer. hope that's question,

Nathan Martin

it that. Mike. due on earlier it, appreciate mainly the I markets. Got comments your export I of to softening was was figuring probably

Maybe specifically now you're is Okay. coal side year, on for the your to million around of the tons I expecting the initial end next, lower X recall, of shifting Looks CMT, like gears as things. guidance. which, full at

remarks You mentioned in elevated. and started remain we logistics prices both extremely that your to coal coal ease know prepared the improve. And have or supply export thermal obviously,

quite expected So maybe a just maybe them hoping was I I play there shipments high little get color to out. why aren't have to would more as as

Mike Rippey

supply in first. quarter in in the you're some there Well, disruptions We right. the do up to were second because had catching

And So The there and back capacity seeing If perhaps now advantage pick in of with you're that take nice is quarter. the facility. run we'll in correct we catch-up certain half. in we're levels it. there, is of regard price is the there full over APIX. more the the acknowledging up to was remain that quite normal and supply the a high, demand international the thermal pricing, to demands pricing But us favorable is global additional XXX% rate

Nathan Martin

there part seeing? be you quick you some prices Mike, a -- that on great. with even provide would color with could last these comments benefit more tiered structure? APIX kicker. real of Any any is just like we're that record Or the on Do

Mike Rippey

We insight levels, kicker what mentioned. already certain into is beyond contract provide said, there above you is we've that don't that price which

Nathan Martin

Appreciate sure that. I you I'm had to ask. understand.

So...

Mike Rippey

did hope It our answer. you appreciate but glad paying can you I ask. I'm proves you're attention,

Nathan Martin

do. I I do,

Operator

Your line Goldman from next question from comes of the Sachs. Karl Blunden

Karl Blunden

that. raise. City, still a timing wonder could the Granite if considerations. lot and I explored results some for and guidance mentioned is on I strong Congrats the go appreciate into you of being you

you of sense proceed, seen recently? have the is to the you capital needs types there the consider on Assuming based might fund of and we've in might the project a when volatility of you market then sources

Mike Rippey

completed we question, I we've about That's the to years construction in case, prior startup. We've it after past, a our said remains period agreement, think the and X good the and expect of discussion Karl. reached

from would perhaps our our of with to So regard that's fund to revolvers. kind of project operations you. for capital and the some under needs, we this time Then line out expect borrowing cash flows

Karl Blunden

thoughts helpful. And relative 'XX, as CapEx the XXXX? been we the of That's in some then assess you've needs of to there is for rest can provide 'XX, directional the how business kind you running in

Mike Rippey

Yes.

think million. about representative year fairly is we're a where year $XX I talking this

in the only Of course, manage now our to effects working CapEx, hard negative also but we're inflation not operating expenses. of on

experience factor come inflationary what have. beyond work same of million. in that 'XX, quantum might in a only of kind guidance $XX you currently we So but we'll as range And we think of also projects, impacts in with out specific not we

Operator

Rippey, no turn back are you over time. remarks. for call at this Mike some the there further Mr. I questions closing to And

Mike Rippey

again, thank Look in you this us on the Thanks the again. a interest forward once morning continued in call joining and Have talking Well, ahead for great out your day. SunCoke. to all future.

Operator

This concludes Thank call. for participation. conference your today's you

You now disconnect. may

SunCoke Energy (SXC) 2 Aug 222022 Q2 Earnings call transcript