Q1 2024 SunCoke Energy Inc Earnings Call
Angela: Good 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. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by one again. I will now hand you over to your host, Shantanu Agrawal, Vice President of Finance and Treasure
Good morning, everyone and welcome to the Sun Coke Energy first quarter 'twenty 'twenty four earnings call. My name is Angela and I'll be coordinating your call today. During the presentation. You can register if you ask a question by pressing star followed by one on your telephone keypad, if you change.
Your mind, Please press star followed by T O.
I will now hand, you over to your host Shunto Grill.
Shantanu Agrawal: As President Finance and Treasurer. Please go ahead.
Shantanu Agrawal: Thanks Angela.
Shantanu Agrawal: Good morning, and thank you for joining us this morning to discuss SunCoke Energy's first quarter 2024 results. With me today are Mike Rippey, Chief Executive Officer, Katherine Gates, President, and Mark Marinko, Senior Vice President and Chief Financial Officer.
Shantanu Agrawal: Good morning, and thank you for joining us this morning to discuss <unk> quarter of 2024 adults with me today are Mike Rippey, Chief Executive Officer, Katherine Gates, President and Mark Marine Coe Senior Vice President and Chief Financial Officer. Following managements prepared remarks, well open the call for Q&A. This conference call is being webcast live on.
Shantanu Agrawal: Following management's prepared remarks, we'll open the call for Q&A. This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. If 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 Katherine, let me remind you that the various remarks we make on today's call regarding future expectations constitute forward-looking statements.
Shantanu Agrawal: The Investor Relations section of a section of our website and a replay will be available later today.
Shantanu Agrawal: If you do not get to your questions on the call today, Please feel free to reach out to Investor Relations team before I turn things over to Kathryn Let me remind you that the various remarks, we make on todays call regarding future expectations constitute forward looking statements are cautionary language regarding forward looking statements in our SEC filings apply to the remarks, we make.
Shantanu Agrawal: 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 Katherine.
Shantanu Agrawal: Good day.
Shantanu Agrawal: These documents are available on our website as I recall installations to non-GAAP financial measures discussed on today's call with that I'll now turn things over to Katherine.
Katherine T. Gates: Thanks, John News. 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 two 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. The entire SunCoke team wishes him the best in his retirement.
Kathryn: Good morning, and thank you for joining us on today's call.
Kathryn: Before we get started I'd like to congratulate Mike Rippey on its previously announced retirement in two weeks Mike's leadership and contributions have been crucial to the success of Sun Coke during his tenure.
Katherine: 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.
Kathryn: The entire Sun co team wishes him the best in his retirement.
Katherine T. Gates: Moving to the first quarter results, I wanted to share a few highlights before turning it over to Mark to discuss the results in detail. First, I'd like to thank all of our SunCoke employees for their contributions to our very good first quarter results. Our domestic coke plants continue to run at full capacity with strong operational performance. Our logistics terminals delivered excellent results, handling 5.5 million tons during the quarter. We 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.
Kathryn: Moving to first quarter results I wanted to share a few highlights before turning it over to mark to discuss the results in detail.
Kathryn: First I'd like to thank all of our Sun Coke employees for their contributions to our very good first quarter results.
Kathryn: Our domestic coke plants continued to run at full capacity with strong operational performance.
Mark: Our logistics terminals delivered excellent result, handling five 5 million tons during the quarter.
Mark: We saw higher volumes at our domestic terminal due in part to east coast Port congestion caused by the unfortunate incident in Baltimore, which favorably impacted results.
Katherine T. Gates: Through our collective efforts, we delivered consolidated adjusted EBITDA of $67.9 million. From a balance sheet perspective, we ended the first quarter with a strong liquidity position of $470.1 million. 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 to $255 million. With that, I'll turn it over to Mark to review our first quarter earnings in detail. Mark.
Kathryn: Through our collective efforts, we delivered consolidated adjusted EBITDA of $67 $9 million.
Kathryn: From a balance sheet perspective, we ended the first quarter with a strong liquidity position of $471 million.
Kathryn: Our gross leverage was approximately 1.86 times on a trailing 12 month adjusted EBITDA basis at the end of the quarter.
Kathryn: Looking ahead, we're pleased to have all of our spot blast and foundry Coke sales finalized for the full year.
Kathryn: With this strong start we are well positioned to achieve our full year adjusted EBITDA guidance range of $240 million to $255 million.
Kathryn: With that I'll turn it over to Mark to review, our first quarter earnings in detail Mark.
Mark W. Marinko: Katherine, turning to slide four, net income attributable to SunCoke was 23 cents per share in the first quarter of 2024, up four cents versus the prior year period; adjusted EBITDA for the first quarter 2024 was $67.9 million compared to $67.1 million in the first quarter 2023. The increase in adjusted EBITDA was primarily driven by higher BlastCoke sales volumes and higher volumes at our domestic logistics terminals, partially offset by lower volumes at CMT. Moving to slide five, we discuss our domestic coke business performance in detail.
Mark: Thanks, Catherine turning to slide four.
Mark: Net income attributable Sun Coke was 23 per share in the first quarter 2024.
Mark: <unk> versus the prior year period.
Mark: Adjusted EBITDA for the first quarter, 2024 was $67 $9 million compared to $67 $1 million in the first quarter 2023.
Mark: 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.
Mark: Moving to slide five to discuss our domestic coke business performance in detail.
Mark W. Marinko: First quarter domestic coke adjusted EBITDA was $61.4 million dollars, 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; full year domestic Coke sales guidance remains approximately 4.1 million tons. As Katherine mentioned earlier, all Spot, Blast, and Foundry Coke sales are finalized for the full year.
Mark: First quarter domestic coke adjusted EBITDA was $61 $4 million in Coke sales volumes were 996000 tonnes. 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 <unk>.
Mark: Coke sales volumes are.
Mark: Our full year domestic coke sales tons guidance remains approximately $4 1 million tonnes.
Mark: As Katherine mentioned earlier, all spot blast in foundry Coke sales are finalized for the full year.
Mark W. Marinko: Given 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 to $245 million. Now moving on to slide six to discuss our logistics.
Mark: Given 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 million to $245 million now moving on to slide six to discuss our logistics business.
Mark W. Marinko: Our logistics business generated $13 million of adjusted EBITDA in the first quarter of 2024, compared to $13.5 million in the first quarter of 2023. The decrease in adjusted EBITDA was primarily due to lower throughput volumes at CMT, partially offset by higher volumes at our domestic terminal. CMT also recognized a limited API 2 price adjustment benefit during the quarter. Our terminals handled combined throughput volumes of approximately 5.5 million tons during the first quarter of 2024, as compared to 5.3 million tons during the same prior year period.
Mark: Our logistics business generated $13 million of adjusted EBITDA in the first quarter of 2024 compared to $13 $5 million in the first quarter of 2023.
Mark: The decrease in adjusted EBITDA was primarily due to lower throughput volumes at CMT, partially offset by higher volumes at our domestic terminals CMP.
Mark: <unk> also recognized limited API two price adjustment benefit during the quarter.
Mark: Our terminals handled combined throughput volumes of approximately $5 5 million tonnes. During the first quarter of 2024 as compared to $5 3 million tons. During the same prior year period.
Mark W. Marinko: Our domestic terminals handled 3.6 million tons in Q1 2024, making it the best quarter in terms of volume for the domestic terminals in the past five years. The increase in volume was driven in part by the unfortunate bridge incident in Baltimore, which caused East Coast port congestion.
Mark: Our domestic terminals handled three 6 million tonnes in Q1 2024, making it the best quarter in terms of volume for the domestic terminals in the past five years the.
Mark: The increase in volume was driven in part by the unfortunate bridge incident in Baltimore, which caused east coast Port congestion.
Mark W. Marinko: We are pleased with the excellent results from our logistics segment in the first quarter 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 first quarter with a cash balance of $120.1 million; cash flow from operating activities generated $10 million, and was negatively impacted by the timing of working capital changes of approximately $50 million during the quarter.
Mark: We are pleased with the excellent results from our logistics segment in the first quarter and are well positioned to achieve our logistics all year 2020 for adjusted EBITDA and volume guidance, which remain unchanged.
Mark: Now turning to slide seven to discuss our liquidity position for Q1.
Mark: Suncook ended the first quarter with a cash balance of $121 million.
Mark: Cash flow from operating activities generated $10 million and was negatively impacted by the timing of working capital changes of approximately $50 million in the quarter.
Mark W. Marinko: We expect this impact to reverse over the course of the year, and we are reaffirming our full year operating cash flow guidance of $185 to $200 million. We paid $9 million in dividends at the rate of $0.10 per share this quarter and spent $15.5 million on CapEx. In total, we ended the quarter with a strong liquidity position of $470.1 million. With that, I will turn it back over to Katherine. Thanks, Mark.
Mark: We expect this impact to reverse over the course of the year and we are reaffirming our full year operating cash flow guidance of $185 million to $200 million.
Mark: We paid $9 million in dividends at the rate of <unk> 10 per share this quarter and spent $15 $5 million on capex.
Mark: In total we ended the quarter with a strong liquidity position of $471 million with that I will turn it back over to Katherine.
Katherine T. Gates: Thanks, 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. We also continue to concentrate our efforts on adding new business at our logistics terminal.
Katherine T. Gates: Thanks, Mark wrapping up on slide eight as always safety is our first priority and we will continue to focus on strong safety and environmental performance.
Katherine T. Gates: Robust safety and environmental standards that Sun Coke apart and are central to our reliable delivery of high quality Coke and logistics services.
Katherine T. Gates: We remain focused on safely executing against our operating and capital plan for full utilization of our coke making assets.
Katherine T. Gates: We also continue to concentrate our efforts on adding new business at our logistics terminal.
Katherine T. Gates: 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 our customer base. As we've 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.
Katherine T. Gates: And while we were able to finalize all of our spot black and foundry Coke sales for the full year, we are still focused on future opportunities to broaden our customer base.
Katherine T. Gates: As we've demonstrated in the past, we will pursue a balanced yet opportunistic approach to capital allocation from.
Katherine T. Gates: 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 will make capital allocation decisions accordingly.
Katherine T. Gates: Finally, we're very pleased with the strong results in the first quarter, and we expect to achieve our full year consolidated adjusted EBITDA guidance of $240 to $255 million. With that, let's go ahead and open up the call for Q&A.
Katherine T. Gates: Finally, we're very pleased with the strong results in the first quarter and we expect to achieve our full year consolidated adjusted EBITDA guidance of $240 million to $255 million.
Katherine T. Gates: With that let's go ahead and open up the call for Q&A.
Operator: Thank you, Katherine. Everyone, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. We'll pause here briefly as the questions are being registered. The first question is from Lucas Pipes with B Riley Securities. Your line is open.
Catherine: Thank you Catherine.
Speaker Change: If you would like to ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by T.
Speaker Change: We will pause briefly ask a question of being retrospect.
Lucas Nathaniel Pipes: The first question is from Lucas pipes with B Riley Securities your.
Katherine: Your line is open.
Lucas Nathaniel Pipes: Hey, good morning everyone. How are you?
Lucas Nathaniel Pipes: Hey, good good.
Lucas Nathaniel Pipes: Good morning, everyone. How are you.
Unnamed: Good morning, Lucas.
Lucas Nathaniel Pipes: Good morning Lucas.
Lucas Nathaniel Pipes: So my first question is kind of the longer-term outlook for utilization rates. One of your customers recently commented on an earnings call about the Middletown contract and their desire to replace that blast furnace with a DRI. I saw you just renewed a maintenance contract with Fluor, so it seems like you have confidence in the long-term needs of your existing Coke fleet. But if you could maybe comment on that and what your outlook is maybe through the end of this decade and then maybe post-2032, I would really appreciate it. Thank you.
Unnamed: So.
Lucas Nathaniel Pipes: My first question is on kind of the.
Lucas Nathaniel Pipes: The longer term outlook for the utilization rates.
Lucas Nathaniel Pipes: Yeah.
Lucas Nathaniel Pipes: One of your customers recently commented on our earnings call about.
Lucas Nathaniel Pipes: Kind of the Middletown contract.
Lucas Nathaniel Pipes: And their desire to.
Lucas Nathaniel Pipes: Replace that blast furnace with a D R I and.
Lucas Nathaniel Pipes: I saw you just renewed a maintenance contract with fluor. So so it seems like you have confidence in the long term need.
Lucas Nathaniel Pipes: Existing Coke fleet, but if you could maybe comment on that.
Lucas Nathaniel Pipes: And what your outlook is maybe through first through the end of this decade, and then maybe post 2032 I would really appreciate it. Thank you.
Unnamed: Sure. Thanks, Lucas. With respect to, I think you're referring to the CLIFS announcement for their Middletown Works. And with respect to that, that announcement really has no impact on us. Our contract with CLIFS runs through the end of 2032. You know, in terms of sort of the next decade, if you will, I mean, there's a long way to go till 2033. We're not going to speculate on the opportunities that will be available to us in 2033 today.
Speaker Change: Sure. Thanks, Lee I guess with respect to I think youre, referring to the cliffs announcement for their Middletown bark.
Unnamed: And with respect to that that announcement really has no impact on us our contract with cliffs runs through the end of 2032.
Unnamed: In terms of sort of the next decade. If you will I mean, there is there is a long way to go till 2033, we're not going to speculate on the opportunities that are available to us in 2033 today.
Unnamed: 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.
Unnamed: 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 furnace is long term.
Lucas Nathaniel Pipes: got it. And so when you think about the upcoming, more near-term renewals, contract renewals, I think there's...
Speaker Change: Got it.
Unnamed: So when you.
Lucas Nathaniel Pipes: Think about that.
Martin: Upcoming Martin.
Lucas Nathaniel Pipes: Near term.
Lucas Nathaniel Pipes: Renewal.
Lucas Nathaniel Pipes: Contract renewals I think there is.
Unnamed: US Steel at the end of this year, then Cleveland Cliffs, I think with two contracts next year, and then Algoma after that. Do you expect more of those tons to shift into either the foundry or spot blast furnace coke market, or would you expect your current proportion of contracted to spot volumes to stay roughly the same through the next two to three years?
Speaker Change: U S steel at the end of this year, then Cleveland cliffs, I think with two contract next year and then.
Unnamed: I'll go my after after that.
Do you expect more of those comes to shift into either the found him or merchant rather spot blast furnace coke market or what you expect.
Unnamed: Kind of your current.
Unnamed: The proportion of contracted to spot volumes to stay roughly the same.
Unnamed: Through the next two to three years.
Unnamed: Well, with respect to the Granite City coke contract, as we've said in the past, that coke 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 discussion.
Unnamed: Ah.
Unnamed: Well with respect to the granite city Coke contract as we said in the past that Coke 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.
Unnamed: Comment on any kind of contract discussions.
Lucas Nathaniel Pipes: Okay, but if Middletown were to convert to DRI in 2029, I guess Middletown and Cope would maybe backfill some of the Havahill tons? Should we expect that those contract renewals will go, or may be shorter in nature than they've historically been?
Speaker Change: Okay, but.
Unnamed: If if if middletown were to be at Cri and.
Lucas Nathaniel Pipes: Would you convert to DIY in 2029, I guess Middletown Coke maybe.
Lucas Nathaniel Pipes: Maybe backfill some of them haven't hill tons.
Lucas Nathaniel Pipes: So.
Lucas Nathaniel Pipes: Should we expect that dos contract renewal scope may be shorter in nature than they have historically.
Lucas Nathaniel Pipes: Sure.
Unnamed: Lucas, as I said before, we're 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 Change: Yeah, Lucas 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 gonna to speculate so.
Speaker Change: I really can't I can't help you more than that.
Lucas Nathaniel Pipes: Okay, now that's appreciated. On the Granite City side, could you maybe update us on kind of what the most recent update is in terms of your conversations with USDO, obviously while following the news and the..., seems tricky, but I would appreciate your color on where that project is.
Unnamed: Okay.
Speaker Change: Appreciate it.
Lucas Nathaniel Pipes: On the granite city site.
Lucas Nathaniel Pipes: Could you maybe update us on kind of what the what the most recent.
Lucas Nathaniel Pipes: Update us in terms of in terms of your conversations with U S steel obviously.
Speaker Change: We're all following the news.
Lucas Nathaniel Pipes: And.
Lucas Nathaniel Pipes: Seems tricky, but but would appreciate your color on where that where that project stands today.
Unnamed: Sure. 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, and 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.
Lucas Nathaniel Pipes: Sure 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.
Lucas Nathaniel Pipes: Got it. Any sort of timetable when that detailed engineering might be completed?
Lucas Nathaniel Pipes: Right now.
Lucas Nathaniel Pipes: And so we will continue to work with U S steel on the GPI project and we would look forward to working with Nippon in the future.
Lucas Nathaniel Pipes: Got it any any sort of timing would that detailed engineering might be completed.
Unnamed: That's an ongoing project with U.S. Steel, and I'm not going to comment further on it.
Lucas Nathaniel Pipes: That's an ongoing project with U S steel and I'm not going to comment further on it.
Lucas Nathaniel Pipes: Okay, okay. And order of magnitude, if What sort of capital might we be looking at? I assume there are costs for a 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.
Unnamed: Okay, Okay and what.
Lucas Nathaniel Pipes: Order of magnitude if.
Lucas Nathaniel Pipes: What sort of capital.
Lucas Nathaniel Pipes: Might we be looking at.
Lucas Nathaniel Pipes: I assume there are costs for a conversion.
Lucas Nathaniel Pipes: So.
Lucas Nathaniel Pipes: I'd be curious about kind of the cash component, but then also.
Lucas Nathaniel Pipes: Any sort of reclamation liability step might be assumed would be very helpful to understand.
Lucas Nathaniel Pipes: What's the capital.
Lucas Nathaniel Pipes: Commitments might be thank you.
Shantanu Agrawal: Hey, Lucas. Yeah, this is Shantanu.
Lucas Nathaniel Pipes: Hey, Lucas this is Jonathan I mean, as we've said before right I mean, obviously kind of as we when b.
Lucas: This project.
Shantanu Agrawal: We said like based on that that point of time, the project was kind of.
Shantanu Agrawal: I mean, as we have said before, right? I mean, obviously, kind of as we when we, you know, announced this project, we said, like, at that point in time, the project was kind of assumed. And that's how we are progressing right now. It's going to, you know, be a thing about from a cash CapEx perspective, it's two years of our free cash flows, plus some revolver borrowing, right?
Lucas: Zoom and Thats, how we are progressing right now is it's going to be.
Shantanu Agrawal: Thinking about from a cash capex versus back to its two years of our free cash flows plus some revolver borrowing right and that still is the case as we move forward with this project. So we haven't really given out.
Shantanu Agrawal: And that still is the case as we move forward with this project. So we haven't really given out a specific number, but that's kind of the order of magnitude is roughly you can think about it is two years of our free cash flows, plus some revolver borrowing.
Shantanu Agrawal: Catholic.
Shantanu Agrawal: Speaking number, but that's kind of the order of magnitude is roughly you can think about it as two years of our free cash flow plus some revolver borrowing.
Lucas Nathaniel Pipes: That is very helpful. I appreciate all the color. I'll turn it over for now. Thank you.
Speaker Change: That is very helpful. I appreciate all the color I'll turn it over for now thank you.
Speaker Change: Thanks Lucas.
Lucas Nathaniel Pipes: Okay.
Speaker Change: Uh huh.
Operator: Thank you. As a reminder, everyone, if you would like to ask a question, please press star followed by one on your telephone keypad. The next question is from Nathan Martin with Benchmark. You're on.
Speaker Change: Thank you as a reminder to everyone. If you would like to ask a question. Please press star followed by one on your telephone keypad.
Operator: The next question is from Nathan Martin with benchmark.
Nathan Pierson Martin: Your line is open.
Nathan Pierson Martin: Thanks, operator. Good morning, everyone. Congratulations on the first quarter results, and Mike, congratulations on your retirement. Best of luck there.
Nathan Pierson Martin: Thanks, operator, good morning, everyone.
Nathan Pierson Martin: Congrats on the first quarter results and my congratulations on your retirement best of luck there.
Unnamed: Much appreciated. Thanks.
Nathan Pierson Martin: Much appreciate it thanks.
Nathan Pierson Martin: Um, maybe moving over to the logistics segment for a second, multi-year highs, tons handled there, I think that's mainly, you know, Logistics X, CMP, you guys mentioned in your prepared remarks that a lot of that was driven by increased shipments due to the outage at Baltimore. You know, no update to your logistics volume guidance, it didn't look like, so is the expectation that tons will kind of come down in subsequent quarters as Baltimore reopens, or is there a possibility you could exceed that original guidance if current levels kind of remain elevated?
Nathan Pierson Martin: Maybe moving over to logistics segment for a second multiyear highs tons handled there I think it's mainly logistics ex CMT.
Nathan Pierson Martin: As mentioned in your prepared remarks, a lot of that was driven by increased shipments due to the outage at Baltimore.
Nathan Pierson Martin: No update to your logistics volume guidance. It didn't look like so is the expectation that tonnage kind of come down in subsequent quarters as Baltimore reopens or is there a possibility that you exceed that original guidance if current levels kind of remain elevated.
Shantanu Agrawal: Thanks, Nathan. I mean, you know, yeah, as we said, Q1, from a domestic terminals perspective, was one of the best quarters in the last five years, right? So it was definitely an exceptional quarter. As we've seen, right, like you saw last year, the logistics business could be quite volatile, right? So, I mean, as we sit here today, what we're looking at in the market, we are affirming our guidance, you know, if the market kind of remains up and down and weak.
Speaker Change: Thanks, Nathan I mean, yes, as we said Q1 from a domestic terminals perspective was one of the bed.
Shantanu Agrawal: It was the best quarter in last five years right. So it was definitely an exceptional quarter.
Shantanu Agrawal: As we've seen really you saw the last year.
Shantanu Agrawal: 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 if the market kind of remain up and down and weak.
Shantanu Agrawal: That's what we expect. But if, you know, we see a pickup in the second year, you know, the 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're seeing, we confirm our guidance, and we stick with the $30 to $35 million of logistics EBITDA.
Shantanu Agrawal: What we expect but we see a pickup in Oh Dear.
Shantanu Agrawal: Later half of the year.
Shantanu Agrawal: And 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 can part of our guidance and we stick with the $30 million to $35 million of logistics EBITDA.
Nathan Pierson Martin: I appreciate that, Shantanu. I guess just thinking, you know, the Baltimore port looks like the main deep draft terminal is not scheduled or part of it to be reopened until the end of May. It would just make some sense, maybe, do you still think you'll have some benefit here in the second quarter?
Speaker Change: I appreciate that Shaun I guess, just thinking the Baltimore port it looks like the main.
Nathan Pierson Martin: <unk> terminals scheduled or part of it to be reopened till the end of may.
Nathan Pierson Martin: It just makes some sense, maybe do you still think youll have some benefit here in the second quarter.
Shantanu Agrawal: Not, not much. I mean, you know, we saw kind of some pickup, you know, 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.
Shantanu Agrawal: Not not much I mean, we saw kind of some pick up 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.
Nathan Pierson Martin: Okay, that's fair. And then maybe specifically at CMT, you guys talked about, you know, 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? Maybe remind us, is that looked at on a quarterly basis, or is that annual? Because I think it's 4 million tons annually. And then, well, great, just get your thoughts on how you view export coal demand here over the next few quarters. And, you know, how do you expect your API 2 price adjustment to trend? And maybe if we use this first quarter result as a baseline.
Speaker Change: Okay. That's fair and then maybe specifically at CMT.
Nathan Pierson Martin: You guys talked about the weak commodity markets weak coal exports.
Nathan Pierson Martin: Just curious did you hit your coal take or pay minimums during the first quarter from a volume perspective.
Nathan Pierson Martin: Mind us as that looked at on a quarterly basis.
Nathan Pierson Martin: Is that annual because I think it's 4 million tons annually.
Nathan Pierson Martin: And then Greg just get your thoughts on how you view export coal demand here over the next few quarters.
Nathan Pierson Martin: How do you expect your API two price adjustment to trend maybe for US. This first quarter result.
Nathan Pierson Martin: Nathan Marinko, Lucas Pipes, Nathan Martin, Katherine Gates, SunCoke Energy
Nathan Pierson Martin: Baseline.
Shantanu Agrawal: Yeah, so on the take or pay, it's an annual take or pay, Nathan. So I mean, obviously, we don't provide any kind of coal tons separately, the total CMT did 1.8 million tons, which is kind of pretty much in line with what what the kind of expectation was, and we do expect to hit the take or pay minimum for the full year this year. Again, you know, going back to kind of what the expectation for the volumes and the price of API2 is, I mean, if you look at the futures, API2 looks pretty decent, right?
Nathan Pierson Martin: So on the take or pays an annual take or pay Nathan So I mean.
Shantanu Agrawal: Obviously, we.
Shantanu Agrawal: Can see you don't provide.
Shantanu Agrawal: Provide like kind of calls.
Shantanu Agrawal: Don separately that Golar CMT did $1 8 million tonnes, which is kind of pretty much in line and what kind of what our expectation was and we do expect to hit our take or pay or minimum.
Shantanu Agrawal: The full year for this year.
Shantanu Agrawal: Again.
Shantanu Agrawal: Going back to kind of what the expectation for the volumes and the price of API two is.
Shantanu Agrawal: 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 it can move 10, 20, 30 bucks in a matter of a couple of days. And there is some, our profitability is, as you know, is derived from that. So it's hard to predict, right?
Shantanu Agrawal: I mean, if you look at the futures API, two look pretty decent right I mean, it's kind of come back from the lows, but it can move pretty quickly. After we have seen in the past right like kind of it can move 10 2030 Bucks in a matter of couple of days and there is some our profitably is as you know is derived from that.
Shantanu Agrawal: To predict right.
Speaker Change: What we have put in the guidance I think we feel pretty good about it.
Shantanu Agrawal: What 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, you know, we really like having this terminal, and, as in the past, it has performed really well. And we continue to believe in this terminal.
Shantanu Agrawal: In the long run outlook of the CMT.
Shantanu Agrawal: Terminal remains pretty attractive and that's why we really like having this terminal in <unk>.
Shantanu Agrawal: As in the past it has performed really well and we continue to believe in this terminal.
Nathan Pierson Martin: Thanks for that, Shantanu. Maybe just shifting over to the domestic Coke segment real quickly, Yves-Adopte-Breton, looks like it came in above your four-year guidance range. Maybe, can you talk about the drivers behind that outperformance?
Speaker Change: Thanks for that Sean.
Shantanu Agrawal: Maybe just shifting over to the domestic Coke segment real quickly EBITDA per ton.
Nathan Pierson Martin: It looks like it came in above your full year guidance range, maybe can you talk about the drivers behind that outperformance.
Shantanu Agrawal: So, 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 our facility back to run really well in Q2 and Q3. And this quarter, except for 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 talked about a higher Blast Coke sales volume in Q1.
Yves-Adopte-Breton: So Q1 normally is one of the quarters, where we don't have a lot of outages.
Shantanu Agrawal: We're just coming out of the winter just trying to kind of get backup facility to run really well in Q2 and Q3 and this this quarter, except the first for us.
Shantanu Agrawal: Couple of weeks of January the weather weather was pretty good as well and it helped us kind of going to perform really well on top of that we talk about kind of off hire blast book sales volume in Q1 and that is that is actually timing of that and that is.
Shantanu Agrawal: And that is actually the 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. For the rest of the year, I think as we reaffirm our domestic Coke EBITDA guidance of 238 to 248, it kind of tells you that we expect to run kind of as expected as we announced when we came up with our guidance initially, and we kind of are on track to meet that guidance.
Shantanu Agrawal: The smart glass Coke sales volume timing, where it was unusually front.
Shantanu Agrawal: Frontloaded in Q1 versus the previous year, so that helps.
Shantanu Agrawal: Our Q1.
Shantanu Agrawal: To be really really good and done the domestic coke performance, while the rest of the year I think as we reaffirm our Cogs.
Shantanu Agrawal: Domestic coke EBITDA guidance of <unk> 38 to 48, it kind of tells you that we expect to run kind of as expected as we announced.
Shantanu Agrawal: And became a October guidance, initially and we kind of.
Shantanu Agrawal: <unk> on track to meet that guidance.
Nathan Pierson Martin: Okay, I appreciate that, Keller. Just make sure I followed you correctly. You said the spot blast coke sales volumes were kind of front loaded, so more in the first quarter 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 allude to, the adjustability of the upper ton is going to need to come down, obviously, just to get you within your guidance.
Speaker Change: Okay. I appreciate that color just mature followed correctly. So the spot plus coke sales volumes were kind of front loaded so more in the first quarter than maybe typical so.
Nathan Pierson Martin: That's true how do we think about maybe the mix the sales mix in <unk> again as you allude to the adjusted EBITDA per ton is going to need to come down. Obviously just did two within your full year guidance, but is there is there any kind of additional planned maintenance in any given quarter that could pressure EBITDA per ton.
Nathan Pierson Martin: But is there any kind of additional planned maintenance in any given quarter that could pressure either the upper ton, maybe in 3Q or 4Q, just for instance, or any sales mix or headwind, or tailwind, which we should be thinking about?
Nathan Pierson Martin: <unk>, maybe in <unk>, just for instance, or sales mix or headwind tailwind, which we should be thinking about.
Shantanu Agrawal: No, I mean, obviously, as I mentioned, there were no outages in Q1. So we expect to have outages and, you know, not expect. We have planned outages in Q3 and Q4 of the year, right? So that'll impact our performance during that time. And, you know, kind of from our contracted sales perspective, it's kind of, kind of pretty relatively laid out. And then SpotCoke, if the first quarter was heavily loaded, obviously, like, you know, the rest of the year would kind of even out based on that, as we said, you know, we have 650,000 equivalent blast and foundry coke, sales coke tons to sell, and that just laid out for the year. It was just heavily loaded in the first quarter, so it's going to be lower in the rest half of the year.
Speaker Change: No I mean.
Nathan Pierson Martin: There's obviously as I mentioned there was no outages in Q1, so we expect to have outages.
Shantanu Agrawal: <unk> expect to be have planned outages in Q3, and Q4 of the year right. So that the impact of our performance during that time and kind of from our contracted sales perspective, it's kind of kind.
Shantanu Agrawal: Kind of pretty Ratably laid out and then spot Corp fourth quarter was heavily loaded obviously like the rest of the year would kind of.
Shantanu Agrawal: Even now based on that as we said.
Shantanu Agrawal: We have 650000 equaling blast in foundry Coke.
Shantanu Agrawal: Sales of Coke tons to sell and that just laid out for the year just.
Shantanu Agrawal: Heavily loaded in the first quarter. So it is going to be lower than the desktop of the year.
Nathan Pierson Martin: Got it. I appreciate those comments. I'll leave it there. Best of luck in the second quarter.
Speaker Change: Got it I appreciate those comments I'll leave it there best of luck in the second quarter.
Speaker Change: Thank you.
Operator: Thank you. We have a follow-up question with Lucas Pipes of B Riding Securities. Your line is open.
Speaker Change: Thank you.
Nathan Pierson Martin: So a follow up question with Lucas pipes with B Riley Securities. Your line is open.
Lucas Nathaniel Pipes: Thank you so much, operator. Thank you so much for taking my follow-up question.
Lucas Nathaniel Pipes: Thank you so much operator, thank you so much for taking my follow up question.
Lucas Nathaniel Pipes: I wondered if you could maybe give us a little bit of an update on the kind of size of the North American Last Furnace Coke Market. There's been some idling at Granite City. There have been some other changes to the utilization rate of the blast furnace fleet. Obviously, 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... Thank you.
Lucas Nathaniel Pipes: I wondered if you could maybe give us a little bit of an update on two kind of the size of the north American blast furnace Coke market.
Lucas Nathaniel Pipes: There's been the idling of granite city.
Lucas Nathaniel Pipes: There have been some other changes on the utilization rate of the blast furnace fleet. Obviously there are changes if you look out in the years ahead as discussed earlier, but.
Lucas Nathaniel Pipes: What's the status quo.
Lucas Nathaniel Pipes: Would you put.
Lucas Nathaniel Pipes: The size of the market today.
Speaker Change: Thank you.
Shantanu Agrawal: Lucas, I mean, apart from Granite City idling, things haven't really changed that much in the North American market, have they? I mean, there is obviously a lot of announced EF capacity coming online in the future in two, three, four years, but as we sit here today and, you know, you kind of think about versus the last two, three years, apart from the Granite City blast furnace shutdown, utilization or coke demand hasn't changed as a whole in North America.
Lucas Nathaniel Pipes: Lukas I mean, apart from the granite city idling.
Shantanu Agrawal: Things haven't really changed that much in the North American market right. I mean, there is obviously a lot of unknowns.
Shantanu Agrawal: We have capacity coming online.
Shantanu Agrawal: In the future in 234 years, but as we sit here today and you kind of think about versus the last two three years apart from the granite city.
Shantanu Agrawal: Last one is shut down.
Shantanu Agrawal: But utilization out of the Coke demand Hasnt changed.
Shantanu Agrawal: As a whole in the North America.
Lucas Nathaniel Pipes: Okay, okay, so what's the market size?
Lucas: Okay. Okay. So what's the what's the market size roughly.
Shantanu Agrawal: It's roughly, you know, kind of as we have said in our earnings deck, it's around, you know, eight and a half to 10 million tons of coke that is being produced in the US, in the North American market.
Lucas Nathaniel Pipes: It's roughly you know kind of as we have said in our earnings deck.
Shantanu Agrawal: It's around eight and a half to 10 million tons of book.
Shantanu Agrawal: What is kind of being produced in the U S in the North American market.
Lucas Nathaniel Pipes: Got it. So this would include Algoma and DeFasco and Stelco up in Canada. Correct. And so, it's kind of fair to say you have what kind of, 50-40% of the market today.
Speaker Change: Got it so this would include.
Lucas Nathaniel Pipes: I'll go mine dofasco in stelco.
Speaker Change: Okay got it.
Lucas Nathaniel Pipes: Correct.
Lucas Nathaniel Pipes: And so kind of fair to say.
Lucas Nathaniel Pipes: Kind of.
Lucas Nathaniel Pipes: 50% or 40% of the market today.
Shantanu Agrawal: We say we have roughly 30-35-40% of the market because we only sell 3.6 million tons of contracted capacity, right? Got it. Yeah, then. Then you sell some other blast furnace coke in North America as well, right, on a spot basis... Yeah, America and all over the world. Yeah. And then foundry as well, right? Yeah, which we are not including in that, right?
Lucas Nathaniel Pipes: We say, we have roughly 30%, 35% to 40% of the market.
Shantanu Agrawal: Because because we only sell $3 6 million tons of contracted capacity right.
Speaker Change: Got it.
Shantanu Agrawal: Then.
Shantanu Agrawal: Then you sell some other blast furnace Coke in North America, as well right on a spot basis.
Shantanu Agrawal: Yes.
Shantanu Agrawal: Again, all over the world and foundry as well right.
Shantanu Agrawal: Yep, which we are not including on that right.
Lucas Nathaniel Pipes: Yeah, so the 30-35% would just be your contracted volume.
Shantanu Agrawal: Yes, so the <unk>.
Shantanu Agrawal: 30% to 35% with just be your contracted.
Lucas Nathaniel Pipes: Volumes.
Shantanu Agrawal: It's right, right, yeah, yeah, yeah.
Speaker Change: Right right, yes, yes, okay.
Shantanu Agrawal: Okay.
Shantanu Agrawal: And then.
Lucas Nathaniel Pipes: and then. Do you have a, what is the competition on the Merchant Coke side? kind of the next close competitor. Merchant Coke Supplier. How large would they be?
Shantanu Agrawal: Do you have.
Shantanu Agrawal: What is the competition on the merchant Coke side.
Lucas Nathaniel Pipes: Ed.
Lucas Nathaniel Pipes: Kind of the next closest.
Lucas Nathaniel Pipes: Merchant Coke supplier, how large with Davy.
Shantanu Agrawal: I mean, again, as we discussed, the only other merchant co-producer in the U.S. is DTE, and you know, their capacity is in the like 800,000 to a million ton range.
Lucas Nathaniel Pipes: I mean this is also again as we've just because the only other marchenko producer in the U S is DTE.
Shantanu Agrawal: And.
Shantanu Agrawal: Their capacity is like 800000 to a 1 million ton range.
Speaker Change: Got it.
Lucas Nathaniel Pipes: and they don't have a They don't have a byproduct.
Shantanu Agrawal: And they don't have.
Lucas Nathaniel Pipes: They don't have a byproduct.
Lucas Nathaniel Pipes: Oven set right.
Shantanu Agrawal: they do have byproduct they they have the traditional coke production coke coke production methodology
Lucas Nathaniel Pipes: They do have byproduct they have the traditional co production Cocomat co production methodology.
Lucas Nathaniel Pipes: Got it. Got it. Got it. Okay, that's that makes sense so, kind of, the the the If I just kind of look at this high level, integrated capacity is still around 50%, is that about right?
Speaker Change: Got it got it got it okay.
Lucas Nathaniel Pipes: Doug.
Lucas Nathaniel Pipes: That makes sense, so kind of to the.
Lucas Nathaniel Pipes: But just kind of look at this high level integrated capacity is still around 50% is that about right.
Shantanu Agrawal: Yeah, a little more than 50%, I would say yes.
Lucas Nathaniel Pipes: Yes, a little more than 50% I would say yes.
Lucas Nathaniel Pipes: and how would you describe that fleet? Has it been generally well maintained, or do you have a view on that capacity?
Shantanu Agrawal: And how would you describe that fleet.
Lucas Nathaniel Pipes: Has it been generally well maintained or do you have a view on.
Lucas Nathaniel Pipes: On that capacity.
Shantanu Agrawal: I mean, as you know, the Coke plant would have shut down recently, right? So obviously, there hasn't been much capital spent on that.
Lucas Nathaniel Pipes: I mean as kind.
Shantanu Agrawal: Kind of you know the coke plants that have shut down recently right. So obviously there hasn't been much capital spend on that.
Lucas Nathaniel Pipes: What Which are the ones that shut down coke facilities?
Shantanu Agrawal: Which which are the ones that shut down.
Lucas Nathaniel Pipes: Coke facility.
Shantanu Agrawal: The recent announcement was Claritin, right, the two batteries that should...
Lucas Nathaniel Pipes: The recent announcement was.
Shantanu Agrawal: The clarity right.
Shantanu Agrawal: <unk> batteries that shut down.
Lucas Nathaniel Pipes: What was their utilization rate prior to that shutdown?
Shantanu Agrawal: What was their utilization rate prior to that shutdown.
Shantanu Agrawal: Lucas, for that, I guess, you know, kind of you guys; we don't follow that that closely, or, you know, you got to ask US Steel for that.
Lucas Nathaniel Pipes: Lukas.
Lucas Nathaniel Pipes: That I guess kind of.
Shantanu Agrawal: Yeah.
Shantanu Agrawal: We don't follow that that closely or you got to ask you is deal for that.
Shantanu Agrawal: Okay.
Lucas Nathaniel Pipes: Okay, that's helpful, and your view is that you can compete effectively with that integrated capacity and kind of take share from there.
Shantanu Agrawal: Hello.
Shantanu Agrawal: Okay.
Speaker Change: Helpful but.
Lucas Nathaniel Pipes: <unk>.
Lucas Nathaniel Pipes: Yes.
Lucas Nathaniel Pipes: <unk>.
Lucas Nathaniel Pipes: Your view is that you can compete effectively.
Lucas Nathaniel Pipes: With that integrated capacity and kind of takes you from there.
Shantanu Agrawal: Yeah, I mean, if you look at the last three years, right, like what we have done since coming out of 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, you know, run really profitably. And we continue to believe that we will be able to do that in the future.
Lucas Nathaniel Pipes: Yes, I mean, if you look at last three years really like what we have done since coming out of Covid right. We have matured the market really well the market has been constantly changing as we have talked about and we have been able to run full.
Shantanu Agrawal: And kind of you know run really profitably and we continue to believe that we will be able to do that in the future.
Shantanu Agrawal: Okay.
Lucas Nathaniel Pipes: Okay, 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, in North America. Lucas, on the, you know, kind of, we don't talk about spot blast and foundry coke separately. We always talk about spot blast and foundry coke on a combined basis, given the size of the market. And that part hasn't changed.
Shantanu Agrawal: Okay.
Shantanu Agrawal: In terms of kind of your spot Coke.
Lucas Nathaniel Pipes: Sales today has there been increased opportunities due to customer outages.
Lucas Nathaniel Pipes: In terms of the spot blast furnace coke market.
Lucas Nathaniel Pipes: Lucas.
Lucas Nathaniel Pipes: On the kind of we don't talk about spot blast furnace Coke separately, we always talk about spot glass in foundry Coke on a combined basis, given the size of the market and that spot Hasnt changed that's the 650000 equaling blast furnace claw back to sell and we intend to sell in 'twenty three 'twenty four.
Lucas Nathaniel Pipes: That's the 650,000 equivalent blast furnace coke that we sell, and we intend to sell it in 23, 24. OK. All right. I really appreciate the additional color. Thanks so much for taking my follow-up question.
Lucas Nathaniel Pipes: Okay.
Lucas Nathaniel Pipes: Alright, I really appreciate the additional color.
Lucas Nathaniel Pipes: Thanks, Thanks, so much for taking my follow up question.
Speaker Change: Best of luck.
Speaker Change: Thank you.
Operator: Thank you. We currently have no further questions, so I'll hand over to Katherine to conclude. Thank you all again for joining us today.
Lucas Nathaniel Pipes: Thank you. We currently have no further questions. So I'll hand back over to Katherine Xu. Please go ahead.
Katherine T. Gates: Thank you all 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.
Katherine: Thank you all again for joining us this morning and for your continued interest in Sun Coke, let's continue to work safely and create value for all of our stakeholders.
Operator: Thank you. This concludes today's call. Thank you for joining us. You may now disconnect your line.
Katherine: Thank you. This concludes today's call. Thank you for joining you may now disconnect your lines.
Operator: Okay.
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Katherine: Thank you.
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