NYSE:SXC SunCoke Energy Q1 2024 Earnings Report $9.59 +0.04 (+0.42%) As of 10:08 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast SunCoke Energy EPS ResultsActual EPS$0.23Consensus EPS $0.22Beat/MissBeat by +$0.01One Year Ago EPS$0.19SunCoke Energy Revenue ResultsActual Revenue$488.40 millionExpected Revenue$549.40 millionBeat/MissMissed by -$61.00 millionYoY Revenue Growth+0.10%SunCoke Energy Announcement DetailsQuarterQ1 2024Date5/1/2024TimeBefore Market OpensConference Call DateWednesday, May 1, 2024Conference Call Time11:30AM 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 Q1 2024 Earnings Call TranscriptProvided by QuartrMay 1, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the SunCoke Energy First Quarter 2024 Earnings Call. My name is Angela, and I'll be coordinating your call today. Operator00:00:20I will now hand you over to your host, Chantalou Agreal, Vice President, Finance and Treasurer. Please go ahead. Speaker 100:00:30Thanks, Angela. Good morning and thank you for joining us this morning to discuss SunCoke Energy's Q1 2024 results. With me today are Mike Rippey, Chief Executive Officer Kathryn Gates, 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 200:01:30Thanks, Shantanu. Good morning, and thank you for joining us on today's call. Before we get started, I'd like to congratulate Mike Rippey on his previously announced retirement in 2 weeks. Mike's leadership and contributions have been crucial to the success of SunCoke during his tenure. I've had the privilege of working closely with Mike over the past several years and look forward to having him as an advisor for the company. Speaker 200:01:55The entire SunCoke team wishes him the best in his retirement. Moving to Q1 results, I wanted to share a few highlights before turning it over to Mark to discuss the results in detail. 1st, I'd like to thank all of our SunCoke employees for their contributions to our very good first quarter results. Our domestic coke plants continued to run at full capacity with strong operational performance. Our logistics terminals delivered excellent results, handling 5,500,000 tonnes during the quarter. Speaker 200:02:30We saw higher volumes at our domestic terminals, due in part to East Coast port congestion caused by the unfortunate incident in Baltimore, which favorably impacted results. Through our collective efforts, we delivered consolidated adjusted EBITDA of $67,900,000 From a balance sheet perspective, we ended the Q1 with a strong liquidity position of $470,100,000 Our gross leverage was approximately 1.86 times on a trailing 12 month adjusted EBITDA basis at the end of the quarter. Looking ahead, we're pleased to have all of our spot blast and foundry coke sales finalized for the full year. With this strong start, we are well positioned to achieve our full year adjusted EBITDA guidance range of $240,000,000 to $255,000,000 With that, I'll turn it over to Mark to review our Q1 earnings in detail. Mark? Speaker 300:03:30Thanks, Catherine. Turning to Slide 4. Net income attributable to SunCoke was $0.23 per share in the Q1 of 2024, up $0.04 versus the prior year period. Adjusted EBITDA for the Q1 2024 was $67,900,000 compared to $67,100,000 in the Q1 2023. The increase in adjusted EBITDA was primarily driven by higher blast coke sales volumes and higher volumes at our domestic logistics terminals, partially offset by lower volumes at CMT. Speaker 300:04:09Moving to Slide 5 to discuss our domestic coke business performance in detail. 1st quarter domestic coke adjusted EBITDA was $61,400,000 and coke sales volumes were 996,000 tons. The domestic coke fleet continues to run at full capacity and the increase in adjusted EBITDA as compared to the prior year period was primarily driven by higher blast coke sales volumes. Our full year domestic coke sales tons guidance remains approximately 4,100,000 tons. As Catherine mentioned earlier, all spot blast and foundry coke sales are finalized for the full year. Speaker 300:04:52Given the strong performance this quarter from our domestic coke segment, we are well positioned to achieve full year domestic coke adjusted EBITDA within our guidance range of $238,000,000 to $245,000,000 Now moving on to Slide 6 to discuss our Logistics business. Our Logistics business generated $13,000,000 of adjusted EBITDA in the Q1 of 2024 compared to $13,500,000 in the Q1 of 2023. The decrease in adjusted EBITDA was primarily due to lower throughput volumes at CMT, partially offset by higher volumes at our domestic terminals. CMT also recognized limited API2 price adjustment benefit during the quarter. Our terminals handled combined throughput volumes of approximately 5,500,000 tonnes during the Q1 of 2024, as compared to 5,300,000 tonnes during the same prior year period. Speaker 300:05:56Our domestic terminals handled 3,600,000 tonnes in Q1 2024, making it the best quarter in terms of volume for the domestic terminals in the past 5 years. The increase in volume was driven in part by the unfortunate bridge incident in Baltimore, which caused East Coast port congestion. We are pleased with the excellent results from our Logistics segment in the Q1 and are well positioned to achieve our Logistics full year 2024 adjusted EBITDA and volume guidance, which remain unchanged. Now turning to Slide 7 to discuss our liquidity position for Q1. SunCoke ended the Q1 with a cash balance of $120,100,000 Cash flow from operating activities generated $10,000,000 and was negatively impacted by the timing of working capital changes of approximately $50,000,000 in the quarter. Speaker 300:06:59We expect this impact to reverse over the course of the year and we are reaffirming full year operating cash flow guidance of $185,000,000 to $200,000,000 We paid $9,000,000 in dividends at the rate of $0.10 per share this quarter and spent $15,500,000 on CapEx. In total, we ended the quarter with a strong liquidity position of $470,100,000 With that, I will turn it back over to Catherine. Speaker 200:07:32Thanks, Mark. Wrapping up on Slide 8. As always, safety is our first priority and we will continue to focus on strong safety and environmental performance. Robust safety and environmental standards set SunCoke apart and are central to our reliable delivery of high quality coke and logistics services. We remain focused on safely executing against our operating and capital plan for full utilization of our coke making assets. Speaker 200:08:01We also continue to concentrate our efforts on adding new business at our logistics terminals. And while we were able to finalize all of our spot blast and foundry coke sales for the full year, we are still focused on future opportunities to broaden demonstrated in the past, we will pursue a balanced yet opportunistic approach to capital allocation. From a growth perspective, we continue to work on developing the Granite City GPI project. We continuously evaluate the capital needs of the business, our capital structure and the need to reward our shareholders and we'll make capital allocation decisions accordingly. Finally, we're very pleased with the strong results in the Q1, and we expect to achieve our full year consolidated adjusted EBITDA guidance of $240,000,000 to $255,000,000 With that, let's go ahead and open up the call for Q and A. Operator00:09:03Thank you, The first question is from Lucas Pipes with B. Riley Securities. Your line is open. Speaker 400:09:34Hey, good morning, everyone. How are you? Speaker 200:09:38Good morning, Lucas. Speaker 400:09:42So my first question is on kind of the longer term outlook for the utilization rates. One of your customers recently commented on an earnings call about kind of the Middletown contract and their desire to replace that blast furnace with the DRI. And I saw you just renewed a maintenance contract with Fluor. So it seems like you have confidence in the long term need of your existing coke fleet. But if you could maybe comment on that and what your outlook is maybe through first through the end of this decade and then maybe post 2,032, I would really appreciate it. Speaker 400:10:29Thank you. Speaker 200:10:31Sure. Thanks, Lucas. With respect to I think you're referring to the Cliffs announcement for their Middletown works. And with respect to that, that announcement really has no impact on us. Our contract with Cliffs runs through the end of 2,032. Speaker 200:10:53In terms of sort of the next decade, if you will, I mean, there's a long way to go till 2,033. We're not going to speculate on the opportunities that are available to us in 2,033 today. But what we've said before is that we have the newest coke making assets and we continue to make significant investments in them. We do that because we believe we're best positioned to serve the blast furnaces long term. Speaker 400:11:22Got it. And so when you think about the upcoming more near term renewals contract renewals. I think there's U. S. Steel at the end of this year, then Cleveland Cliffs. Speaker 400:11:39I think it's 2 contracts next year and then Algoma after that. Do you expect more of those tons to shift into either the foundry or merchant or rather spot blast furnace scope market? Or would you expect kind of your current proportion of contracted to spot volumes to stay roughly the same through the next 2, 3 years? Speaker 200:12:09Well, with respect to the Granite City co contract, as we said in the past, that co contract is part of our GPI project and part of those negotiations. And with respect to our other contracts with other customers, we're always in dialogue with our customers, but we're not going to comment on any kind of contract Speaker 400:12:34discussions. Okay. But if Middletown were to be a DRI in were to convert to DRI in 2029, I guess Middletown cope with maybe backfill some of the Haverhill Hill tons. So should we expect that those contract renewals go maybe shorter in nature than they've historically been? Speaker 200:13:00Lucas, as I said before, I mean, we're not we've not going to comment on our contract discussions with our customers, and we're not going to speculate. So I really can't help you more than that. Speaker 500:13:16Okay. No, that's appreciated. Speaker 400:13:21On the Granite City side, could you maybe update us on kind of what the most recent update is in terms of your conversations with U. S. Steel. Obviously, we're all following the news and it seems tricky, but would appreciate your color on where that project stands today. Speaker 200:13:45Sure. Well, with respect to the GPI project, we are continuing to work with U. S. Steel on the GPI project. We are doing the detailed engineering for what would be a first of its kind project right now. Speaker 200:14:00And so we'll continue to work with U. S. Steel on the GPI project and we would look forward to working with Nippon in the future. Speaker 400:14:10Got it. Any sort of timing when that detailed engineering might be completed? Speaker 200:14:17That's an ongoing project with U. S. Steel and I'm not going to comment further on it. Speaker 400:14:23Okay. Okay. And order of magnitude, if what sort of capital might we be looking at, assume there are cost for conversion? So I'd be curious about kind of the cash component, but then also any sort of reclamation liabilities that might be assumed would be very helpful to understand what the capital commitments might be? Thank you. Speaker 100:14:54Hey, Lucas. Yes, this is Shantanu. I mean, as we have said before, right, obviously, kind of as when we announced this project, we said like based on at that point of time, the project was kind of assumed and that's how we are progressing right now is it's going to be thinking about from a cash CapEx perspective. It's 2 years of our free cash flows plus some revolver borrowing, right? And that still is the case as we move forward with this project. Speaker 100:15:25So we haven't really given out like a specific number, but that's kind of the order of magnitude is roughly you can think about it as 2 years of our free cash flows plus some revolver borrowing. Speaker 400:15:41That is very helpful. I appreciate all the color. I'll turn it over for now. Thank you. Operator00:15:48Thanks Lucas. Thank you. The next question is from Nathan Martin with Benchmark. Your line is open. Speaker 600:16:08Thanks, operator. Good morning, everyone. Congrats on the Q1 results and Mike congratulations on your retirement. Best of luck there. Speaker 300:16:17Much appreciated. Thanks. Speaker 600:16:21Maybe moving over to logistics segment for a second, multiyear highs, tons handled there, I think that's mainly logistics ex CMT. You guys mentioned in your prepared remarks, a lot of that was driven by increased shipments due to the outage at Baltimore. No update to your logistics volume guidance, it didn't look like. So is the expectation that tons kind of come down in subsequent quarters as Baltimore reopens? Or is there a possibility you exceed that original guidance if current levels kind of remain elevated? Speaker 100:16:55Thanks, Nathan. I mean, yes, as we said, Q1 from a domestic terminals perspective was one of the was the best quarter in last 5 years, right? So it was definitely an exceptional quarter. As we have seen, right, like you saw the last year, the logistics business could be quite volatile, right? So I mean, as we sit here today, what we're looking at the market, we are affirming our guidance. Speaker 100:17:21If the market kind of remain up and down and weak, that's what we expect. But if we see a pickup in the out year later half of the year, we can pick up more volumes and you will see that in the results. But as we sit here today, what we are seeing, we confirm our guidance and we stick with the $30,000,000 to $35,000,000 of logistics EBITDA. Speaker 600:17:44Appreciate that, Shantanu. I guess just thinking, the Baltimore port looks like the main deep draft terminal is not scheduled or targeted to be reopened till the end of May. It would just make some sense maybe do you still think you'll have some benefit here in the Q2? Speaker 100:18:02Not much. I mean, we saw kind of some pickup at the start like when it happened and then we saw some in Q2, but it's really not driving the results that much as we sit here today. Speaker 600:18:17Okay. That's fair. And then maybe specifically at CMT, you guys talked about the weak commodity markets, weak coal exports. Just curious, did you hit your coal take or pay minimum during the first quarter from a volume perspective? If you remind us, is that looked at on a quarterly basis? Speaker 600:18:34Or is that annual? Because I think it's 4,000,000 tons annually. And then would great just get your thoughts on how you view export coal demand here over the next few quarters and how do you expect your API2 price adjustment to trend and maybe if we use this Q1 result as a baseline? Speaker 100:18:54Yes. So on the take or pay, it's an annual take or pay, Nathan. So I mean, obviously, you can see we don't provide like kind of coal tons separately. The total CMT did 1,800,000 tons, which is kind of pretty much in line and kind of our expectation was. And we do expect to hit the take or pay minimum for the full year for this year. Speaker 100:19:19Again, going back to kind of what the expectation for the volumes and the price of the API2 is, I mean, if you look at the futures, API 2 look pretty decent, right? I mean, it's kind of come back from the lows, but it can move pretty quickly as we have seen in the past, right. Like kind of it can move 10, 20, dollars 30 in a matter of couple of days. And there is some our profitability, as you know, is derived from that. So it's hard to predict, right? Speaker 100:19:51What we have put in the guidance, I think we feel pretty good about it. The long run outlook of the CMT terminal remains pretty attractive, and that's why we really like having this terminal. And as in the past, it has performed really well and we continue to believe in this terminal. Speaker 600:20:15Thanks for that Shantanu. Maybe just shifting over to the domestic coke segment real quickly. EBITDA per tonne looks like came in above your full year guidance range. Maybe can you talk about the drivers behind that outperformance? Speaker 100:20:33So Q1 normally is one of the quarters where we don't have a lot of outages. We are just coming out of the winter, just trying to kind of get back our facility to run really well in Q2 and Q3. And this quarter, except the first couple of weeks of January, the weather was pretty good as well, and it helped us kind of perform really well. On top of that, we talk about kind of higher blast coke sales volume in Q1 and that is actually timing of that and that is the spot blast coke sales volume timing where it was unusually front loaded in Q1 versus the previous year. So that helped our Q1 to be really, really good in terms of domestic coke performance. Speaker 100:21:25For the rest of the year, I think as we reaffirm our domestic coke EBITDA guidance of $238,000,000 to $248,000,000 It kind of tells you that we expect to run kind of as expected as we announced when we came about our guidance initially and we kind of are on track to meet that guidance. Speaker 600:21:51Okay. Appreciate that color. Just to make sure I follow it correctly, you said the spot blast coke sales volumes were kind of front loaded, so more in the Q1 than maybe typical. So if that's true, how do we think about maybe the mix, the sales mix in 2Q, 3Q, 4Q? Again, as you alluded to, the adjusted EBITDA per ton is going to need to come down, obviously, just to get you within your full year guidance. Speaker 600:22:17But is there any kind of additional planned maintenance in any given quarter that could pressure EBITDA per ton maybe in 3Q or 4Q just for instance or any sales mix or headwind, tailwind we should be thinking about? Speaker 100:22:32No. I mean, there's obviously, as I mentioned, there was no outages in Q1. So we expect to have outages and not expect we have planned outages in Q3 and Q4 of the year, right? So that will impact our performance during that time. And kind of from our contracted sales perspective, kind of pretty ratably laid out. Speaker 100:22:52And then spot coke, if Q1 was heavily loaded, obviously, like the rest of the year would kind of even now. And based on that, as we said, we have 650,000 equivalent blast and foundry coke sales, coke tons to sell and that just laid out for the year. It's just heavily loaded in the first quarter, so it's going to be lower in the rest half of the year. Speaker 600:23:18Got it. I appreciate those comments. I'll leave it there. Best of luck in the second quarter. Speaker 100:23:25Thank you. Operator00:23:28Thank you. We have a follow-up question with Lucas Pipes with B. Riley Securities. Your line is open. Speaker 400:23:38Thank you so much, operator. Thank you so much for taking my follow-up question. I wondered if you could maybe give us a little bit of an update on to kind of the size of the North American blast furnace coke market. There's been the idling at Granite City. There have been some other changes on the utilization rate of the blast furnace fleet. Speaker 400:24:05Obviously, there are changes if you look out at the years ahead as discussed earlier. But kind of what's the status quo? Where would you put the size of the market today? Thank you. Speaker 100:24:20Lucas, I mean, apart from the Granite City idling, things haven't really changed that much in the North in the future in 2, 3, 4 years. But as we sit here today and you kind of think about versus the last 2, 3 years apart from the Granite City blast furnace shutdown, the utilization or the coke demand hasn't changed, as a whole in the North America. Speaker 400:25:02Okay. Okay. So what's the market size roughly? Speaker 100:25:09It's roughly kind of as we have said in our earnings deck, it's around 8,500,000 to 10,000,000 tons of coke what is kind of being produced in the U. S. In the North American market. Speaker 500:25:26Got it. So this would include Speaker 400:25:29Algoma and Difasco and Stelco up in Canada? Speaker 500:25:33Correct. Correct. Speaker 400:25:36And so kind of fair to say you have what kind of 50%, 40% of the market today? Speaker 100:25:45We say we have roughly 30%, 35% to 40% of the market because we only sell 3,600,000 tons of contracted capacity, right? Speaker 500:25:58Got it. Yes. And then but Speaker 400:26:02then you sell some other blast furnace coke in North America as well, right, on a spot basis? Speaker 100:26:09Yes. It's North America and all Speaker 600:26:11over the world, Speaker 100:26:12yes. And foundry as well, right? Yes. Which we are not including Speaker 400:26:18in that, right? Yes. So the 30% to 35% would just be your contracted volumes? Right. Speaker 100:26:27Yes. Speaker 400:26:28Okay. Speaker 500:26:31And then, Speaker 400:26:34do you have a what is the competition on the merchant coke side, Kind of the next closest merchant coke supplier, how large would they be? Speaker 100:26:46I mean, this is also again, as we discussed, the only other merchant co producer in the U. S. Is DTE, and their capacity is in the like 800,000 to 1,000,000 ton range. Speaker 500:27:02Got it. And Speaker 400:27:07they don't have a byproduct oven is that right? Speaker 100:27:12They do have byproduct. They have traditional coke production coke production methodology. Got Speaker 500:27:20it. Okay. Speaker 400:27:24That makes sense. So kind of the if I just kind of look at this high level, integrated capacity still around 50%, is that about right? Speaker 100:27:36Yes. A little more than 50%, I would say, yes. Speaker 600:27:41And how would Speaker 400:27:42you describe that fleet? Has it been generally well maintained? Or do you have a view on that capacity? Speaker 100:27:52I mean, as kind of you know the coke plants that have shut down recently, right? So obviously there hasn't been much capital spend on that. Speaker 400:28:05Which are the ones that shut down Speaker 500:28:07coke facility? Speaker 100:28:09The recent announcement was the Claritin, right, the 2 batteries that shut down. Speaker 500:28:20What was their utilization rate prior to that shutdown? Speaker 100:28:25Lucas, for that, I guess, kind of we don't follow that that closely or you got to ask U. S. Steel for that. Speaker 500:28:36Okay. I'll have to follow-up with that. Okay, that's helpful. But Speaker 400:28:46your view is that you can compete effectively with that integrated capacity and kind of take share from there? Speaker 100:28:55Yes. I mean, if you look at last 3 years, right, like what we have done since coming out COVID, right, we have maneuvered the market really well. The market has been constantly changing as we have talked about, and we have been able to run full and kind of run really profitably and we continue to believe that we will be able to do that in the future. Speaker 400:29:20Okay. In terms of kind of your spot coke sales today, have there been increased opportunities due to customer outages in terms of the spot blast furnace coke market in North America? Speaker 100:29:36Lucas, on the kind of we don't talk about spot blast furnace coke separately. We always talk about spot blast and pondered coke on a combined basis given the size of the market and that part hasn't changed. That's the 650,000 equivalent blast furnace coke that we sell and we intend to sell in 2024. Speaker 400:30:00Okay. All right. I really appreciate the additional color. Thanks so much for taking my follow-up question and best of luck. Thank you. Operator00:30:13Thank you. We currently have no further questions. So I'll hand back over to Catherine to conclude. Speaker 400:30:20Thank you Speaker 200:30:21all again for joining us this morning and for your continued interest in SunCoke. Let's continue to work safely and create value for all of our stakeholders.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSunCoke Energy Q1 202400:00 / 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. 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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 7 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the SunCoke Energy First Quarter 2024 Earnings Call. My name is Angela, and I'll be coordinating your call today. Operator00:00:20I will now hand you over to your host, Chantalou Agreal, Vice President, Finance and Treasurer. Please go ahead. Speaker 100:00:30Thanks, Angela. Good morning and thank you for joining us this morning to discuss SunCoke Energy's Q1 2024 results. With me today are Mike Rippey, Chief Executive Officer Kathryn Gates, 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 200:01:30Thanks, Shantanu. Good morning, and thank you for joining us on today's call. Before we get started, I'd like to congratulate Mike Rippey on his previously announced retirement in 2 weeks. Mike's leadership and contributions have been crucial to the success of SunCoke during his tenure. I've had the privilege of working closely with Mike over the past several years and look forward to having him as an advisor for the company. Speaker 200:01:55The entire SunCoke team wishes him the best in his retirement. Moving to Q1 results, I wanted to share a few highlights before turning it over to Mark to discuss the results in detail. 1st, I'd like to thank all of our SunCoke employees for their contributions to our very good first quarter results. Our domestic coke plants continued to run at full capacity with strong operational performance. Our logistics terminals delivered excellent results, handling 5,500,000 tonnes during the quarter. Speaker 200:02:30We saw higher volumes at our domestic terminals, due in part to East Coast port congestion caused by the unfortunate incident in Baltimore, which favorably impacted results. Through our collective efforts, we delivered consolidated adjusted EBITDA of $67,900,000 From a balance sheet perspective, we ended the Q1 with a strong liquidity position of $470,100,000 Our gross leverage was approximately 1.86 times on a trailing 12 month adjusted EBITDA basis at the end of the quarter. Looking ahead, we're pleased to have all of our spot blast and foundry coke sales finalized for the full year. With this strong start, we are well positioned to achieve our full year adjusted EBITDA guidance range of $240,000,000 to $255,000,000 With that, I'll turn it over to Mark to review our Q1 earnings in detail. Mark? Speaker 300:03:30Thanks, Catherine. Turning to Slide 4. Net income attributable to SunCoke was $0.23 per share in the Q1 of 2024, up $0.04 versus the prior year period. Adjusted EBITDA for the Q1 2024 was $67,900,000 compared to $67,100,000 in the Q1 2023. The increase in adjusted EBITDA was primarily driven by higher blast coke sales volumes and higher volumes at our domestic logistics terminals, partially offset by lower volumes at CMT. Speaker 300:04:09Moving to Slide 5 to discuss our domestic coke business performance in detail. 1st quarter domestic coke adjusted EBITDA was $61,400,000 and coke sales volumes were 996,000 tons. The domestic coke fleet continues to run at full capacity and the increase in adjusted EBITDA as compared to the prior year period was primarily driven by higher blast coke sales volumes. Our full year domestic coke sales tons guidance remains approximately 4,100,000 tons. As Catherine mentioned earlier, all spot blast and foundry coke sales are finalized for the full year. Speaker 300:04:52Given the strong performance this quarter from our domestic coke segment, we are well positioned to achieve full year domestic coke adjusted EBITDA within our guidance range of $238,000,000 to $245,000,000 Now moving on to Slide 6 to discuss our Logistics business. Our Logistics business generated $13,000,000 of adjusted EBITDA in the Q1 of 2024 compared to $13,500,000 in the Q1 of 2023. The decrease in adjusted EBITDA was primarily due to lower throughput volumes at CMT, partially offset by higher volumes at our domestic terminals. CMT also recognized limited API2 price adjustment benefit during the quarter. Our terminals handled combined throughput volumes of approximately 5,500,000 tonnes during the Q1 of 2024, as compared to 5,300,000 tonnes during the same prior year period. Speaker 300:05:56Our domestic terminals handled 3,600,000 tonnes in Q1 2024, making it the best quarter in terms of volume for the domestic terminals in the past 5 years. The increase in volume was driven in part by the unfortunate bridge incident in Baltimore, which caused East Coast port congestion. We are pleased with the excellent results from our Logistics segment in the Q1 and are well positioned to achieve our Logistics full year 2024 adjusted EBITDA and volume guidance, which remain unchanged. Now turning to Slide 7 to discuss our liquidity position for Q1. SunCoke ended the Q1 with a cash balance of $120,100,000 Cash flow from operating activities generated $10,000,000 and was negatively impacted by the timing of working capital changes of approximately $50,000,000 in the quarter. Speaker 300:06:59We expect this impact to reverse over the course of the year and we are reaffirming full year operating cash flow guidance of $185,000,000 to $200,000,000 We paid $9,000,000 in dividends at the rate of $0.10 per share this quarter and spent $15,500,000 on CapEx. In total, we ended the quarter with a strong liquidity position of $470,100,000 With that, I will turn it back over to Catherine. Speaker 200:07:32Thanks, Mark. Wrapping up on Slide 8. As always, safety is our first priority and we will continue to focus on strong safety and environmental performance. Robust safety and environmental standards set SunCoke apart and are central to our reliable delivery of high quality coke and logistics services. We remain focused on safely executing against our operating and capital plan for full utilization of our coke making assets. Speaker 200:08:01We also continue to concentrate our efforts on adding new business at our logistics terminals. And while we were able to finalize all of our spot blast and foundry coke sales for the full year, we are still focused on future opportunities to broaden demonstrated in the past, we will pursue a balanced yet opportunistic approach to capital allocation. From a growth perspective, we continue to work on developing the Granite City GPI project. We continuously evaluate the capital needs of the business, our capital structure and the need to reward our shareholders and we'll make capital allocation decisions accordingly. Finally, we're very pleased with the strong results in the Q1, and we expect to achieve our full year consolidated adjusted EBITDA guidance of $240,000,000 to $255,000,000 With that, let's go ahead and open up the call for Q and A. Operator00:09:03Thank you, The first question is from Lucas Pipes with B. Riley Securities. Your line is open. Speaker 400:09:34Hey, good morning, everyone. How are you? Speaker 200:09:38Good morning, Lucas. Speaker 400:09:42So my first question is on kind of the longer term outlook for the utilization rates. One of your customers recently commented on an earnings call about kind of the Middletown contract and their desire to replace that blast furnace with the DRI. And I saw you just renewed a maintenance contract with Fluor. So it seems like you have confidence in the long term need of your existing coke fleet. But if you could maybe comment on that and what your outlook is maybe through first through the end of this decade and then maybe post 2,032, I would really appreciate it. Speaker 400:10:29Thank you. Speaker 200:10:31Sure. Thanks, Lucas. With respect to I think you're referring to the Cliffs announcement for their Middletown works. And with respect to that, that announcement really has no impact on us. Our contract with Cliffs runs through the end of 2,032. Speaker 200:10:53In terms of sort of the next decade, if you will, I mean, there's a long way to go till 2,033. We're not going to speculate on the opportunities that are available to us in 2,033 today. But what we've said before is that we have the newest coke making assets and we continue to make significant investments in them. We do that because we believe we're best positioned to serve the blast furnaces long term. Speaker 400:11:22Got it. And so when you think about the upcoming more near term renewals contract renewals. I think there's U. S. Steel at the end of this year, then Cleveland Cliffs. Speaker 400:11:39I think it's 2 contracts next year and then Algoma after that. Do you expect more of those tons to shift into either the foundry or merchant or rather spot blast furnace scope market? Or would you expect kind of your current proportion of contracted to spot volumes to stay roughly the same through the next 2, 3 years? Speaker 200:12:09Well, with respect to the Granite City co contract, as we said in the past, that co contract is part of our GPI project and part of those negotiations. And with respect to our other contracts with other customers, we're always in dialogue with our customers, but we're not going to comment on any kind of contract Speaker 400:12:34discussions. Okay. But if Middletown were to be a DRI in were to convert to DRI in 2029, I guess Middletown cope with maybe backfill some of the Haverhill Hill tons. So should we expect that those contract renewals go maybe shorter in nature than they've historically been? Speaker 200:13:00Lucas, as I said before, I mean, we're not we've not going to comment on our contract discussions with our customers, and we're not going to speculate. So I really can't help you more than that. Speaker 500:13:16Okay. No, that's appreciated. Speaker 400:13:21On the Granite City side, could you maybe update us on kind of what the most recent update is in terms of your conversations with U. S. Steel. Obviously, we're all following the news and it seems tricky, but would appreciate your color on where that project stands today. Speaker 200:13:45Sure. Well, with respect to the GPI project, we are continuing to work with U. S. Steel on the GPI project. We are doing the detailed engineering for what would be a first of its kind project right now. Speaker 200:14:00And so we'll continue to work with U. S. Steel on the GPI project and we would look forward to working with Nippon in the future. Speaker 400:14:10Got it. Any sort of timing when that detailed engineering might be completed? Speaker 200:14:17That's an ongoing project with U. S. Steel and I'm not going to comment further on it. Speaker 400:14:23Okay. Okay. And order of magnitude, if what sort of capital might we be looking at, assume there are cost for conversion? So I'd be curious about kind of the cash component, but then also any sort of reclamation liabilities that might be assumed would be very helpful to understand what the capital commitments might be? Thank you. Speaker 100:14:54Hey, Lucas. Yes, this is Shantanu. I mean, as we have said before, right, obviously, kind of as when we announced this project, we said like based on at that point of time, the project was kind of assumed and that's how we are progressing right now is it's going to be thinking about from a cash CapEx perspective. It's 2 years of our free cash flows plus some revolver borrowing, right? And that still is the case as we move forward with this project. Speaker 100:15:25So we haven't really given out like a specific number, but that's kind of the order of magnitude is roughly you can think about it as 2 years of our free cash flows plus some revolver borrowing. Speaker 400:15:41That is very helpful. I appreciate all the color. I'll turn it over for now. Thank you. Operator00:15:48Thanks Lucas. Thank you. The next question is from Nathan Martin with Benchmark. Your line is open. Speaker 600:16:08Thanks, operator. Good morning, everyone. Congrats on the Q1 results and Mike congratulations on your retirement. Best of luck there. Speaker 300:16:17Much appreciated. Thanks. Speaker 600:16:21Maybe moving over to logistics segment for a second, multiyear highs, tons handled there, I think that's mainly logistics ex CMT. You guys mentioned in your prepared remarks, a lot of that was driven by increased shipments due to the outage at Baltimore. No update to your logistics volume guidance, it didn't look like. So is the expectation that tons kind of come down in subsequent quarters as Baltimore reopens? Or is there a possibility you exceed that original guidance if current levels kind of remain elevated? Speaker 100:16:55Thanks, Nathan. I mean, yes, as we said, Q1 from a domestic terminals perspective was one of the was the best quarter in last 5 years, right? So it was definitely an exceptional quarter. As we have seen, right, like you saw the last year, the logistics business could be quite volatile, right? So I mean, as we sit here today, what we're looking at the market, we are affirming our guidance. Speaker 100:17:21If the market kind of remain up and down and weak, that's what we expect. But if we see a pickup in the out year later half of the year, we can pick up more volumes and you will see that in the results. But as we sit here today, what we are seeing, we confirm our guidance and we stick with the $30,000,000 to $35,000,000 of logistics EBITDA. Speaker 600:17:44Appreciate that, Shantanu. I guess just thinking, the Baltimore port looks like the main deep draft terminal is not scheduled or targeted to be reopened till the end of May. It would just make some sense maybe do you still think you'll have some benefit here in the Q2? Speaker 100:18:02Not much. I mean, we saw kind of some pickup at the start like when it happened and then we saw some in Q2, but it's really not driving the results that much as we sit here today. Speaker 600:18:17Okay. That's fair. And then maybe specifically at CMT, you guys talked about the weak commodity markets, weak coal exports. Just curious, did you hit your coal take or pay minimum during the first quarter from a volume perspective? If you remind us, is that looked at on a quarterly basis? Speaker 600:18:34Or is that annual? Because I think it's 4,000,000 tons annually. And then would great just get your thoughts on how you view export coal demand here over the next few quarters and how do you expect your API2 price adjustment to trend and maybe if we use this Q1 result as a baseline? Speaker 100:18:54Yes. So on the take or pay, it's an annual take or pay, Nathan. So I mean, obviously, you can see we don't provide like kind of coal tons separately. The total CMT did 1,800,000 tons, which is kind of pretty much in line and kind of our expectation was. And we do expect to hit the take or pay minimum for the full year for this year. Speaker 100:19:19Again, going back to kind of what the expectation for the volumes and the price of the API2 is, I mean, if you look at the futures, API 2 look pretty decent, right? I mean, it's kind of come back from the lows, but it can move pretty quickly as we have seen in the past, right. Like kind of it can move 10, 20, dollars 30 in a matter of couple of days. And there is some our profitability, as you know, is derived from that. So it's hard to predict, right? Speaker 100:19:51What we have put in the guidance, I think we feel pretty good about it. The long run outlook of the CMT terminal remains pretty attractive, and that's why we really like having this terminal. And as in the past, it has performed really well and we continue to believe in this terminal. Speaker 600:20:15Thanks for that Shantanu. Maybe just shifting over to the domestic coke segment real quickly. EBITDA per tonne looks like came in above your full year guidance range. Maybe can you talk about the drivers behind that outperformance? Speaker 100:20:33So Q1 normally is one of the quarters where we don't have a lot of outages. We are just coming out of the winter, just trying to kind of get back our facility to run really well in Q2 and Q3. And this quarter, except the first couple of weeks of January, the weather was pretty good as well, and it helped us kind of perform really well. On top of that, we talk about kind of higher blast coke sales volume in Q1 and that is actually timing of that and that is the spot blast coke sales volume timing where it was unusually front loaded in Q1 versus the previous year. So that helped our Q1 to be really, really good in terms of domestic coke performance. Speaker 100:21:25For the rest of the year, I think as we reaffirm our domestic coke EBITDA guidance of $238,000,000 to $248,000,000 It kind of tells you that we expect to run kind of as expected as we announced when we came about our guidance initially and we kind of are on track to meet that guidance. Speaker 600:21:51Okay. Appreciate that color. Just to make sure I follow it correctly, you said the spot blast coke sales volumes were kind of front loaded, so more in the Q1 than maybe typical. So if that's true, how do we think about maybe the mix, the sales mix in 2Q, 3Q, 4Q? Again, as you alluded to, the adjusted EBITDA per ton is going to need to come down, obviously, just to get you within your full year guidance. Speaker 600:22:17But is there any kind of additional planned maintenance in any given quarter that could pressure EBITDA per ton maybe in 3Q or 4Q just for instance or any sales mix or headwind, tailwind we should be thinking about? Speaker 100:22:32No. I mean, there's obviously, as I mentioned, there was no outages in Q1. So we expect to have outages and not expect we have planned outages in Q3 and Q4 of the year, right? So that will impact our performance during that time. And kind of from our contracted sales perspective, kind of pretty ratably laid out. Speaker 100:22:52And then spot coke, if Q1 was heavily loaded, obviously, like the rest of the year would kind of even now. And based on that, as we said, we have 650,000 equivalent blast and foundry coke sales, coke tons to sell and that just laid out for the year. It's just heavily loaded in the first quarter, so it's going to be lower in the rest half of the year. Speaker 600:23:18Got it. I appreciate those comments. I'll leave it there. Best of luck in the second quarter. Speaker 100:23:25Thank you. Operator00:23:28Thank you. We have a follow-up question with Lucas Pipes with B. Riley Securities. Your line is open. Speaker 400:23:38Thank you so much, operator. Thank you so much for taking my follow-up question. I wondered if you could maybe give us a little bit of an update on to kind of the size of the North American blast furnace coke market. There's been the idling at Granite City. There have been some other changes on the utilization rate of the blast furnace fleet. Speaker 400:24:05Obviously, there are changes if you look out at the years ahead as discussed earlier. But kind of what's the status quo? Where would you put the size of the market today? Thank you. Speaker 100:24:20Lucas, I mean, apart from the Granite City idling, things haven't really changed that much in the North in the future in 2, 3, 4 years. But as we sit here today and you kind of think about versus the last 2, 3 years apart from the Granite City blast furnace shutdown, the utilization or the coke demand hasn't changed, as a whole in the North America. Speaker 400:25:02Okay. Okay. So what's the market size roughly? Speaker 100:25:09It's roughly kind of as we have said in our earnings deck, it's around 8,500,000 to 10,000,000 tons of coke what is kind of being produced in the U. S. In the North American market. Speaker 500:25:26Got it. So this would include Speaker 400:25:29Algoma and Difasco and Stelco up in Canada? Speaker 500:25:33Correct. Correct. Speaker 400:25:36And so kind of fair to say you have what kind of 50%, 40% of the market today? Speaker 100:25:45We say we have roughly 30%, 35% to 40% of the market because we only sell 3,600,000 tons of contracted capacity, right? Speaker 500:25:58Got it. Yes. And then but Speaker 400:26:02then you sell some other blast furnace coke in North America as well, right, on a spot basis? Speaker 100:26:09Yes. It's North America and all Speaker 600:26:11over the world, Speaker 100:26:12yes. And foundry as well, right? Yes. Which we are not including Speaker 400:26:18in that, right? Yes. So the 30% to 35% would just be your contracted volumes? Right. Speaker 100:26:27Yes. Speaker 400:26:28Okay. Speaker 500:26:31And then, Speaker 400:26:34do you have a what is the competition on the merchant coke side, Kind of the next closest merchant coke supplier, how large would they be? Speaker 100:26:46I mean, this is also again, as we discussed, the only other merchant co producer in the U. S. Is DTE, and their capacity is in the like 800,000 to 1,000,000 ton range. Speaker 500:27:02Got it. And Speaker 400:27:07they don't have a byproduct oven is that right? Speaker 100:27:12They do have byproduct. They have traditional coke production coke production methodology. Got Speaker 500:27:20it. Okay. Speaker 400:27:24That makes sense. So kind of the if I just kind of look at this high level, integrated capacity still around 50%, is that about right? Speaker 100:27:36Yes. A little more than 50%, I would say, yes. Speaker 600:27:41And how would Speaker 400:27:42you describe that fleet? Has it been generally well maintained? Or do you have a view on that capacity? Speaker 100:27:52I mean, as kind of you know the coke plants that have shut down recently, right? So obviously there hasn't been much capital spend on that. Speaker 400:28:05Which are the ones that shut down Speaker 500:28:07coke facility? Speaker 100:28:09The recent announcement was the Claritin, right, the 2 batteries that shut down. Speaker 500:28:20What was their utilization rate prior to that shutdown? Speaker 100:28:25Lucas, for that, I guess, kind of we don't follow that that closely or you got to ask U. S. Steel for that. Speaker 500:28:36Okay. I'll have to follow-up with that. Okay, that's helpful. But Speaker 400:28:46your view is that you can compete effectively with that integrated capacity and kind of take share from there? Speaker 100:28:55Yes. I mean, if you look at last 3 years, right, like what we have done since coming out COVID, right, we have maneuvered the market really well. The market has been constantly changing as we have talked about, and we have been able to run full and kind of run really profitably and we continue to believe that we will be able to do that in the future. Speaker 400:29:20Okay. In terms of kind of your spot coke sales today, have there been increased opportunities due to customer outages in terms of the spot blast furnace coke market in North America? Speaker 100:29:36Lucas, on the kind of we don't talk about spot blast furnace coke separately. We always talk about spot blast and pondered coke on a combined basis given the size of the market and that part hasn't changed. That's the 650,000 equivalent blast furnace coke that we sell and we intend to sell in 2024. Speaker 400:30:00Okay. All right. I really appreciate the additional color. Thanks so much for taking my follow-up question and best of luck. Thank you. Operator00:30:13Thank you. We currently have no further questions. So I'll hand back over to Catherine to conclude. Speaker 400:30:20Thank you Speaker 200:30:21all again for joining us this morning and for your continued interest in SunCoke. Let's continue to work safely and create value for all of our stakeholders.Read morePowered by