Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, welcome to the SunCoke Energy Second Quarter 2023 Earnings Call. My name is Glenn, and I will be the operator for today's call. [Operator Instructions]

I will now hand you over to your host, Shantanu Agrawal, VP, Finance and Treasurer, to begin.

Shantanu Agrawal

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

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

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

now I'll that, Katherine. turn to With things over

Katherine Gates

Thanks, results. results. review Shantanu. quarter we I'd second to turning to thank Energy's over us in joining results our by discuss SunCoke announced Earlier SunCoke for second quarter today's record it you call. for like our their want few on to employees highlights today, to Mark a all before Good detail. start thanking the I morning, and of contributions to

quarter. ran plants coke at full for capacity domestic the excellent Our delivered and results

commodity by were terminals logistics but weaker impacted conditions, solid still Our market delivered results.

consolidated a for performance. record efforts, Through million, delivered second we adjusted EBITDA our $XX of collective quarter

in $X.XX payment. increase quarterly XXXX, stability continued on a progress underlying the that dividend of and of the increase is X, confidence our XX% our effective our and businesses. in and demonstrates SunCoke per next today of The Board core approved the announced quarterly management's Board's meaningful also share. We from strength the This $X.XX to September increase Directors

time completed and business flexibility losing foundry allows project the on expansion grow foundry SunCoke to to project well to budget. to without on and the perform between coke Our participation foundry with continue This alternate continues coke recently market our production. coke blast

is the for Our our for blast order with full finalized non-contracted furnace substantially of year. coke blast solid sales book all non-contracted coke

leverage ended leverage gross a ratio with perspective, EBITDA approximately a adjusted quarter times the on XX-month From we trailing our X.XX at basis.

to to million Finally, end $XXX achieve positioned our of we EBITDA as full adjusted we well continue million. year execute are $XXX the objectives, high against range our guidance XXXX of to

Mark? to I'll turn to review Mark earnings our With it in that, over detail. second quarter

Mark Marinko

Katherine. Thanks,

coal-to-coke quarter SunCoke driven favorable yields in X. on $X.XX blast income for quarter to was in higher Turning quarter Adjusted $X.XX XXXX. EBITDA timing, due second $X.X EBITDA by sales period. share to Slide coke from adjusted the million per up increase of primarily lower by volumes was versus and second and attributable million, $XX prior an segment. in the contribution increase was our to Net second margin non-contracted volumes of the Logistics sales XXXX offset XXXX, coke partially The year lower

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

Second the to quarter as sales was same excellent driven tons. million, prior was period million adjusted volumes performance. by $X.X $XX.X coke X,XXX,XXX EBITDA in Domestic The EBITDA adjusted compared increase and year Coke operational were

quarter. achieved domestic during second the plants yields Our coke coal-to-coke higher

timing are second the full blast domestic non-contracted coke sales. noncontracted continues by also margin year. the the sales the finalized furnace operate full partially that coke Our The on to from achievements were realized coke we first at fleet quarter. blast to all plants capacity, sales and quarter our anticipated coke substantially coke for lower shift These shipment due higher a offset contribution operational volumes in

adjusted are high million. EBITDA we Given to range half Domestic Coke end million of our first of well to $XXX the on strong performance year, the the during of deliver our guidance positioned $XXX

discuss moving to business. X to our Logistics Slide Now on

of handled million respectively, quarter X.X generated the volumes EBITDA in prior the compared and business was XXXX X.X during throughput Logistics conditions. from to million Our combined period. decrease commodity of adjusted tons, $XX.X and that million EBITDA as the million primarily adjusted due during tons weaker $XX.X throughput The of lower same year market the resulted second approximately to volumes

price continued pricing full the during CMT APIX to but coal second adjustment benefited from Thermal quarter. the decline,

Logistics conditions, $XX market we of year guidance we continued million. within anticipate to While deliver EBITDA adjusted full expect volatile range commodity to million our $XX

million ended flow discuss from paid fully SunCoke the our for and quarter generated operating during $XX on $X.XX liquidity in quarter, revolver turning the dividends CapEx share. approximately position the our cash rate We Slide $XX to a of approximately activities million Now $XX.X with QX. balance X down $X.X to Cash million. of of paid at balance per million spent million. $XX

approximately we a strong $XXX total, million. the with of In ended liquidity position quarter

quarterly we our As This with priorities, one mentioned, capital our our dividend. rewarding consistent shareholders. in XX% increase long-term is a announced is of Katherine allocation key increase which

turn Katherine. With it back over that, to will I

Katherine Gates

Wrapping Mark. Slide on X. Thanks, up

As remain assets. focused for always, safely company. coke our capital safety, against our environmental and on of for We executing utilization operational and performance making are top full plan our priorities operating

to earlier, As continues our foundry I said perform well. coke business

while and completed or market foundry blast participation either allows time maintaining us to and was budget project make expansion to Our grow flexibility coke. our on on

decisions continued of capital capital evaluate in a make dividend. structure increase strategy continuously we'll and quarterly the We accordingly. rewarding We with business, meaningful our needs shareholders, to allocation capital our our capital progress long-term the the make on quarter allocation during and

reliability the to operating $XXX our EBITDA of look high the Finally, full year adjusted factoring $XXX we to performance guidance achieve conditions, also million. market end based in while volatile of segments, million of our on and

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

Operator

Lucas Instructions] our line [Operator Securities. B. have now from Thank is question first your from We Riley Luca, you. comes Pipes open.

Lucas Pipes

quarter. Good much, very congrats operator. a and you on Thank morning, everyone good

Katherine Gates

Lucas. Thanks,

Lucas Pipes

do buybacks? From question capital with perspective, buybacks increasing dividend. tax more the first be could return efficient. you announcement start And about you made, to I the a lot think you a wanted how the

Thank wondering your factor very So from could framework you much. here. return buybacks where into capital

Katherine Gates

thanks, Well, Lucas.

consider we you way As to really the do cash our best making and and We said, shareholders. we're we and And decisions. full capital recognizing allocation determined into GPI long-term increase as we've steadiness a that reward was at account this all when of project. the our that look to the know, dividend options given time flows taking

Lucas Pipes

Got it.

you Okay. remind export of roughly export volumes I into what appreciate side, Then business? the on can that. go us amount coke the

Katherine Gates

Go -- Lucas, Well, as know, Lucas. sorry, ahead. you discuss the specifics don't we

Lucas Pipes

on a Yeah, just range basis. rough kind of an annual

Shantanu Agrawal

Shantanu. Lucas, this is

said combined blast a for XXX,XXX roughly going spot on we coke coke into is and the combined tons equivalent year, furnace of market. full that blast have So foundry furnace basis, the

million And the -- as we don't obviously, commercial talked changed. break blast So we reasons. that and blast number really we capacity. is furnace roughly, contracted, and coke out furnace is equivalent a number coke X.X still spot have into XXX,XXX the But of export million before, and foundry to XXX,XXX furnace we have market. coke for spot X.X between going hasn't blast foundry

Lucas Pipes

what's going? Okay. breakdown would of typically business? the be coke exports export geographic All And where the right. rough geographically, of Kind

Shantanu Agrawal

Europe did past North for are domestic more seeing going these But and years, majority talked XXXX, into coke locations. coke and And we shipments did as could to of the in in South export we So into in of we from users, we 'XX-'XX, last be America as couple some well Canada. the quarter, of America. market American demand as about purchasers, a South which our the

as compared in is XXXX market bit 'XX. a and 'XX in to little changing the So did it what

Katherine Gates

or on really at American. Yeah, Lucas. We coke seaborne really can where as most really blast whether merchants' but profit, an think to find it's basis, uncontracted about our the we North look

as really we today, are said. Shantanu where So that's

Lucas Pipes

Very helpful.

increased the to point Is been America, could Canada domestic? North has demand in So that what or us, driving you that? anything

Katherine Gates

in certainly both, just say. would fair think I to say that I it's we're interest seeing

Shantanu Agrawal

driven Lucas, I just just to balance. on -- explore mean that, driven coke and I it's by the think supply demand by it's

that those steel additional the we think situation, additional how want North furnaces think reassessing much producers that. then and inventory levels within to there huge are have this in blast COVID, North what up. American driven region. America it causing levels was -- coming And things built I And through the is all I down, like coke as their call demand inventory they run is

Katherine Gates

year And I the X.X years, think, supply last significant Lucas, and a over come amount of coke as you we've know, market. seen the off

as that well. this So into factors

Lucas Pipes

you. number That's about helpful. desire that contractual still contracts? furnace And is EAS side. over look How that translating there or do Thank the on -- for level think some million growth into years? up So is creep we the glass this longer-term downside you in Because could million coming risk? X.X operators to X.X additional see demand

Katherine Gates

provides we're sales. have, -- you're of it that think our here you're pleased we've we as coke seeing, that I come that Well, seeing I the otherwise us the our merchant mean with increase benefited cash coke But certainly also through our certainly do and steadiness from contracted dividend. we flows and and

for out just market. there profitably coke look continue into we'll so our to And most to ways the put

Lucas Pipes

-- are appreciate that. you. of you. Is that shifted your maybe has do is Thank Jewell. most I that of Thank coke spot the something remember I Or then right? within out sales And my portfolio? recollection

Shantanu Agrawal

bit of a where coming I we of little the and most Jewell foundry. a of little spot bit are extra from are Jewell. sales is combination, Lucas, producing mean, out The mostly Haverhill

Haverhill our So then and kind blast act as and spot furnace. combined spot foundry including of Jewell coke,

Lucas Pipes

if that's Gulf -- East Coast? or you export, through off And down it then the And the Okay. helpful. is

Shantanu Agrawal

Gulf. the through down It's

Lucas Pipes

Typically?

Shantanu Agrawal

Yes.

Lucas Pipes

it. Got

of side. would Yeah, exact is a a And appreciate it's... want rough export if you Okay. but helpful, very a The on helpful be of kind rough export would breakdown to super breakdown a XXX breakdown the numbers, obviously volumes. be give just number. don't good I

Shantanu Agrawal

of about being small. understood there. the again, I Lucas. due a markets on I But to have are not talked commercial, foundry There Yeah. mean, that, players lot we right, so

very So apparent. the down one, break if other becomes one we

us So understand -- that. difficult this of I do point your very it's But for to and at time, concern.

Lucas Pipes

appreciate color good up and keep yeah, All the right. the I work.

Katherine Gates

Thanks, Lucas.

Operator

from We question line you. Nathan Thank Instructions] Nathan, now is next from Martin have Company. [Operator open. Benchmark your our The comes

Nathan Martin

Thanks, on Thanks taking the my for Good operator. everyone. morning, quarter. Congrats questions.

Katherine Gates

Thanks, Nathan.

Nathan Martin

at understand Maybe way year elaborate [Technical finalized, to appear any coke Are finalized seen but sales full for you this could let's mentioned this guidance, that. to on I'll noncontracted Thanks. market you least I Difficulty] well half me, All substantially guidance EBITDA I well Katherine, think, to now. year foundry the exceed half? sales on there you've headwinds the all second conditions. as year -- adjusted not go, your just for volatile point? start you at see. full full coke Maybe potential potentially some

Katherine Gates

question. appreciate Nathan, the and Yeah. Absolutely,

that's that not markers As more volumes, for certainly merchant remaining I -- as the volatile. on price our tons. and say, And logistics just for did say actually weaker well coke are would I it's blast commodity markets but the uncontracted actually

have I at we the So have to level we'll from that adjustment year. saw price keep second that half, the mind. half the APIX expect to going but actually at the not we some benefit in of we're that in first same the see that

And the second were corporate our as in slide, saw costs lower the quarter. you on actually

those we to be was expect This So higher. all timing.

be in them second And forecast more to was record -- be we we on based performance. frankly, It second couldn't can't we higher really quarter So us. but with Nathan, that, for the had pleased a half. exceptional was performance. the We record expect

But reassess it end certainly more the factors and are at at some guidance those So of of here. our the clarity have third we'll time. the we'll that driving quarter,

Nathan Martin

Katherine. Okay. missed I I And I apologize it. that, if appreciate

You Logistics guidance guys the you Logistics provide for sales updated Did just volumes. segment? mentioned any

Shantanu Agrawal

Logistics at are for unchanged guidance volumes this point. the Nathan,

Nathan Martin

I million and Okay. split overall, Shantanu, tons I kind was XX was remind think think -- it of me. the

so ex was it think I CMT, ex XX XX million something CMT? like million

Shantanu Agrawal

Yes.

right. I think you're

Nathan Martin

it would standpoint given are from the coal from guess, Okay. true? color benefit -- And coal a seeing we based -- great partners to you what the that your probably sequentially decline. down so Is far. And be will I see export on just comment that guys mentioned an be then Thanks. get some benefit, maybe APIX averages on on said where Katherine. you you

Katherine Gates

Oh, sure, Nathan.

we said half, drop we I off. the that seen quarter, what don't in expect we completely third that was just see the yes, that when that fall won't look during the saw So first quarter. benefit to APIX also prices kind we've but same But of we to

volatile. that right So are we us in weak markets, but not as are in they for the as third with we into level at the quarter the there'll we know now and benefit in, be and took half. they And our the some certainly guidance, were account export first

took range. fully of we that we so be would the at into account guidance And end in that saying our high

Nathan Martin

Okay.

what markets general? weak So are in specifically just or logistics is coal for you're saying export

Shantanu Agrawal

think you're I the Nathan. coal. mean, about Hey, I talking

think I talking Katherine market metallurgical export the of about coke. was

yes, seen side, have -- and similar mean volumes in we volume On drop-off pricing together. the the hand-in-hand to go coal I a slight the

we drop-off, So half bit being be there little softening in is given but but definitely volume, to not that pricing. unchanged, going we are a feel the guidance drop guiding a volume significant that our of up to second volume there's a seeing both and in in

Nathan Martin

it, by not year of in changed And seeing confirming we're looking was shipment maybe that your was some Got Shantanu. logistics weakness what there I full that right have obviously the you guidance for now. face

last one Okay. one. maybe Perfect. And then just

completed coke time, You at the budget. on foundry project expansion guys Jewell on

beyond? trying on horizon any on you Thank of top guys think true. other there around maintenance, to for $XX which CapEx or Just previously at growth $XX that for 'XX Are million, million, congratulations I does if So you. projects pegged hold think still there. potential about the

Katherine Gates

Right.

our the still beyond regular that as So are U.S. we're project. we on contemplating with we're forward working that the maintenance Steel GPI is if move that. And project, CapEx, to with growth able CapEx for -- really

So growth that's purposes contemplate out of we what ahead for CapEx.

Nathan Martin

Got it.

so level. to true? of million Does feel that, million you maintenance $XX $XX in hold kind And comfortable still obviously, that absent that still

Katherine Gates

We exactly -- yes. right,

Nathan Martin

comments, and second luck it Perfect. guys. of I’ll best all the Okay. Appreciate leave those half. in there

Katherine Gates

All Thank you. right.

Operator

Thank you, Nathan.

line. SunCoke I for Katherine back now closing further questions Energy, hand to of remarks. We have President no Gates, the on will

Katherine Gates

you all you joining in Thank for interest SunCoke. today, us thank and your for

Operator

Ladies you. and joining. for gentlemen, today's Thank this you Thank concludes call.

You may now disconnect your lines.

SunCoke Energy (SXC) 1 Aug 232023 Q2 Earnings call transcript