NYSE:SXC SunCoke Energy Q3 2023 Earnings Report $9.60 +0.05 (+0.48%) As of 10:05 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast SunCoke Energy EPS ResultsActual EPS$0.08Consensus EPS $0.18Beat/MissMissed by -$0.10One Year Ago EPS$0.49SunCoke Energy Revenue ResultsActual Revenue$520.40 millionExpected Revenue$386.10 millionBeat/MissBeat by +$134.30 millionYoY Revenue Growth+0.70%SunCoke Energy Announcement DetailsQuarterQ3 2023Date11/1/2023TimeBefore Market OpensConference Call DateWednesday, November 1, 2023Conference Call Time11:00AM ETUpcoming EarningsSunCoke Energy's Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled at 11:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by SunCoke Energy Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 1, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the SunCoke Energy Third Quarter 2023 Earnings Call. My name is Chet, and I'll be coordinating your call today. Now like to hand over to Shantanu Agarwal, VP, Finance to begin. Please go ahead. Speaker 100:00:29Thank you, Chatch. Good morning, and thank you for joining us this morning to discuss SunCoke Energy's Q3 2023 results. With me today are Mike Rippey, Chief Executive Officer Catherine Graetz, President and Mark Marinko, Senior Vice President and Chief Financial Officer. Following management's prepared remarks, we'll open the call for Q and A. This conference call is being webcast live on the Investor Relations section of our website, And a replay will be available later today. Speaker 100:00:57If we do not get to your questions on the call today, please feel free to reach out to our Investor Relations team. Before I turn things over to Catherine, let me remind you that the various remarks we make on today's call regarding future expectations constitute forward looking statements. The cautionary language regarding forward looking statements in our SEC filings apply to the remarks we make today. These documents are available on our website as our reconciliations to non GAAP financial measures discussed on today's call. With that, I'll now turn things over to Catherine. Speaker 200:01:29Thanks, Shantanu. Good morning, and thank you for joining us on today's call. Earlier today, we announced SunCoke Energy's 3rd quarter results. Before I turn it over to Mark to review the results in detail, I do want to share a few highlights from Q3. I'd like to start by thanking all of our SunCoke employees for their contributions to our 3rd quarter results. Speaker 200:01:53Our domestic coke plants operated well and continued to run at full capacity. When compared to last year's record 3rd quarter results, We delivered lower contribution margins on non contracted blast coke sales. Similarly, our logistics terminals continued to operate well, But saw lower volumes and pricing driven by weaker demand during the quarter. Through our collective efforts, we delivered consolidated adjusted EBITDA $65,400,000 We continue to successfully navigate through challenging market conditions With all of our non contracted blast furnace coke sales finalized for the remainder of the year. Earlier today, We announced a $0.10 per share dividend payable to shareholders on December 1, 2023. Speaker 200:02:44From a balance sheet perspective, we ended the 3rd quarter with a strong liquidity position of $475,900,000 Our gross leverage was approximately 1.91 times on a trailing 12 month adjusted EBITDA basis at the end of the quarter. Finally, we continue to execute against our 2023 objectives and remain well positioned to achieve the high end of our full year EBITDA guidance range of $250,000,000 to $265,000,000 With that, I'll turn it over to Mark review our Q3 earnings in detail. Mark? Speaker 300:03:23Thanks, Catherine. Turning to Slide 4. Net income attributable to SunCoke was $0.08 per share in the Q3 of 2023, down $0.41 versus the prior year period. Tax adjustments of $0.29 per share impacted EPS, primarily due to tax law changes In the U. S. Speaker 300:03:46And Brazil in both 20222023. Excluding the impact of these adjustments, EPS was lower by $0.12 per share quarter over quarter, primarily driven by lower contribution margins on non contracted blast coke sales, partially offset by favorable coal to coke yields. Adjusted EBITDA for the Q3 2023 was $65,400,000 a decrease of $18,300,000 from record results of Q3 2022. The decrease in adjusted EBITDA was primarily driven by the lower contribution margins On non contracted blast coke sales, partially offset by favorable cold to coke yields and lower transloading volumes and pricing in our Logistics segment. Moving to Slide 5 to discuss our domestic coke business performance in detail. Speaker 300:04:443rd quarter domestic coke adjusted EBITDA was $64,000,000 and coke sales volumes were 1,016,000 tons. While the domestic coke fleet has continued to run at full capacity, the decrease in adjusted EBITDA as compared to the record prior year period Was primarily driven by lower contribution margin on our non contracted blastoscope sales, partially offset by higher cold to coke yields. As Catherine mentioned, we continue to successfully navigate through difficult market conditions and all our Coke sales are finalized for the rest of the year. Given the solid year to date performance of our domestic Coke segment, we are well positioned to deliver domestic Coke adjusted EBITDA on the high end of our guidance range of $234,000,000 to $242,000,000 Now moving on to Slide 6 to discuss our Logistics business. Our Logistics business generated $8,400,000 of adjusted EBITDA and handles combined throughput volumes of approximately 5,000,000 tons during the Q3 of 2023 As compared to $12,900,000 5,700,000 tonnes respectively during the same prior year period. Speaker 300:06:03The decrease in adjusted EBITDA was primarily due to lower throughput volumes and a lower API2 price adjustment benefit at CMT. We continue to see volatility in thermal coal pricing as evidenced by CMT recognizing a limited API2 price adjustment benefit during the Q3. However, we expect the API2 price adjustment to recover during the Q4. Based on our year to date performance and anticipation of continued volatility in the market, we expect to deliver logistics Full year adjusted EBITDA at the low end of our guidance range of $47,000,000 to $50,000,000 Now turning to Slide 7 to discuss our liquidity position for Q3. SunCoke ended the 3rd quarter with a cash balance $126,000,000 Cash flow from operating activities generated approximately $94,000,000 For the quarter, cash flow was favorably impacted by working capital changes, mainly the timing of receivables and payables. Speaker 300:07:13We expect this favorability to reverse in the 4th quarter. We paid 8,400,000 Dollars and dividends at the rate of $0.10 per share this quarter and spent $34,100,000 on CapEx. In total, we ended the quarter with a strong liquidity position of approximately $476,000,000 With that, I will turn it back over to Catherine. Speaker 200:07:41Thanks, Mark. Wrapping up on Slide 8. Safety, environmental and operational performance are top priorities for our company. We remain focused on safely executing against our operating and capital plan For full utilization of our coke making assets. As mentioned in our Q2 earnings call, we completed the foundry expansion project This project allows us to grow our foundry market participation while maintaining flexibility to make either blast We will continue to pursue a balanced opportunistic approach to capital allocation as we've demonstrated in the past. Speaker 200:08:23We continuously evaluate the capital needs of the business and our capital structure and will make capital allocation decisions accordingly. As mentioned earlier, despite challenging market conditions, we were able to finalize all of our non contracted blast furnace coke sales for the year. Finally, based on the reliability and performance of our operating segments, we look to achieve the high end of our full year consolidated adjusted EBITDA guidance of $250,000,000 to $265,000,000 With that, let's go ahead and open up the call for Q and A. Operator00:09:01Thank you, If you change your mind, please press star followed by 2. When the parent asks a question, please ensure your device is unmuted locally. Our first question today comes from Lucas Pipes of B. Riley. Please go ahead. Speaker 400:09:27Thank you very much, operator. Thank you for taking my questions. Just a few quick ones. The first one is on the blast furnace coke side, And you mentioned kind of the weaker contributions there during the quarter. I wondered if you could remind us how those tons are typically priced and what causes Variability in the contribution margin. Speaker 400:09:48Thank you very much. Speaker 200:09:50So thanks, Lucas. Appreciate the question. So The contribution margins are dependent on what the spot blast furnace coke price sales are. And so this quarter, we've just seen lower contribution margins based on the spot sales that we had remaining for this year. Speaker 100:10:14And Lucas, I would add that this is Shantanu. It's like we are comparing this against the Q3 2022 Last year quarter, right, which was one of the highest points from a spot market perspective where the blast So we're trading at. So the comparison is kind of a little bit unfair. And if you look at Our quarterly performance over the last three quarters, it's more in line with that. So it's just kind Speaker 400:10:42of the comparison. It's coming off Speaker 100:10:44of a really high Report quarter of last year. Speaker 400:10:48Got it. Got it. Now that's helpful. What are typically the lags or the lead times in that segment? So Are you selling blast furnace spot coke today for Q4 or for Q1 next year, for Q2 next year? Speaker 400:11:03How does that kind of typically flow through Business. Speaker 200:11:07It's typically, Lucas, about 3 to 6 months. Speaker 400:11:10Yes. It's like a quarter, Speaker 100:11:11right, basically. That's what we have said before. Got it. Got it. And this Speaker 400:11:16is essentially like the supply demand for Coke Kind of with that outlook, that kind of sets the price and the margin. Speaker 200:11:29It does, Lucas. Speaker 400:11:32And remind me, is that true for both domestic and export? Or Should we differentiate between the 2? Speaker 200:11:45No. It's the same whether we're selling in the North American market or into the seaborne market. Speaker 400:11:52And is the seaborne market currently open given where international coal prices are Relative to met coal prices? Speaker 100:12:01I mean, yes, the prices are a little bit depressed On the international seaborne market, right, like there is a price at which the product will clear. It is definitely depressed, But we kind of look at all our options and see where our coke can go. Speaker 400:12:20Okay. Okay. Thank you for that. And then A couple of questions on Slide 8. The first is the Foundry coke expansion project. Speaker 400:12:29And I wondered 2 things. First, can you remind us on the timing of that project and then also the capital intensity of that project? Thank you very much. Speaker 200:12:41Yes. So we completed that project actually Before in Q2, and so that was actually finished a little bit early. We had originally said we would have it done by Q3. So we got that done on time and we don't give the specifics, but as we said, we expected this to be Typically, our CapEx is around $80,000,000 to $85,000,000 We were at $95,000,000 so we had built in approximately 12 to for that project, Lucas. Speaker 400:13:17$12,000,000 to $15,000,000 Got it. And is it operating at full capacity today? Speaker 200:13:24It is. The screener itself is operating at full capacity. As we had said, Our sales are finalized for the year. Speaker 400:13:34Okay. Thank you for that. And then On Slide 8, I don't see a mentioning of Granite City. Should we assume that project is kind of off the table or low priority at this point? Speaker 200:13:49That would be a no and a no. So we are continuing to work with U. S. Steel On the GPI project, so that is continuing to move forward and it is a very, very high I think it can be unsatisfying to have to wait to hear an announcement on this type of And Lucas, it's a complex project, but we've continued to work with U. S. Speaker 200:14:22Steel and they've continued to work with us. And we just we really have a strong belief that if this is consummated, it's going to be meaningfully rewarding to our shareholders. And so it's really it's worth the time to continue to move forward with US Steel on this. Speaker 400:14:38And in light of the strategic process that US Steel is running, has there been More or less activity since August? Speaker 200:14:47We have continued to move forward. The activity remains the same. Speaker 400:14:53Okay. I appreciate it. Thank you very much and best of luck. Speaker 200:14:57Thanks, Lucas. Operator00:15:01The next question is from Nathan Martin from The Benchmark Company. Please go ahead. Speaker 500:15:08Thanks, operator. Good morning, everyone. Thanks for taking my questions. Just maybe one more, Catherine, on the Granite City GPI opportunity. Can you talk about maybe any of the biggest hurdles kind of remaining there on those negotiations? Speaker 200:15:24I would just say, in saying it was complex, I mean, whether we're talking about the capital, we're talking about the siting, we're talking about all of those elements of it, Those things just take time. There are absolutely things that we can work through, but they do take time. Speaker 500:15:43Okay. Got it. Maybe shifting over to the domestic coke segment. Obviously, you maintain your expectations for full year adjusted EBITDA at High end of the range. If my math is correct, that only implies EBITDA of around $49,000,000 in the 4th quarter to get you to that high end of the range, which would Should be down about $15,000,000 quarter over quarter. Speaker 500:16:03So I guess, the question is given all your Coke sales are finalized, I'm wondering what are the headwinds you see in the Q4 that caused you to believe maybe a sequential decline like that is possible? Or maybe are you baking A little bit of conservatism into your guidance. Speaker 200:16:21I appreciate the question. Yes, no, we're really Seized with our year to date performance and we have a significant amount of planned outage work in the Q4. That's contemplated in our guidance. And I think we've said before, certain of our planned outages are largely expensed. And so this is really it's not Similar to, for example, last year and some of our other 4th quarters, Nathan, and it's actually it's why we don't give quarterly guidance. Speaker 200:16:50But With those planned outages and this planned work, we still remain well positioned to achieve the high end of our guidance range. Speaker 500:17:00So, Catherine, just maybe a little bit more on the planned outages. Are those going to affect adjusted EBITDA per tonne? I mean, Clearly, your sales volume guidance stayed around $4,000,000 So I guess that doesn't necessarily get affected much. How does that kind of affect the operations output? Speaker 200:17:16So with these outages, there's higher O and M when they occur. It does affect our EBITDA per tonne, but that's Fully contemplated in our guidance. It was contemplated at the beginning of the year. Speaker 500:17:34Okay. All right. Okay. Maybe I'll move over to logistics business. I mean, there I guess you did adjust Your full year guidance is low end of the prior range, which actually looks like it would imply a $5,000,000 or so quarter over quarter EBITDA increase. Speaker 500:17:52It would be great to get your thoughts maybe on some puts and takes there in the Q4. Also curious what you guys are assuming for full year throughput. I think original guidance was 22,000,000 tons with maybe 10 from CMT. Is there any updates on that front? Speaker 200:18:07So, with respect to what we're For Q4, as Mark mentioned, the API2 price adjustment is recovering for us. So that's part of what you're seeing coming through. And then we do expect to see higher volumes on logistics. Speaker 100:18:23Yes. To add to that, Nate, On a full year basis, our guidance was 10,000,000 tons approximately 10,000,000 tons per CMT and approximately 12,000,000 for Other logistics business. So we are going to be a little bit short of that on a full year basis. So if you look at kind of what we have performed earlier in the year, that's kind of what Q4 is going to look like. But overall, the volumes We'll come in a little bit short, but we are guiding towards the lower end of the EBITDA guidance. Speaker 500:18:57Okay. Yes, good afternoon. That's kind of what's going to be my So that makes sense that you may be a little short on the shipment guidance standpoint. I guess it would also be helpful though if you guys could give some more color on the Split in between coal shipments and other shipments at CMT, that was kind of the bulk of the quarter over quarter Klein, it looked like from a shipment perspective. Is it more weakness in coal or is it some of the other products you guys are moving through the terminal? Speaker 100:19:25It's mostly coal. Yes, I mean, Nate, I mean, on the CMT side, most of the variability comes from the coal side. The ancillary business is kind of more or less stable from a quarter to quarter basis. And obviously, it comes from what the demand is, and that is Kind of reflected in the API 2 pricing, which drives the demand of the coal. So most of the VAT comes from the coal. Speaker 500:19:51Okay, got it. Very helpful. And then maybe just one last kind of modeling question for me. CapEx, Mark mentioned, it was $34,000,000 in the 3rd quarter. I think that's what's your year to date spend already, about $85,000,000 You maintained guidance of 95,000,000 It's a pretty big fall off, I guess, in the Q4 to roughly $10,000,000 Is that right? Speaker 500:20:15Is that the right way to think about it? Or am I missing something? Speaker 200:20:20No, that's the right way to think about it. I mentioned earlier that we have our own planned outages at our coke plants And those are really higher O and M. They're not CapEx heavy. So That's really what we're seeing in the Q4. So it's we're low on CapEx there. Speaker 200:20:42But what we have seen is That we've seen the inflationary pressures related to our maintenance CapEx and that's throughout the year. We actually have some nominal capital spend on preliminary engineering work on the GTI project as well. So both that inflationary pressure and the GPI project was not anticipated at the Time that we gave our CapEx guidance. So we actually anticipate CapEx coming in slightly above our guidance of the 95,000,000 Speaker 500:21:17Got it. So slightly above $95,000,000 Okay. So maybe again a little more than that $10,000,000 which would seem like it would be a little bit light just Based on your run rates. Okay. Great. Speaker 500:21:28That's very helpful. And then one more thing actually, Catherine, the tax law changes you guys highlighted, Is that just kind of a one time thing? Or is there a new kind of tax rate we should assume going forward? Speaker 200:21:41No. This is absolutely a one time thing. Speaker 500:21:44Okay. Perfect. I appreciate the time and the comments. I'll leave it there. Best of luck in the Q4. Speaker 200:21:51All right. Thanks, Nathan. Operator00:21:55We have no further questions in the question queue. So I'd now like to hand back to Catherine Gates, President of SunCoke Energy. Speaker 200:22:03Alright. Well, thank you all for joining us today and thank you for your continued interest in SunCoke.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSunCoke Energy Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) SunCoke Energy Earnings HeadlinesZacks Industry Outlook Highlights SunCoke Energy and Ramaco ResourcesApril 25 at 12:58 PM | uk.finance.yahoo.comSunCoke Energy, Inc. Announces First Quarter 2025 Earnings DateApril 23, 2025 | businesswire.com🥾⛏️👷♂️ What I Learned From Numerous Mine Visits...Twenty years ago, I made a decision that changed my life. Instead of sitting behind a desk analyzing mining stocks like most gold analyst CFAs, I decided to visit every significant gold mine I could. 10+ site visits later, I've confirmed my theory... That the most profitable mines share three specific characteristics. When you find all three together, the returns can be staggering.April 28, 2025 | Golden Portfolio (Ad)Trump order looks to harness coal power to dominate AI - reportApril 8, 2025 | msn.comSunCoke: Rosy Outlook As Trump Boosts U.S. Coal, But Uncertainties RemainMarch 21, 2025 | seekingalpha.comSunCoke Energy, Inc. (SXC) Stock ForecastsMarch 7, 2025 | ca.finance.yahoo.comSee More SunCoke Energy Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like SunCoke Energy? Sign up for Earnings360's daily newsletter to receive timely earnings updates on SunCoke Energy and other key companies, straight to your email. Email Address About SunCoke EnergySunCoke Energy (NYSE:SXC) operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates cokemaking facilities in the United States and Brazil. 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There are 6 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the SunCoke Energy Third Quarter 2023 Earnings Call. My name is Chet, and I'll be coordinating your call today. Now like to hand over to Shantanu Agarwal, VP, Finance to begin. Please go ahead. Speaker 100:00:29Thank you, Chatch. Good morning, and thank you for joining us this morning to discuss SunCoke Energy's Q3 2023 results. With me today are Mike Rippey, Chief Executive Officer Catherine Graetz, President and Mark Marinko, Senior Vice President and Chief Financial Officer. Following management's prepared remarks, we'll open the call for Q and A. This conference call is being webcast live on the Investor Relations section of our website, And a replay will be available later today. Speaker 100:00:57If we do not get to your questions on the call today, please feel free to reach out to our Investor Relations team. Before I turn things over to Catherine, let me remind you that the various remarks we make on today's call regarding future expectations constitute forward looking statements. The cautionary language regarding forward looking statements in our SEC filings apply to the remarks we make today. These documents are available on our website as our reconciliations to non GAAP financial measures discussed on today's call. With that, I'll now turn things over to Catherine. Speaker 200:01:29Thanks, Shantanu. Good morning, and thank you for joining us on today's call. Earlier today, we announced SunCoke Energy's 3rd quarter results. Before I turn it over to Mark to review the results in detail, I do want to share a few highlights from Q3. I'd like to start by thanking all of our SunCoke employees for their contributions to our 3rd quarter results. Speaker 200:01:53Our domestic coke plants operated well and continued to run at full capacity. When compared to last year's record 3rd quarter results, We delivered lower contribution margins on non contracted blast coke sales. Similarly, our logistics terminals continued to operate well, But saw lower volumes and pricing driven by weaker demand during the quarter. Through our collective efforts, we delivered consolidated adjusted EBITDA $65,400,000 We continue to successfully navigate through challenging market conditions With all of our non contracted blast furnace coke sales finalized for the remainder of the year. Earlier today, We announced a $0.10 per share dividend payable to shareholders on December 1, 2023. Speaker 200:02:44From a balance sheet perspective, we ended the 3rd quarter with a strong liquidity position of $475,900,000 Our gross leverage was approximately 1.91 times on a trailing 12 month adjusted EBITDA basis at the end of the quarter. Finally, we continue to execute against our 2023 objectives and remain well positioned to achieve the high end of our full year EBITDA guidance range of $250,000,000 to $265,000,000 With that, I'll turn it over to Mark review our Q3 earnings in detail. Mark? Speaker 300:03:23Thanks, Catherine. Turning to Slide 4. Net income attributable to SunCoke was $0.08 per share in the Q3 of 2023, down $0.41 versus the prior year period. Tax adjustments of $0.29 per share impacted EPS, primarily due to tax law changes In the U. S. Speaker 300:03:46And Brazil in both 20222023. Excluding the impact of these adjustments, EPS was lower by $0.12 per share quarter over quarter, primarily driven by lower contribution margins on non contracted blast coke sales, partially offset by favorable coal to coke yields. Adjusted EBITDA for the Q3 2023 was $65,400,000 a decrease of $18,300,000 from record results of Q3 2022. The decrease in adjusted EBITDA was primarily driven by the lower contribution margins On non contracted blast coke sales, partially offset by favorable cold to coke yields and lower transloading volumes and pricing in our Logistics segment. Moving to Slide 5 to discuss our domestic coke business performance in detail. Speaker 300:04:443rd quarter domestic coke adjusted EBITDA was $64,000,000 and coke sales volumes were 1,016,000 tons. While the domestic coke fleet has continued to run at full capacity, the decrease in adjusted EBITDA as compared to the record prior year period Was primarily driven by lower contribution margin on our non contracted blastoscope sales, partially offset by higher cold to coke yields. As Catherine mentioned, we continue to successfully navigate through difficult market conditions and all our Coke sales are finalized for the rest of the year. Given the solid year to date performance of our domestic Coke segment, we are well positioned to deliver domestic Coke adjusted EBITDA on the high end of our guidance range of $234,000,000 to $242,000,000 Now moving on to Slide 6 to discuss our Logistics business. Our Logistics business generated $8,400,000 of adjusted EBITDA and handles combined throughput volumes of approximately 5,000,000 tons during the Q3 of 2023 As compared to $12,900,000 5,700,000 tonnes respectively during the same prior year period. Speaker 300:06:03The decrease in adjusted EBITDA was primarily due to lower throughput volumes and a lower API2 price adjustment benefit at CMT. We continue to see volatility in thermal coal pricing as evidenced by CMT recognizing a limited API2 price adjustment benefit during the Q3. However, we expect the API2 price adjustment to recover during the Q4. Based on our year to date performance and anticipation of continued volatility in the market, we expect to deliver logistics Full year adjusted EBITDA at the low end of our guidance range of $47,000,000 to $50,000,000 Now turning to Slide 7 to discuss our liquidity position for Q3. SunCoke ended the 3rd quarter with a cash balance $126,000,000 Cash flow from operating activities generated approximately $94,000,000 For the quarter, cash flow was favorably impacted by working capital changes, mainly the timing of receivables and payables. Speaker 300:07:13We expect this favorability to reverse in the 4th quarter. We paid 8,400,000 Dollars and dividends at the rate of $0.10 per share this quarter and spent $34,100,000 on CapEx. In total, we ended the quarter with a strong liquidity position of approximately $476,000,000 With that, I will turn it back over to Catherine. Speaker 200:07:41Thanks, Mark. Wrapping up on Slide 8. Safety, environmental and operational performance are top priorities for our company. We remain focused on safely executing against our operating and capital plan For full utilization of our coke making assets. As mentioned in our Q2 earnings call, we completed the foundry expansion project This project allows us to grow our foundry market participation while maintaining flexibility to make either blast We will continue to pursue a balanced opportunistic approach to capital allocation as we've demonstrated in the past. Speaker 200:08:23We continuously evaluate the capital needs of the business and our capital structure and will make capital allocation decisions accordingly. As mentioned earlier, despite challenging market conditions, we were able to finalize all of our non contracted blast furnace coke sales for the year. Finally, based on the reliability and performance of our operating segments, we look to achieve the high end of our full year consolidated adjusted EBITDA guidance of $250,000,000 to $265,000,000 With that, let's go ahead and open up the call for Q and A. Operator00:09:01Thank you, If you change your mind, please press star followed by 2. When the parent asks a question, please ensure your device is unmuted locally. Our first question today comes from Lucas Pipes of B. Riley. Please go ahead. Speaker 400:09:27Thank you very much, operator. Thank you for taking my questions. Just a few quick ones. The first one is on the blast furnace coke side, And you mentioned kind of the weaker contributions there during the quarter. I wondered if you could remind us how those tons are typically priced and what causes Variability in the contribution margin. Speaker 400:09:48Thank you very much. Speaker 200:09:50So thanks, Lucas. Appreciate the question. So The contribution margins are dependent on what the spot blast furnace coke price sales are. And so this quarter, we've just seen lower contribution margins based on the spot sales that we had remaining for this year. Speaker 100:10:14And Lucas, I would add that this is Shantanu. It's like we are comparing this against the Q3 2022 Last year quarter, right, which was one of the highest points from a spot market perspective where the blast So we're trading at. So the comparison is kind of a little bit unfair. And if you look at Our quarterly performance over the last three quarters, it's more in line with that. So it's just kind Speaker 400:10:42of the comparison. It's coming off Speaker 100:10:44of a really high Report quarter of last year. Speaker 400:10:48Got it. Got it. Now that's helpful. What are typically the lags or the lead times in that segment? So Are you selling blast furnace spot coke today for Q4 or for Q1 next year, for Q2 next year? Speaker 400:11:03How does that kind of typically flow through Business. Speaker 200:11:07It's typically, Lucas, about 3 to 6 months. Speaker 400:11:10Yes. It's like a quarter, Speaker 100:11:11right, basically. That's what we have said before. Got it. Got it. And this Speaker 400:11:16is essentially like the supply demand for Coke Kind of with that outlook, that kind of sets the price and the margin. Speaker 200:11:29It does, Lucas. Speaker 400:11:32And remind me, is that true for both domestic and export? Or Should we differentiate between the 2? Speaker 200:11:45No. It's the same whether we're selling in the North American market or into the seaborne market. Speaker 400:11:52And is the seaborne market currently open given where international coal prices are Relative to met coal prices? Speaker 100:12:01I mean, yes, the prices are a little bit depressed On the international seaborne market, right, like there is a price at which the product will clear. It is definitely depressed, But we kind of look at all our options and see where our coke can go. Speaker 400:12:20Okay. Okay. Thank you for that. And then A couple of questions on Slide 8. The first is the Foundry coke expansion project. Speaker 400:12:29And I wondered 2 things. First, can you remind us on the timing of that project and then also the capital intensity of that project? Thank you very much. Speaker 200:12:41Yes. So we completed that project actually Before in Q2, and so that was actually finished a little bit early. We had originally said we would have it done by Q3. So we got that done on time and we don't give the specifics, but as we said, we expected this to be Typically, our CapEx is around $80,000,000 to $85,000,000 We were at $95,000,000 so we had built in approximately 12 to for that project, Lucas. Speaker 400:13:17$12,000,000 to $15,000,000 Got it. And is it operating at full capacity today? Speaker 200:13:24It is. The screener itself is operating at full capacity. As we had said, Our sales are finalized for the year. Speaker 400:13:34Okay. Thank you for that. And then On Slide 8, I don't see a mentioning of Granite City. Should we assume that project is kind of off the table or low priority at this point? Speaker 200:13:49That would be a no and a no. So we are continuing to work with U. S. Steel On the GPI project, so that is continuing to move forward and it is a very, very high I think it can be unsatisfying to have to wait to hear an announcement on this type of And Lucas, it's a complex project, but we've continued to work with U. S. Speaker 200:14:22Steel and they've continued to work with us. And we just we really have a strong belief that if this is consummated, it's going to be meaningfully rewarding to our shareholders. And so it's really it's worth the time to continue to move forward with US Steel on this. Speaker 400:14:38And in light of the strategic process that US Steel is running, has there been More or less activity since August? Speaker 200:14:47We have continued to move forward. The activity remains the same. Speaker 400:14:53Okay. I appreciate it. Thank you very much and best of luck. Speaker 200:14:57Thanks, Lucas. Operator00:15:01The next question is from Nathan Martin from The Benchmark Company. Please go ahead. Speaker 500:15:08Thanks, operator. Good morning, everyone. Thanks for taking my questions. Just maybe one more, Catherine, on the Granite City GPI opportunity. Can you talk about maybe any of the biggest hurdles kind of remaining there on those negotiations? Speaker 200:15:24I would just say, in saying it was complex, I mean, whether we're talking about the capital, we're talking about the siting, we're talking about all of those elements of it, Those things just take time. There are absolutely things that we can work through, but they do take time. Speaker 500:15:43Okay. Got it. Maybe shifting over to the domestic coke segment. Obviously, you maintain your expectations for full year adjusted EBITDA at High end of the range. If my math is correct, that only implies EBITDA of around $49,000,000 in the 4th quarter to get you to that high end of the range, which would Should be down about $15,000,000 quarter over quarter. Speaker 500:16:03So I guess, the question is given all your Coke sales are finalized, I'm wondering what are the headwinds you see in the Q4 that caused you to believe maybe a sequential decline like that is possible? Or maybe are you baking A little bit of conservatism into your guidance. Speaker 200:16:21I appreciate the question. Yes, no, we're really Seized with our year to date performance and we have a significant amount of planned outage work in the Q4. That's contemplated in our guidance. And I think we've said before, certain of our planned outages are largely expensed. And so this is really it's not Similar to, for example, last year and some of our other 4th quarters, Nathan, and it's actually it's why we don't give quarterly guidance. Speaker 200:16:50But With those planned outages and this planned work, we still remain well positioned to achieve the high end of our guidance range. Speaker 500:17:00So, Catherine, just maybe a little bit more on the planned outages. Are those going to affect adjusted EBITDA per tonne? I mean, Clearly, your sales volume guidance stayed around $4,000,000 So I guess that doesn't necessarily get affected much. How does that kind of affect the operations output? Speaker 200:17:16So with these outages, there's higher O and M when they occur. It does affect our EBITDA per tonne, but that's Fully contemplated in our guidance. It was contemplated at the beginning of the year. Speaker 500:17:34Okay. All right. Okay. Maybe I'll move over to logistics business. I mean, there I guess you did adjust Your full year guidance is low end of the prior range, which actually looks like it would imply a $5,000,000 or so quarter over quarter EBITDA increase. Speaker 500:17:52It would be great to get your thoughts maybe on some puts and takes there in the Q4. Also curious what you guys are assuming for full year throughput. I think original guidance was 22,000,000 tons with maybe 10 from CMT. Is there any updates on that front? Speaker 200:18:07So, with respect to what we're For Q4, as Mark mentioned, the API2 price adjustment is recovering for us. So that's part of what you're seeing coming through. And then we do expect to see higher volumes on logistics. Speaker 100:18:23Yes. To add to that, Nate, On a full year basis, our guidance was 10,000,000 tons approximately 10,000,000 tons per CMT and approximately 12,000,000 for Other logistics business. So we are going to be a little bit short of that on a full year basis. So if you look at kind of what we have performed earlier in the year, that's kind of what Q4 is going to look like. But overall, the volumes We'll come in a little bit short, but we are guiding towards the lower end of the EBITDA guidance. Speaker 500:18:57Okay. Yes, good afternoon. That's kind of what's going to be my So that makes sense that you may be a little short on the shipment guidance standpoint. I guess it would also be helpful though if you guys could give some more color on the Split in between coal shipments and other shipments at CMT, that was kind of the bulk of the quarter over quarter Klein, it looked like from a shipment perspective. Is it more weakness in coal or is it some of the other products you guys are moving through the terminal? Speaker 100:19:25It's mostly coal. Yes, I mean, Nate, I mean, on the CMT side, most of the variability comes from the coal side. The ancillary business is kind of more or less stable from a quarter to quarter basis. And obviously, it comes from what the demand is, and that is Kind of reflected in the API 2 pricing, which drives the demand of the coal. So most of the VAT comes from the coal. Speaker 500:19:51Okay, got it. Very helpful. And then maybe just one last kind of modeling question for me. CapEx, Mark mentioned, it was $34,000,000 in the 3rd quarter. I think that's what's your year to date spend already, about $85,000,000 You maintained guidance of 95,000,000 It's a pretty big fall off, I guess, in the Q4 to roughly $10,000,000 Is that right? Speaker 500:20:15Is that the right way to think about it? Or am I missing something? Speaker 200:20:20No, that's the right way to think about it. I mentioned earlier that we have our own planned outages at our coke plants And those are really higher O and M. They're not CapEx heavy. So That's really what we're seeing in the Q4. So it's we're low on CapEx there. Speaker 200:20:42But what we have seen is That we've seen the inflationary pressures related to our maintenance CapEx and that's throughout the year. We actually have some nominal capital spend on preliminary engineering work on the GTI project as well. So both that inflationary pressure and the GPI project was not anticipated at the Time that we gave our CapEx guidance. So we actually anticipate CapEx coming in slightly above our guidance of the 95,000,000 Speaker 500:21:17Got it. So slightly above $95,000,000 Okay. So maybe again a little more than that $10,000,000 which would seem like it would be a little bit light just Based on your run rates. Okay. Great. Speaker 500:21:28That's very helpful. And then one more thing actually, Catherine, the tax law changes you guys highlighted, Is that just kind of a one time thing? Or is there a new kind of tax rate we should assume going forward? Speaker 200:21:41No. This is absolutely a one time thing. Speaker 500:21:44Okay. Perfect. I appreciate the time and the comments. I'll leave it there. Best of luck in the Q4. Speaker 200:21:51All right. Thanks, Nathan. Operator00:21:55We have no further questions in the question queue. So I'd now like to hand back to Catherine Gates, President of SunCoke Energy. Speaker 200:22:03Alright. Well, thank you all for joining us today and thank you for your continued interest in SunCoke.Read morePowered by