Q4 2024 SunCoke Energy Inc Earnings Call

Speaker Change: Good day, and welcome to the SunKilk Energy 4th Quarter 2024 Earnings Conference Call.

All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

Please note, today's event is being recorded.

Speaker Change: I would now like to turn the conference over to Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead.

Thanks Rukul.

Speaker Change: Good morning, and thank you for joining us this morning to discuss Suncoak Energy's fourth quarter and full year 2024 results, as well as 2025 guidance.

Speaker Change: With me today are Katherine Gates, President and Chief Executive Officer, and Mark Marinko, Senior Vice President and Chief Financial Officer.

Following management's prepared remarks, we'll open the call for Q&A.

Speaker Change: This conference call is being webcast live on the investor relations section of our website and a replay will be available later today.

Speaker Change: If we don't 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.

Speaker Change: The cautionary language regarding forward-looking statements in our SEC filings apply to the remarks we make today.

Speaker Change: These documents are available on our website as are reconciliations to non-GAAP financial measures discussed on today's call. With that, I'll now turn things over to Katherine.

Katherine Gates: Thanks, Shantanu. Good morning. Thank you for joining us today. Earlier today, we announced Suncoak Energy's fourth quarter results. Before I turn it over to Mark to review the results in detail, I want to share a few highlights from 2024.

Speaker Change: First, I want to recognize our remarkable achievement in safety performance. Suncoak ended the year with a record-setting total recordable incident rate of 0.5. Safety is our first priority, and I'd like to thank all of our employees for their continued commitment to exceptional safety performance.

Speaker Change: Turning to our financial achievements, we delivered consolidated adjusted EBITDA of $272.8 million, exceeding the high end of our increased guidance range of $270 million.

Speaker Change: Excellent performance from our logistics segment and the one-time gain from the Department of Labor agreement drove our results. We generated 96 million dollars of free cash flow exceeding the high end of our guidance range of 90 million dollars.

Speaker Change: Our coke plants ran full in 2024, and we successfully sold all non-contracted tons into the Foundry and Spot Blast coke markets, delivering adjusted EBITDA within our revised guidance range, despite lower cold coke yields.

Speaker Change: In addition, we extended our Granite City coke making contract through June 2025, with the option for the customer to extend through year end.

Speaker Change: In the logistics segment, we grew our barge business at our Kanawha River Terminal and benefited from the API2 price adjustment at Convent Marine Terminal.

Speaker Change: We also signed a new three-year take-or-pay coal handling agreement at KRT and expect to see the benefit of that beginning in Q3 when the capital project is complete.

Speaker Change: We made great progress on our capital allocation priorities in 2024, returning approximately $38 million to our shareholders via our quarterly dividend, which was increased from $0.10 per share to $0.12 per share. We expect to continue our quarterly dividend throughout 2025.

Speaker Change: We ended the year with a gross leverage ratio of 1.83 times on a last 12 months adjusted EBITDA basis.

Speaker Change: Finally, the additional delays of the U.S. steel Nippon transaction have unfortunately resulted in ongoing delays for an agreement on the GPI project. Despite this, we recognize the significant merits of the project and remain focused on its development.

Speaker Change: With that, I'll turn it over to Mark to review our fourth quarter and full-year earnings in detail.

Mark Marinko: Thanks, Katherine. Turning to slide 4, the fourth quarter net income attributable to Suncoak was $0.28 per share, up $0.12, versus the fourth quarter of 2024, primarily driven by lower depreciation expense.

Mark Marinko: Our full year 2024 net income attributable to Suncoak was $1.12 per share, up 44 cents versus the full year 2023.

Mark Marinko: The increase was primarily driven by lower depreciation expense, the one-time gain from the agreement with the DOL, and lower income tax expense.

Mark Marinko: Consolidated adjusted EBITDA for the 4th quarter 2024 was $66.1 million, up $3.8 million versus the 4th quarter of 2023.

Mark Marinko: The increase was mainly driven by lower planned outage related costs in the domestic coke segment and higher transloading volumes in the logistics segment.

Mark Marinko: The year-over-year increase is mainly driven by the one-time gain from the DOL agreement, higher transloading volumes at domestic logistics terminals, and higher API 2 price adjustment benefit at CMT.

Mark Marinko: partially offset by lower coal-to-coke yields on our long-term take-or-pay contracts in the domestic coke segment.

Mark Marinko: Turning to slide 5 to discuss the year-over-year adjusted EBITDA variance in detail.

Mark Marinko: Our domestic coke business operated at full capacity, but was impacted by lower cold coke yields on our long-term take-or-pay contracts. The domestic coke segment delivered full-year adjusted EBITDA of $234.7 million within our full-year revised domestic coke guidance range.

Mark Marinko: Including Brazil, our coke operations delivered adjusted EBITDA of $244.6 million.

Mark Marinko: Logistics segment adjusted EBITDA increased by 6.1 million dollars year over year, driven by higher volumes at domestic logistics terminals from new spot barge business and higher API 2 price adjustment benefit at CMT.

Mark Marinko: The logistics segment delivered full year, adjusted EBITDA of $50.4 million.

Mark Marinko: Finally, our corporate and other expenses, which include results from our legacy coal mining business, were lower by $10.2 million year-over-year, mainly due to the one-time gain on the elimination of the majority of our legacy black lung liabilities.

Turning to slide six to discuss capital deployment in 2024.

Mark Marinko: We generated operating cash flow of $168.8 million in 2024, including the impact of the $36 million payment to the DOL.

Mark Marinko: Capital expenditures came in at $72.9 million, which was slightly below our guidance range of $75 to $80 million.

Mark Marinko: We also returned capital to our shareholders in the form of a $0.44 per share annual dividend, which was a use of approximately $38 million of cash. In July, we increased our dividend by 20% from $0.10 to $0.12 per share.

Mark Marinko: We ended 2024 with a cash bounce of $189.6 million and full availability of our $350 million revolver, resulting in strong liquidity of approximately $540 million.

Mark Marinko: Now I'd like to turn to our guidance expectations for 2025.

Mark Marinko: Domestic co-cadjusted EBITDA is expected to be lower by 43 to 50 million dollars primarily driven by lower margins at both Granite City and Haverhill.

Mark Marinko: Our guidance contemplates the lower economics from the contract extension at Granite City and assumes that the customer will execute the additional six-month option to extend the contract through the end of the year.

Mark Marinko: Currently, we have not reached an agreement on the expiring contract at Haverhill, and have assumed that those tons will be sold in the spot market at lower margins.

Mark Marinko: We are essentially sold out for all of our Coke products for the full year, but have reflected the margin compression driven by soft spot Coke market conditions in our guidance.

Mark Marinko: Brazil Coke adjusted EBITDA is expected to be essentially flat year-over-year. As a reminder, the Brazil Coke facility is owned by ArcelorMittal Brazil and SunCoke provides the operating and technological services pursuant to an operating agreement.

Mark Marinko: Logistics suggests that EBITDA is expected to be flat to lower by $5 million in 2025.

Mark Marinko: The absence of the one-time gain on the elimination of the majority of our black lung liabilities will result in a year-over-year decrease in adjusted EBITDA of 9.5 million dollars.

Mark Marinko: Lastly, we expect our corporate and other expenses to be lowered by $3 million to $5 million.

Moving on to slide 9 to discuss the

Mark Marinko: We have approximately 3.3 million tons contracted under long-term take-or-pay agreements in 2025.

Mark Marinko: We expect to sell the approximately 875,000 remaining furnace-equivalent tons in the foundry and Spackoak markets.

Mark Marinko: Our outlook is impacted by the lower economics from the Granite City contract extension and lower margins on higher spot sales.

Mark Marinko: Our guidance currently contemplates that the non-contracted tons from Haberhill will be sold on a spot market as we do not yet have an agreement in place to renew the expiring contract.

Mark Marinko: While the current pricing environment for SpotCook is challenging, there is still demand for our products and we are essentially sold out for the year.

Mark Marinko: Our guidance also includes the assumption that the Granite City Cokemaking Agreement will be extended for an additional six months through the end of 2025.

Moving to slide 10 to discuss logistics in more detail.

Mark Marinko: 2025 logistics adjusted EBITDA is estimated to be between 45 and 50 million dollars. Our outlook for 2025 is similar to our 2024 operating performance.

Mark Marinko: We are pleased to announce that we recently extended the Take or Pay Coal Handling Agreement at CMT.

Mark Marinko: We expect approximately 4 million tons of coal to be exported through CMT and approximately 4.1 million tons of non-coal throughput, such as iron ore, pet coke, and other products.

Mark Marinko: We have not included any index-based price adjustment benefit from our co-handling agreement at CMT in our 2025 guidance.

Mark Marinko: We expect our domestic logistics terminals to handle approximately 14.8 million tons with the year-over-year volume increase being driven by the new take-or-pake whole handling agreement at KRT. Moving to slide 11.

Mark Marinko: This slide lays out Suncoke's historical adjusted EBITDA, free cash flow generation, and annual dividends paid on a per share basis. As evident from this slide, Suncoke has a strong tech record of generating steady free cash flow.

Mark Marinko: We developed Foundry Coke as a commercially viable product and entered the spot-blast Coke market while navigating through the challenges of COVID in 2020.

Mark Marinko: We continued to expand our foundry market presence and participate in a spot-blast coke market during 23 and 2024, while Logistics expanded both their customer base and services.

Mark Marinko: We also refinanced our debt and prioritized deleveraging during this period, which allowed us to significantly lower our interest expense, while resulting in higher free cash flow conversion.

Mark Marinko: With our leverage target in sight, we prioritize return of capital to shareholders by establishing a quarterly dividend and increasing that dividend each year for three years in a row.

Mark Marinko: As laid out in our previous slides, we expect a drop in our adjusted EBITDA for 2025 due to market conditions, but expect to have solid free cash flow generation in the range of $100 to $115 million.

Mark Marinko: We expect to have lower CapEx spend of around $65 million compared to our normal run rate of $75 to $80 million. Our deliberate and careful capital allocation decisions over the last several years have strengthened our balance sheet and financial position.

while continuing to reward our long-term shareholders with our dividend.

Moving to the 2025 Guidance Summary on slide 11.

Mark Marinko: Once again, we expect Consolidated Adjusted EBITDA to be between $210 and $225 million.

Mark Marinko: Our domestic Coke business is expected to deliver Adjusted EBITDA between $185 and $192 million, while the logistics segment is expected to deliver between $45 and $50 million in Adjusted EBITDA.

Mark Marinko: As indicated earlier, we anticipate our CapEx requirements in 2025 to be approximately $65 million, which is lower than our normal annual run rate.

Mark Marinko: We expect 2025 operating cash flow to be between $165 million and $180 million, and our free cash flow is expected to be between $100 million and $115 million. With that, I'll turn it back over to Katherine.

Katherine Gates: Thanks Mark. Wrapping up on slide 13, we see 2025 reflecting the broader challenges the steel industry is facing with lower pricing and demand. At the same time, we continue to reliably produce high-quality coke and are essentially sold out for the full year.

Katherine Gates: As always, safety is our first priority. We are coming off a year of record safety performance, and the team is energized and committed to maintaining strong safety and environmental performance in 2025. Robust safety and environmental standards set us apart and are central to our reliable delivery of high-quality coke and logistic services.

Katherine Gates: In 2025, our focus will be on maintaining the strength of our core businesses as we navigate challenging market conditions, as well as pursuing new opportunities across all areas of our business.

We continue to see Suncoast being well-positioned for long-term success.

Katherine Gates: Sunkoke has the newest coke making facilities in North America with the leading technology. We continue to invest in our assets to ensure that they are safe, efficient, reliable, and environmentally compliant, putting Sunkoke in the best position to grow and diversify our customer and product base.

Katherine Gates: As we've demonstrated in the past, we will pursue a balanced yet opportunistic approach to capital allocation.

Katherine Gates: From a growth perspective, we continue to work on developing the Granite City GPI project. While we are frustrated by the additional delays outside of our control, we continue to believe in the value of the project.

Katherine Gates: As always, we continuously evaluate the capital needs of the business, our capital structure, and the need to reward our shareholders, and will make capital allocation decisions accordingly.

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

Speaker Change: Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad.

Speaker Change: If your question has already been addressed and you'd like to remove yourself from the queue, please press star 1 and 2.

Speaker Change: Today's first question comes from Nick Giles at B. Reilly. Please go ahead.

Thank you, operator. Good morning, everyone.

Guys, my first question is on the...

Speaker Change: Really the longer term outlook for your fleet and maybe more specifically in the event of a non-renewal at Haverhill, how should we think about utilization at that asset in the outer years and your willingness to be incrementally exposed to spot?

Thanks for the question.

Speaker Change: We recognize, you know, that we find ourselves in a challenging market at this particular time. With CLIFS, the capacity utilization rate, as you know, for both EAFs and integrated producers is at about 74%.

Speaker Change: So, at the same time, we don't believe that the market as it stands today is going to continue in the long term.

Speaker Change: This is really a cyclical industry. And what we've seen is that we really have an ability to adapt to any sort of changing conditions. So.

Speaker Change: If you think about our trajectory, and as Mark talked about,

Speaker Change: You know, we've moved forward in developing Foundry Coke as a product. We now sell that into the market. We've sold Spot Blast Coke very successfully into the market, including record years in 2021 and 2022. And we'll continue to adapt and sell, whether it be Foundry or Spot Blast Coke, into the North American or seaboard markets.

Speaker Change: as well as continuing to work with our long-term customers like CLIFS and continue to pursue our long-term contracts with CLIFS and, you know, with other suppliers.

Thank you.

Katherine, I really appreciate all those comments.

Speaker Change: Maybe my next question, you know, you're still anticipating strong free cash flow this year, CapEx is moving down.

Speaker Change: How should we think about potential orders of magnitude from a debt pay-down perspective? And what could this mean further down the road for increased shareholder returns?

Speaker Change: Nick, I can take the debt pay down question and then turn it over to Katherine for the second half. I mean, you know, where we sit from a debt perspective, we only have that, you know, $500 million of senior bonds outstanding. So, and, you know, we refinanced that in 2021. It's sitting at an attractive rate. So right now, given, you know, what we see in the future, there's no plan of any debt buybacks or anything like that.

Speaker Change: Yeah, and I would say when you think about capital allocation as we've always said, you know, we look to reward our long-term shareholders and

Speaker Change: One of the ways in which we focus on rewarding long-term shareholders is through pursuing profitable growth opportunities.

Speaker Change: So, the GPI project is something that we continue to see the merits of, you know, as I mentioned earlier. I mean, if we think about that project, it's, you know, we have well-positioned, low-cost iron ore. We have blast furnaces that are in place at Granite City Works.

Speaker Change: Our coke plant is adjacent to those furnaces to provide the necessary fuel to make premium-grade GPI for Big River.

Speaker Change: So, that project is something that we continue to support, and as we said before in looking at capital allocation, we take that into account as we focus on capital allocation today.

Speaker Change: We also continue to pursue other profitable growth opportunities outside of GPI. In doing that, we are extremely disciplined in our approach.

Speaker Change: And, you know, we also, as you know, look at dividends or buybacks and we'll continue to make decisions that reward our long-term shareholders.

Speaker Change: Shantanu, Katherine, thanks again. Maybe if I could just sneak one more in. Metco prices have been under pressure for some time, and I was wondering if you could just remind us

Speaker Change: you know, bulk of your contracting occurs throughout a typical calendar year and do these prices impact the way that you approach procurement?

Speaker Change: And then, you know, when we are doing our foundry and spot coke sales, obviously, you know, we're looking at the market and

Speaker Change: take that into account while we are pricing our those calls. So essentially, you know...

Speaker Change: While we are buying those coals or finalizing the purchase of that, that's all factored in in our kind of business plan or the projections here now, you know, as we announced today that we are essentially sold out for the full year, so more or less of our coal buys are finalized.

Speaker Change: during the time period where there is some unsold, right, like say we don't have clarity in the second half of the year where our spot coke is going, then we'll have a little bit of open position, right? We try to tie our cold buys with our coke sales.

Speaker Change: So that's how it works. So, but for specifically this year, there should be no major impact on our profitability from the cold purchases. But, and you're right that the prices we are seeing, you know, down the pressure on that.

Thank you.

Speaker Change: Shantanu, that's very clear. Guys, again, thanks for all the comments and continued best of luck.

Thanks Nick

Speaker Change: Our next question today comes from Nathan Martin with the Benchmark Company. Please go ahead.

Nathan Martin: Thanks operator. Good morning everyone. Congrats on the strong finish to the year. I want to look at the domestic coke business specifically.

Nathan Martin: As we're looking at the initial 2025 guidance, I'm calling for a considerable step down in adjusted EBITDA, which appears to be.

Nathan Martin: essentially entirely driven by lower expected, you know, you can doubt their tongue. You guys called out the lower economics and margins at Granite City. That was known before on that contract extension, as well as, you know, lower margins at Haverhill on those higher spot sales. But...

Nathan Martin: Did you help us better understand the bridge from $58 a ton in 2024 to $47 a ton at the midpoint of 2025 guidance? It would seem like margins, maybe the other operations would also need to be down a little bit. Is that the case? Any color would be helpful.

Nathan Martin: I mean, it's mainly driven by those two factors, what we outlined, right? I mean, if you look at our sales projections from 2024 to 2025,

Nathan Martin: and our operations, they are more or less, you know, kind of, are going to be similar. Actually, you know...

Nathan Martin: As we outlined for 2024, we had some cold-to-cook yields degradation.

Nathan Martin: But the impact of the two items which, you know, you outlined and we outlined here, the Granite City contract economics as well as, you know, the

Nathan Martin: contract expiry at Haverhill, which is now, at this point of time, we are expecting to, you know, kind of go into the spot market. That is, that is the driver of this big drop-off in Ibita and domestic coke.

Nathan Martin: Shantanu, any thoughts then maybe on kind of the cadence of Yves D'Apretam for that business? Would you expect it to kind of weaken in the back half of the year given those items we just talked about?

Nathan Martin: Are you talking about like from a quarter to quarter perspective?

Exactly.

Nathan Martin: Yeah, I mean, you know, we are like, you know, we

Nathan Martin: The way we produce is 24-7, right? So we have to manage our sales as we produce. So we are, you know, we're trying to...

you know, manage.

Nathan Martin: from quarter to quarter that, you know, we are able to sell those products when we produce it because you cannot store it really well. But to coming back to, yes, we expect a slight, you know, decline in the second half of the year versus the first half of the year, given, you know, that contract expires in the first half of the year.

Okay, that's fair.

you know, maybe shifting gears over to

Speaker Change: over to the logistics side. I think, Mark, you mentioned API2 price adjustment has now been replaced by an FOB New Orleans price adjustment. I think that's what I heard over there at CMT. Can we get some additional thoughts there? Maybe what was the driver behind that change and is there any way we can track that index?

Yep, so the, yeah, the

Speaker Change: API 2 price index, the reason for the customer made the request to change the index was that index wasn't really reflective of the markets they were playing in. So I really wanted to change it more to a market that they, you know, more relates to, you know, the market that they're, you know, sending their product to. So that's really the reason for that change.

Speaker Change: And is there any way we can track that on our side?

Speaker Change: I mean... I mean that… Yeah. Yeah, exactly. Especially... Everything else. That is a valued thing to have a soft mortgage plus the fact that they are going to take off eventually. We are going to be very, very successful here. Yeah. And if you have any other concerns, in some sense, we are certainly not going to stop people like that. Probably there are not many people who are in small numbers in other countries. Right. I mean... Absolutely none. Not even because…

Speaker Change: Yeah, the index is published, you know, by Platz on a daily basis, right, like so right now what we can say is that as you as we said that there is no

price benefit built into our guidance.

Speaker Change: from that index. So you can assume that the index is not in the money right now, right? So, and beyond that, it's hard for us to kind of, you know, disclose that. But if that index comes into the money, right, if it goes higher, then we'll have some benefit from that. I mean, it'll work very similar to the API2 index, if you think about it, like, you know, the way it has worked. Now, the points that we get into money versus out of money are slightly different, obviously, with being a different index.

Speaker Change: Is it fair to assume that the economics, though, are fairly...

Speaker Change: fairly in line with the API 2 adjustment you guys had previously from your standpoint?

Speaker Change: Yes, I mean, you can you can see that from the guidance, right, like kind of in 2024.

We had a significant benefit from the API2 index.

right, and that was kind of...

Speaker Change: that drove part of the results of logistics. And in 25, what we're saying is we are seeing an increase in the domestic logistics volumes, but the offset is that we are not assuming any, this price benefit, right? So, yeah, the economics are very similar.

Okay, perfect. Appreciate that.

Speaker Change: And then maybe just kind of wrapping up on CapEx, your guidance, $65 million for the full year.

Speaker Change: As you guys mentioned, that's below your normal level. Plus, I'm assuming that includes probably some remaining CapEx for the KRT upgrades. Is it possible to get a breakdown of that spend, maybe a little bit more color, why it's coming in below normal levels, and then how should we think about the timing? Should it be heavier maybe in the first half, just given the wrap-up of that spend at KRT?

Speaker Change: With respect to the overall amount coming down, we had had some very large projects that had been occurring in the prior years. We have now finished those projects, so those projects being complete is really the driver overall for the drop in our regular M&R CapEx.

Speaker Change: In terms of the breakdown in the 65, 5 million of that is growth capex for the remainder of the KRT project.

Speaker Change: And so, you know, as we as we sort of look going forward, you know, we are we are really pretty steady for all four quarters. So you should see you know, you should see the CapEx spend really, really be steady for the the full for the excuse me for the full year.

Thank you. Thank you.

Nathan Martin: Got it. Thank you, Katherine. And that 60 million maintenance, is that a good way to think about things going forward?

Nathan Martin: I would say that you know our run rate cap X's has been higher in the past and and we may have you know additional larger spend going forward so I think you can still think of 70 to 80 as being our typical run rate cap X

Speaker Change: Okay, yeah, and that was the genesis of my question, that really, why is it lower than that 70 to 80?

Nathan Martin: Okay, I guess it's just some of those other projects wrapped. I mean, I mean, just maybe a final question.

Speaker Change: coming back to the Granite City GPI project, you know clearly the acquisition

Speaker Change: U.S. deal by Nippon was blocked, although I think there might be a couple more months left on that agreement, so some turmoil.

Speaker Change: possible with litigation, etc. But how has that impacted your conversations with US Steel?

Speaker Change: you know if the deal does end up not coming to fruition could that speed up a decision on the GPI project and then you know at what point do you guys think you could give us any kind of ideas on CAPEX would have to wait until that thing moves forward or any additional thoughts that'd be great thank you

Speaker Change: Well, you used the word wait, and I think wait is sort of the word of the day, and we continue to wait.

Speaker Change: with all the other parties as the lawsuit progresses. The deadline, as you mentioned, was extended to June. And, you know, frankly, you know, we've been negatively impacted. Many others have been negatively impacted by, you know, how long this has taken.

Speaker Change: With that said, the project is as strong today as it was when we announced it.

Speaker Change: So, looking at U.S. Steel, we started the discussions with U.S. Steel prior to any sale process for U.S. Steel.

Speaker Change: and the project has always been the fact that the economic fundamentals are so strong between the low-cost iron ore, the blast furnaces.

our adjacent COPE plan.

Speaker Change: and the fact that we could be making this high premium GPI for Big River. So, you know, the benefits continue, would be there for all the parties going forward, right? Whether we're talking about the miners, the Granite City Works employees, our employees, and then the vendors and businesses that support our plant and U.S. Steel's plant.

Speaker Change: So, you know, there's no change in our hypothesis about this going forward. Obviously, if the project doesn't, excuse me, if the sale doesn't go forward, again, the fundamentals of the project are there. And we've always said that we would look forward to working with Nippon or any other party, U.S. Steel or otherwise, on this project.

Speaker Change: One thing I think, Nathan, you also mentioned, like, I think you asked about CapEx, you know, when we announced this project two years back, you know, June 2022, again, there's two years dated, but what we did say was, you know, the CapEx on this project would be around two years of free cash flows plus some revolver borrowing, right?

Speaker Change: We kind of gave some kind of guidelines around what the CAPEX would be. So just wanted to highlight that, that like we did say that at that point of time.

Speaker Change: Yes, Shantanu, I appreciate that reminder. I recall that now. Katherine, thank you for your answer as well. And Mark, I will leave it there. Best of luck in 2025.

Thank you.

Speaker Change: And as a reminder, if you'd like to ask a question, please press star then 1. Our next question comes from Abe Landa with Bank of America. Please go ahead.

Speaker Change: Good morning, this is Abel and I thank you for taking my question and maybe moving on to kind of one of the your which is going through even our reconciliation.

and under that, transaction costs.

Speaker Change: But no, I saw that spend kind of increase from $1.8 million in the fourth quarter.

Speaker Change: versus $0.2 million in the prior nine months. And you also added this language of potential mergers and acquisitions, I guess.

Speaker Change: What is the M&A that's being considered? Are you being acquired? Are you looking to acquire something? And kind of what are these areas of growth?

Speaker Change: and so, you know, in doing that, and this is obviously in addition to the GPI project,

Speaker Change: So, you know, in doing that, you know, we will spend money in order to look at and potentially, you know, move forward with opportunities. Obviously, you know, what we look at and whatever potential growth opportunities are out there are not something that we can discuss unless something was to come to fruition.

Speaker Change: Is this areas that you're currently operating in or different areas?

Speaker Change: In terms of pursuing profitable growth opportunities, as I've said before,

Speaker Change: We remain very disciplined, so we obviously focus when we look at growth on areas where we think that we can add value. And again, you know, it would have to be something where we knew that it could be profitable and reward our long-term shareholders.

Speaker Change: Okay, and then maybe the next question is just on your revolver, which is due in 2026.

Speaker Change: eventually becomes current in about five months. Are you having any early discussions with banks about potentially extending or anything along those lines with the revolver?

Speaker Change: Yes, definitely. It comes current in June of 2025, so we have had some early discussions and we'll address it as it comes along, so no red flags or no issues as we see there.

Speaker Change: Those are the only two questions that I have. Thank you so much.

Thank you. Thank you.

Speaker Change: This concludes our question and answer session. I'd like to turn the conference back over to Katherine Gates for any closing remarks.

Speaker Change: I want to thank everyone for joining us today and again thank the Suncoast team for their hard work and record-setting safety performance in 2024. We are well positioned to meet our financial targets and create value for shareholders. Let's continue to work safely today and every day.

Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.