Earnings call transcript Q4 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 Fourth Quarter 2022 Earnings and 2023 Guidance Conference 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. Instructions] [Operator

Agrawal, and Shantanu begin you President, conference. your Vice you. Treasurer, Finance may Thank

Shantanu Agrawal

morning. you Officer; President and Officer. And this Good Mike Senior XXXX Rob. Thanks, thank Vice today me President; discuss results, well are Energy’s and guidance. XXXX Marinko, With morning Chief for Financial SunCoke fourth Gates, year and quarter Executive Chief full Rippey, as as Katherine to us joining Mark

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

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

will I that, to Mike. turn things With over now

Mike Rippey

thank and morning for Good today. all Shantanu. Thanks, us joining you

judgment as excellent by and appointment start and SunCoke leadership joined recognizing of each Let me this Katherine demonstrated SunCoke of in President our Katherine the effective Gates of year. Xst XXXX roles. various January in has of early

in and together guidance contributions significant earnings will SunCoke in initiatives our Katherine her I role. to key forward new review recognizes President and presentation. at to promotion later her to look Katherine’s continuing work this XXXX

and of objectives. through results. for contributions XXXX, of team The on in safety performance look achieving financial evident all we back want employees XXXX I their excellent operational is to dedication our record, our our SunCoke As our thank

million, of details our in record we that of adjusted the guidance end range delivering against EBITDA for the our how of high key we XXXX, revised We performed company. and three objectives. $XXX.X objectives $XXX million out XXXX set these a exceeded Slide for

free our $XXX which approximately $XXX range generated within million. flow, cash of million was we guidance Additionally, of $XXX million to revised

operated as conditions, Our foundry to strong our us Domestic market of well market as export participation. at which Coke allowed increase coke take full capacity, business advantage

call, announced our will to participation market. to this a year, are SunCoke our completed undertaking in As This XXX% further previous project, grow enable quarter earnings third project to in which we foundry expected foundry Jewell allow that is capital coke. produce the plant the our be will in of

production flexibility and facility alternate Jewell the not is blast the will foundry between project to completed. lose Importantly, coke after this

free on our We $XX million. also We flow priorities gross in deployed reduce XXXX. made great debt progress by cash allocation capital approximately our to

to which we $X.XX dividend share will XXXX, our increased almost anticipate Additionally, our quarterly per shareholders, per returned during in from continue we share million having $XX to $X.XX XXXX.

Lastly, non-binding we U.S. entered of to intent letter pig Steel granulated into iron. with a manufacture

will We this year. the coming in developing project continue

quarter earnings will turn full Mark? in to it to detail. With and fourth that, our review I year Mark over

Mark Marinko

Mike. Thanks,

was $X.XX expense. interest SunCoke share, the due slide XXXX quarter offset quarter per fourth being to coke margins export of net by four. lower income $X.XX fourth Turning down to lower contribution attributable partially The versus to

up refinancing operating results, $X.XX year related strong absence per full income expense. SunCoke XXXX our year by debt interest $X.XX to XXXX, lower net expenses Our was the and attributable share, driven versus the full of

Corporate. EBITDA full XXXX. a basis, versus On million, higher contribution we the by versus coke was for of XXXX quarter adjusted fourth mainly sales, the liability partially by Logistics fourth margin The year lower and adjusted decrease year volumes delivered million up segment legacy in driven million down lower was quarter $XX.X offset export $XXX.X on Consolidated at of $X the $XX.X EBITDA XXXX. full million, the expense

to discuss the detail. five Turning variance year-over-year to in adjusted EBITDA slide

coke Coke year $XXX.X delivered contribution our year higher The Brazil, our delivered margin delivered adjusted coke export on guidance Coke adjusted million. driven EBITDA full operations coke strong revised Domestic Domestic Including sales. by above mainly million, segment full well Our range. business EBITDA results, financial of $XXX.X of

The approximately million throughput higher Logistics year-over-year higher volumes driven segment by adjusted and increased EBITDA pricing. $X.X

the of $XX.X year delivered market, strong With EBITDA backdrop commodity segment a the of adjusted full Logistics million.

legacy we and for employee performance across liability very Finally, by higher pleased offset are resulting a related due historic with company. lower segments, higher expenses expenses. year Other mainly were all to the our by expenses, year-over-year, Overall, $X.X partially million the Corporate non-cash in

capital discuss flow to very initiatives. operating to our slightly generated approximately deployment six on capital make Capital our the expenditures us million. allowed strong We million $XXX $XX.X slide progress million, to were deployment below year which in cash during of XXXX. $XX of guidance Turning approximately of good

to million X.XX also $XX from times. approximately gross gross brought We reduced our our XXXX. outstanding in leverage ratio by debt Year-over-year, times down X.XX we

reduce in outstanding balance. and to expect delever our to revolver continue We XXXX

We the cash. million returned approximately in form common in of our use which our dividend XXXX, to of a of capital shareholders $XX was

our As share share third quarter the per is by mentioned during XXXX. of increased That $X.XX we dividend XX%. to by Mike, per from $X.XX

approximately priorities In total, stage for our ended against in liquidity progress with of allocation XXXX XXXX. $XXX capital balance $XX million, approximately setting million cash and continued we a of strong the

Katherine to Katherine? expectations like XXXX. over our for it I’d to to guidance turn review Now

Katherine Gates

Thanks, good everyone. and Mark, morning,

to $XXX $XX sales adjusted by and We expect to our EBITDA $XXX lower on expectation expected this million market of be adjusted driven EBITDA primarily to price year. conditions. Coke million is million by to lower $XX million, export Domestic be due between realization

participation to foundry full to and coke expect our capacity at in continue coke increasing continue the We facilities market. run our to

be due coke Brazil consideration. prior by $XX interest EBITDA to in million $X redeemed the the technology of ArcelorMittal $X equity fee will for million Brazil Brazil expiration a coke SunCoke’s transaction. lower to million adjusted XXXX, facility a In from cash

as to approximately part received of XXXX that technology also in fees XXXX year SunCoke redemption annually $X transaction. million for

and Brazil technological and the operating ArcelorMittal to As services owned coke provides an SunCoke reminder, pursuant agreement. the a facility operating Brazil by is

Turning segment. to the Logistics

with We at year-over-year. volumes CMT be $X We by year-over-year, anticipate water EBITDA profitability flat to similar that expect to normalized impact but million costs adjusted high could XXXX. lower in

we expenses. to legacy $X Corporate be our Other driven noncash approximately million, liability expense higher by by normalized to million Lastly, expect segment and $X

on contract, between Moving with coke. approximately slide tons the of in $XXX nine to Coke discuss million, we to million coke XXXX, and EBITDA Domestic segment be our and million export sales estimate X of foundry In to detail. adjusted $XXX

the tons long-term and in We export selling coke anticipate foundry expect X.X furnace Approximately fleet capacity. contracted million are remaining at XXX,XXX the agreements markets. equivalent in to We take-or-pay our XXXX. run full under domestic tons the

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

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

The order have coke XXXX of been solid foundry book and for sales is finalized. quarter first export the for

lower based our market continue full capacity, the on primarily is volatility adjusted future guidance. to coke coke current is that running factored to and realizations and expect is we conditions. price experiencing at The due export into expected While price market year-over-year lower export EBITDA sales on significant

water CMT, XX This did normalized at more be between $XX adjusted Logistics slide to is estimate to million million. in Logistics which high to $XX experience and we not costs detail. estimated XXXX based in Moving discuss is EBITDA on XXXX.

price as anticipate forward for such of of Gulf X.X approximately Coast, tons exported to throughput expectations considers coal also at tons non-coal year-over-year based current CMT, from million and projecting be We export iron curve. realizations the thermal X.X million to and volumes other be the the outlook Our pet on coke APIX similar volumes coal products. approximately ore, the

costs be in slightly We from to of or a a XXXX. at driven water XXXX incurred but to more Logistics high resulting by We high year costs lower normalized year-over-year, another XXXX, unusual Overall, was for mainly costs XXXX. Logistics another in water at anticipate EBITDA strong XXXX, high CMT anticipate during more the pattern, perspective. normalized we anticipate no adjusted our expectation CMT high segment. year flat in water water weather XXXX Like

several historical $XXX a to as to XXXX of actual summary again, slide XX, metrics, Moving XXXX million and as a well between slide guidance guidance. provides of EBITDA summary adjusted expect the performance $XXX on view we million. across be this Once our

expected is realizations sales. lower but with on coke price to full at business coke Our capacity, export run

XXXX to similar expect performance Logistics be XXXX. to We

requirements CapEx project. to coke be our in anticipate XXXX $XX We approximately expansion foundry the million, includes which

expected is flow cash taxes, cash million and after taking working be free between million $XXX cash account to and capital changes. Our $XXX capital interest, into expenditures

turning XXXX initiatives. to discuss Now key slide to over XX our

our is excellence plan priority will operating to strong safety safety first continue drive As XXXX. Operational environmental performance focus achievements. and capital in our we and and will always, on

foundry and to pursue as opportunities it specifically to continue optimize will our coke. export to We assets, relates

in facility. participation will earlier in in expansion the with be provide are XXXX foundry market call, the our coke grow diversification. completing participation we This us increased the focus and to will at project As foundry our our our further continue Jewell and market to on pleased coke enable mentioned

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

we deleveraging our continue further. to revolver expect in We bring initiatives to look our balance as XXXX down

From GPI developing project. on a growth City perspective, we the work Granite will

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

significantly market, the supply SunCoke success. beyond is for coke that with America we Looking exit well underinvested leading to and the North believe as that cokemaking aging. domestic technology. SunCoke assets youngest has facilities the positioned are long-term many believe XXXX, We continue will in

will that efficiently and performance. environmental facilities our to invest with safely, operate in outstanding We they continue ensure to

additional diversifying both of advantage taking and take to facilities performance continue will base. towards and our steps by their We customer our product

to see cokemaking for XXXX, businesses financial the core to and on Logistics In targets value of our create strength meet build we further shareholders. potential and our good

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

Operator

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

Your open. line is

Lucas Pipes

from here And capital the everyone, Thank first results. very next year in for providing solid you flow. of Operator. for of question, higher you cash you to my on significantly me Good color morning, to returns and What nice kind guidance that. much, your EBITDA are down way shareholders? stands much leads very to this Thank

Mike Rippey

appreciate don’t think progress. comments your our in continued of I anything the we stands and Lucas, way

in Our is balance great sheet shape.

the As significantly. delever we have it indicated we in expect to past,

We have that. done

well very to grow. ourselves positioned We

is with now at growth GPI regard City. the focus facility to Our Granite

to full. our We continue project assets work to developing continue in and that run cokemaking

the market as market, from away some move as foundry. contractual to able into been in well export the our have success We

of not CMT yet very, close darn have very -- slowing We it. operating pretty repositioned to but high off towards levels capacity, return

keep there grow shareholders. our to So it good incremental the cash generating to are challenge the deploying down to things and and participation to us the is our doing doing we of but are for opportunities grow benefit at CMT,

Lucas Pipes

target? maybe you. turn net Then What is to long-term balance note. the Thank this gross helpful. debt on That’s to sheet your or

Mike Rippey

under be to wanted X times. we said We

under We down have successfully brought it times. X

We revolver. continue got down have had we million left year progress, going this and a $XX We little still are great work. in to to bit

again, will leaves We well that very and us positioned. down, pull it

leaves our For weather balance we might growth, any sheet really in it to good a storms see out ahead. shape

to is, We in ourselves have this business. fact, remind cyclical a that

going are raised and not to the continue shareholders So when up did year to the as dividend reward we by we we lever have to last we ability XX%.

Lucas Pipes

the sustaining in for of the capital spending -- CapEx XXXX, between provide and I breakdown terms appreciate capital? that. growth for And capital spending, can then you XXXX capital

Katherine Gates

Thanks, Lucas.

itself. at the XXXX, is That that we in don’t million our project of foundry $XX capital specific number. as reflects Jewell see into give on In you for growth for number. built can projects expansion capital capital terms and out the the But

Lucas Pipes

of to million, $XX maybe right? would $XX that be order magnitude the And million of

Katherine Gates

and our continue our think million. to about $XX of to when of That about forward ongoing million sort CapEx $XX in gives to that facilities, you going sense good be that you think can would we invest a maintenance around

Lucas Pipes

it That’s have Thank best color. more now. luck. of turn but appreciate questions, helpful. I I you the and very for will I over

Katherine Gates

Lucas. Thanks,

Operator

[Operator Instructions] the Company. from question Nathan Benchmark Your from line Martin next comes The of

open. Your line is

Nathan Martin

recent morning, Good everyone. and appointments. Katherine, congrats the on taking Thanks Hey. for my questions

Katherine Gates

Nathan. Thanks,

Nathan Martin

welcome. are You

Can export Coke on cadence Domestic lower realizations XQ per thoughts quarters? know pricing of on sales possible to already guys this over EBITDA expected drive maybe year. likely talked down your sales four out get we ton how I in about that been or the segment coke have next again finalized. the you export You pointed

color So better any be to now an weaker the expect half is you. in the it or you great? as market and second would Thank get there example

Katherine Gates

Nathan. Thanks, Sure.

XXXX, I we over think some as look of we we market improvement the course see as full the move into further to XXXX. expect in

looking second So quarter. than the for as back the quarter and here first half is we better us sit in

Nathan Martin

guys guiding quick million Curious this exports looks with for a like CMT. year Maybe helpful overall, full a kind of Katherine. of you to X.X metric and of a compare to volumes year. just we be question APIX day. helpful, about around Very It Great. on tons directionally have would coke ton pullback that then prices $XXX XXXX, even seen does how flat the

are you that kicker receiving still So those tons? price on

Katherine Gates

Thanks.

volumes, volumes, very we today, those are price terms we look in flat but are when that the the have And flat comfortable build year-over-year. with really APIX satisfied very really on it’s the guidance comfortable that guidance of the and where year the in So we we with APIX, full that with year-over-year, adjustment for at are are pricing. we we

Nathan Martin

you or comfortable kicker you today with, no or are your incorporated that So are that guess? guidance receiving is I that in

Katherine Gates

the receiving year. anticipation are today for We full the receiving incorporates the guidance the of it kicker and

Nathan Martin

one give on just question Maybe attention. you. final you Thank helpful. much segment Very doesn’t a Perfect.

$XX years few you run kind but the the to $XX going kind is prepared $X of EBITDA of million to in it, Coke the minus again to EBITDA EBITDA of think million get any $X to opportunity that next described is $XX million Is back side, of of little it around, have a let’s segment technology to down or $XX million from or remarks, some this fees. about your rate that? plus year, good a that there million of the this expiration think Brazil kind forward for I going bit over call million on those

Katherine Gates

million don’t rate was expected This an going That capital we the based any structure on or Nathan. and run that forward. we anticipate really the drop $XX and Brazil, is risk going is, side take the operating on of forward. It collecting

Nathan Martin

one just maybe to opportunity? Granite you And one, on going the just can it. updates I try. Got share final am City Any

Katherine Gates

to But am are requirements. the the project I may discussions going But in you we U.S. we continuing a assess Yeah. disappoint Nathan. Steel capital appreciate. and and try. with I I to bit are other

Nathan Martin

I wanted expected, Katherine, to Appreciate… throw but As I out that there.

Katherine Gates

hard No. real tried I for you.

Sorry, Nathan.

Nathan Martin

Best in it there. All XXXX. leave will of right. I luck

Katherine Gates

Thank you.

Operator

And Securities. the B. Riley Lucas we from Pipes have a question of line from follow-up

Your line open. is

Lucas Pipes

City. very Granite much, to more questions And a on you want few ask Operator. Thank I

score. So analysis? Is appreciate time conclude I softening the Nathan to which that a ground the there like would on you by

Katherine Gates

Well, Lucas, appreciate I the question.

complex I project. It think time. we is this takes are a --

the take it takes We to the get right. are going to that time project

Lucas Pipes

under comment of the of on the terms in And still due diligence -- where is what today, it aspects are you -- that spending could that, are analysis you most in the today? time

Katherine Gates

the focus for capital. We on really the requirements primary are That is capital is project. focused the the

Lucas Pipes

And have it put that’s of amount iron the essentially like facility convert pig facility? you to ongoing -- capital the to an on into would that’s to

Katherine Gates

Exactly right.

exactly are right. You

Lucas Pipes

maybe is policy Okay. step Thank returns, a you. -- City part be That’s on And very capital in I cap fair assume helpful. terms capital that far? the that return Granite appreciate current of or decision to to would upon back is a that. it contingent of too

Katherine Gates

Sure. No. Absolutely. No.

right sense in that’s think -- the right really now. of that’s I

for focused cash really preserving are on GPI the We project. our

Lucas Pipes

Thank it. helpful. target, have Very minimum a you. us? can liquidity you you do Got remind And

Katherine Gates

We said mean, really I before, I Mike mean... don’t. as

Shantanu Agrawal

and I that, then off get Yeah. have kind will what of to down. basically, mean, our from That’s on that can kind get I Mike what said target revolver the like, left we that -- there. Lucas. take paid that’s of we about, go of kind

Mike Rippey

we to in fund high with we project, we us, with the cash not we is fully indicated that, times above expect said as as And to we the going that flow Lucas, and GPI are we it X for so watermark the past, liquidity regard very our have we modest be go very, some to have a perhaps, But significant all, revolver. and expect to modest at and borrowings that, very revolver. very into do and operations if don’t under from in will

So the all we in are way shape good around.

Lucas Pipes

helpful. Yeah you. you Thank entire to of again the and team. luck. best Very this Thank for

Operator

further… are no there And

Katherine Gates

Lucas. much, very Thanks

Operator

at the this questions are you closing over back to Ms. I final no Gates, comments. there some Katherine And further for call time. turn

Katherine Gates

again right. for this you All Well, thank all morning. us joining

forward BMO Conference in I meeting for interest those here, of with thank you you your look SunCoke. the up coming in-person you continued and attending are who For to

Operator

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

disconnect. may You now

SunCoke Energy (SXC) 2 Feb 232022 Q4 Earnings call transcript