Good morning, and thank you for joining us to discuss SunCoke Energy's second quarter 2020 earnings. With me today are Mike Rippey, President and Chief Executive Officer; and Fay West, Senior Vice President and Chief Financial Officer. 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 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 Mike, let me remind you that 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 applies to the remarks we make today. 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 Mike.

Thanks, Shantanu. Good morning, and thank you for joining us on today's call. Let me start on Slide 3 with an update on our ongoing response to the COVID-19 pandemic. As we discussed in our last call, SunCoke has been designated an essential business and our facilities continue to operate safely. Our employees are working diligently to serve our customers with essential products and services. We continue to take all necessary measures to ensure the health and safety of our workforce, and have implemented policies and procedures that follow the guidelines established by the CDC, OSHA, and local health and governmental authorities. Our COVID-19 task force continually monitors and evaluates the evolving situation and responds and adjusts to the environmental changes. As we move into the second half of the year, we recognize that market conditions remain challenged. In response, we have taken significant steps to support our customers in the short-term, while simultaneously providing long-term stability for our stakeholders. Additionally, we are making investments to expand our product capabilities and diversify into new markets. On the customer side, we have addressed the lower demand environment. All of our customers have idled or banked blast furnaces during the first half of 2020. While there has been modest recovery in demand, steel capacity utilization remains low at approximately 59%, and it is difficult to predict when demand will fully return to normal levels. In response to these unprecedented and uncertain times, we have partnered with our customers to address their near-term coke needs. In 2020, we will reduce our production by approximately 550,000 tons and now expect to produce approximately 3,750,000 tons for the whole year. Substantially, all of this reduction will occur in the second half of the year. In exchange for these near-term reductions, we have extended several of our coke contracts, as detailed on this slide. Our business model is built on long-term customer relationships. And the actions we have taken not only address the near-term contracts that are approaching expiration but also further strengthen our long-term customer relationships and add meaningful certainty and stability to our business. As we temporarily ramp down production in 2020 and address market conditions and logistics services, we have taken several steps to reduce costs and optimize our operations. The impact of these actions coupled with lower volumes will result in a reduction of 2020 adjusted EBITDA of $40 million to $50 million from our previous guidance. We now expect 2020 adjusted EBITDA to be between $190 million and $200 million. We are also evaluating our cost structure to ensure that we remain a low-cost provider. We are taking meaningful actions, including a reduction in our workforce, which while difficult during these unprecedented times, will better position SunCoke for the future. We anticipate that these initiatives will result in permanent annual savings of approximately $10 million beginning in 2021. Now before I turn it over to Fay, I'm excited to talk about a new opportunity that SunCoke is pursuing. Turning to Slide 4. As mentioned on prior calls, we have been looking at alternative coke products, one of which is foundry coke. We have been evaluating the foundry coke market and developing our production capabilities over the past year. After significant testing and continued development, we have now determined that we can commercially produce and sell foundry coke. We have recently successfully completed foundry coke trials with several potential customers, and our efforts in this area are ongoing. Domestic demand for foundry coke is approximately 600,000 tons per year. And recent shutdowns of foundry coke producers have forced foundries to look to imports as an alternative to domestic supply. We, therefore, believe this is an opportune time to enter the market and establish SunCoke as a long-term reliable supplier of high-quality foundry product. Expansion into this market provides both industry and customer diversification. There are more than 30 foundry coke customers across the country and numerous related industrial coke customers. During the production of foundry coke, smaller-sized coke, known as egg, nut, and stove coke, is also produced and is utilized in other industrial applications such as sugar beet and rock wool production. The production of foundry and related industrial coke helps address the current blast furnace coke market imbalance. Differences in the production process have the effect of replacing approximately two tons of blast furnace coke for each ton of foundry coke produced. Our initial target is to produce approximately 100,000 tons of foundry coke in 2021. Importantly, our ovens are capable of producing this product with no direct investment or need for production downtime to transition into the foundry coke market. We're making capital investments of approximately $12 million on coal grinding, material handling, coke screening, and laboratory equipment, all of which is necessary to meet market demands. Given our cost-efficient production process, we anticipate the payback period for these projects will be relatively short. We will provide additional details on foundry coke when we provide 2021 guidance early next year. With that, I'll turn it over to Fay to review our second quarter earnings in detail.

Thanks, Mike, and good morning, everyone. Moving on to second quarter performance. As you can see on Slide 5, diluted EPS was $0.08 per share in the second quarter of 2020 compared to $0.03 per share in the second quarter of 2019. The prior year period included costs associated with the simplification transaction, which is the main driver of the increase year-over-year. Looking at adjusted EBITDA, this came in at $59 million in the second quarter of 2020 versus $63.1 million in the second quarter of 2019. Adjusted EBITDA from the coke operations increased $4.2 million compared to the prior year. Domestic sales volumes were approximately 54,000 tons lower than the prior year due to customer turn downs. The volume shortfall was more than offset by lower operating costs and better cost recovery. The adjusted EBITDA contribution from the Logistics segment decreased approximately $9 million versus the second quarter of 2019. Throughput volumes at CMT and the domestic terminals were approximately 2.7 million tons lower versus the prior year period. Slide 6 bridges second quarter 2019 adjusted EBITDA to second quarter 2020 adjusted EBITDA. Once again, coke operations were favorable by $4.2 million, driven by strong cost control and favorable cost recovery. Logistics operations were lower $8.8 million quarter-over-quarter, mainly due to Foresight and Mercury bankruptcies. Corporate and Other was better by $0.5 million. Moving on to the next slide, you can see in the chart that our cash balance at the end of the quarter was approximately $81 million, which is a more normalized cash balance. Our cash at the beginning of the quarter was artificially high because the company increased its borrowing under its revolving credit facility by approximately $157 million in order to preserve financial flexibility. We no longer believe that enhanced cash position is necessary, and we have reduced the revolver borrowings. In the quarter, cash flow from operations generated $21.8 million and we had capex of $14.1 million. Additionally, we paid a $0.06 per share dividend in the quarter, which was a use of cash of $5 million. Today, we announced the declaration of the second quarter dividend. We established the dividend at a rate that we believe is sustainable even during challenging market conditions. And while this is a decision made quarterly by our board of directors, we believe we have ample liquidity to maintain this dividend. At the end of the quarter, on an LTM basis, our gross leverage was 3.3 times and our net leverage was 2.96 times. Using the midpoint of our new adjusted EBITDA guidance range, our year-end net leverage would be 3.65 times, which is well within our leverage covenant. Over time as the market stabilizes, we intend to resume executing on our long-term capital allocation priorities with the primary focus on reducing gross leverage to 3 times or lower. Slide 8 details domestic coke operating performance and 2020 outlook. We sold 977,000 tons of coke in the quarter. Sales volumes for all facilities were impacted by the volume relief provided to our customers. Despite these volume concessions, Indiana Harbor volumes were higher than the prior year period, which was expected given the increased volumes from the rebuilt ovens. Q2 2020 adjusted EBITDA per ton was approximately $63 compared to $55 per ton in Q2 of 2019, with the per ton increase driven by favorable cost recovery and strong cost management. Looking at domestic coke on a full-year basis, we now expect domestic coke to generate between $198 million and $202 million of adjusted EBITDA in 2020 on 3,750,000 tons of production. This is approximately $45 million lower than our previous adjusted EBITDA guidance, and production is estimated to be 550,000 tons lower. The decrease in volumes is offset partly by lower operating costs. Our plans have been diligent to variablize costs where possible by managing supplies and services over time, contractor usage, optimizing capital work, and various other efforts. Moving to Slide 9, which summarizes the logistics business and 2020 outlook. The pandemic has impacted demand at our logistics facilities. The domestic terminal handled 2.5 million tons in Q2 2020 versus 3.6 million tons in Q2 of 2019 and 2.9 million tons in Q1 of 2020. CMT volume comparisons to the prior year were impacted by the bankruptcy of Foresight Energy, but were also impacted by the global effects of the pandemic. CMT had throughput volumes of 704,000 tons, which is lower than the first quarter and lower than our original guidance.

Fay, why don't I take it from here. And again, we'll look to be at the lower end of our original guidance in the Logistics segment at $17 million. The next slide, Slide 10, summarizes our 2020 revised guidance. We now expect adjusted EBITDA to be between $190 million and $200 million. This incorporates all of the volume changes we discussed, as well as foundry development expenses and cost reduction activities. Our capital expenditures are estimated to be approximately $80 million, which now includes $12 million of capital for foundry coke. This amount was not contemplated in our original guidance. We have reduced our free cash flow guidance based on revised adjusted EBITDA. We now anticipate that free cash flow will be between $36 million and $52 million in 2020. Wrapping up on Slide 11, as we continue to operate in these extraordinary times, our first priority continues to be the safety and well-being of our employees and contractors. We will continue to do everything possible to ensure that they are well protected and able to perform their jobs with confidence. We remain focused on our core business and how to best optimize our operations, including our logistics assets. As we discussed earlier, we have made significant progress in reducing our cost structure and adding stability by working collaboratively with our customers to address both current market challenges and longer-term supply needs. We also continue to maintain our asset base to ensure that we are able to operate efficiently in the long term even as operating levels may fluctuate in the near term. We are proud of the investments we have made, creating the highest quality assets in the industry, which we are committed to fully utilizing and maintaining. Looking forward, we are developing a new business line in foundry coke and are confident that we will be successful and able to capture significant share in the domestic foundry market. Finally, we are fully committed to the revised financial targets we have put forward and will make every effort to ensure that they are achieved. Before we end our prepared remarks, I would like to take this opportunity to thank all of our employees, contractors, and suppliers who are working diligently during these difficult times to keep our business operating safely. With that, we can open up the call to Q&A.

Thank you. Your first question comes from Nick Jarmoszuk with Stifel. Nick, you may proceed.

Good morning. Thanks for taking the questions. First one on the foundry coke business. Can you give us a little detail as to which facility will be producing the foundry coke?

We will be producing foundry coke out of our Jewell facility. We would be able to produce that coke out of other facilities, but Jewell is well-positioned logistically to be the most efficient producer. So we'll be producing out of Jewell.

Okay. And then in terms of thinking about the potential EBITDA per ton margin, given that it seems like it needs to be in the coke oven for double the amount of time, can we assume that the EBITDA margins are going to be materially higher than the existing operations as well?

As we indicated, approximately a two-for-one replacement ratio. And while we're not providing 2021 guidance today, we are saying that we expect to have a very quick payback on the $12 million investment in capital. So the margin, rather than think about it as per ton is better thought of as per unit of time. So the margins are attractive on a time basis given that it's a two-for-one replacement ratio.

Okay. And then on the Haverhill contract, you can correct me if I'm wrong, but the way that I read it is, you'll ship tonnage to Arcelor in 2021, but then there is nothing beyond that. Is that accurate?

We have 800,000 tons coming from both facilities in '21. And '22 through '25, we anticipate shipping 400,000 from Haverhill, but we have the flexibility should we want to shift that production over to Haverhill.

So it's flexible as to where it can come from?

That's correct.

Okay. And then in terms of the volume decline to Arcelor, does that indicate that they're doing something more material on their blast furnace side or how should we think about how they're sourcing their coke that they're going to need to maintain production levels?

Well, as it relates to their blast furnace side, that's certainly a better question for them. I think the agreements that we've reached are reflective of the current market circumstance as well as where we have clarity of a view in '21 and '22 and beyond. You shouldn't assume though that we're not in almost constant dialogue with our customers. So our discussions with ArcelorMittal and other customers are ongoing with regard to their longer-term requirements for coke.

Your next question comes from the line of Matthew Castellini with Bank of America Securities. Matthew, your line is open.

Thank you for taking my question. I apologize if this has already been addressed, as I was disconnected for a moment. It appears that you are trying to compensate for the lost tons from the extended contracts with this foundry coke opportunity. If this has a lower margin, how does it compare to your presumably higher-priced blast furnace contract tons?

I don't want to leave an impression that it's a lower margin at all.

Okay.

We've made no statement to that effect.

Thank you for your patience. Could you clarify what you believe is the necessary balance sheet leverage over the last couple of years, especially if we experience a decrease in EBITDA and cash flow due to changes in contracts?

Well, as we have said, our long-term goal continues to be three times, and we'll work toward that. I think capital allocation for 2020 is relatively spoken for in our guidance and it will remain a priority in the years ahead to reduce that debt. So as we talk about 2021, early next year, we'll provide further guidance as to what might be expected in the 2021 period. But we'll continue to look to reduce that to the three times number.

Okay, great. Thank you. And just lastly, any progress on any asset sales, terminals, etc.?

Now is really not the time to be looking at asset sales of any type. The pandemic has taken a temporary toll on not just the U.S. industrial sector, but the global economy. So our focus currently is to, as we've talked this morning, reduce our cost to the extent possible. Recognizing the lower volume levels, we've taken a lot of variable costs out of our, particularly our logistics side where even in the presence of these very, very low volumes, we've been able to maintain positive EBITDA as well as look at, on a more permanent basis, our cost structure and that's the $10 million of permanent savings, which begin in 2021. So our focus now is to generate the $190 million to $200 million of EBITDA in 2020 given the greatly reduced volumes on both the logistics and the coke side and be as efficient as we can. As we've said many times, CMT is a very, very efficient terminal, but with the very low volumes, it's hard to demonstrate the real value of that asset. Clearly, if an opportunity at an attractive and fair price were to be brought to us, we would entertain it.

Your next question comes from the line of Lucas Pipes with B. Riley FBR. Lucas, your line is open.

Good morning, Mike. First, congratulations on managing this call without any operator help; that was quite impressive. With the announcement of the ArcelorMittal contract this morning, there are quite a few questions surrounding it. It seems like a glass half-full, glass half-empty situation. How would you describe it, and what can we do to fill the glass completely? Thank you for sharing your insights on this.

Thanks for your good questions, Lucas. We tend to see the glass already as more than half full. We're pleased to have been able to support our customers this year. We're pleased with the outcome of having 800,000 tons of business from ArcelorMittal next year in addition to the 1.2 million tons that comes out of a Harbor works. But we continue to work with customers. As I said, the industry is currently operating at 59% of capacity. We don't know, I don't think anyone knows, when the industry will fully recover. But when it does, we'll be there with our efficient facilities to serve. So in the meantime, we again focus on our cost. The addition of foundry to our customer mix, as I said, we're targeting 100,000 next year that replaces 200,000 tons of blast furnace coke. So we've got 800,000, plus if you use the two-for-one replacement ratio, you've got 200,000 tons equivalent of foundry going out next year. We're not stopping at 100 in foundry; there should be no impression of that. It's a 600,000-ton market. And we are going to look to achieve significant market share in that space. We didn't enter this market with the idea of 100,000 tonnes of foundry sales; that's an initial estimate, our first year in the business. Trials with potential customers have gone very, very well. So we looked at good success in foundry. So we're going to pursue foundry hard. And we're, again, in dialog with our blast furnace customers as their markets continue to recover. So that's the focus.

Thank you, Mike. I appreciate your insights. I have two brief questions. First, regarding foundry coke, what has prompted this move now? Is there something that makes it more viable at this time compared to previous years? Secondly, the coke margin per ton during the second quarter was impressive. Can you share what contributed to that, and do you believe this margin is sustainable as we move into 2021 and beyond? Thank you for your thoughts on this.

Sure. We're not going to start to preview 2021 in this call. But the teams have been working very hard, and I'm very proud of the efforts that all of our coke-producing assets have turned in this year. We've looked to variablize our cost where we can given the lower volume levels, and we're taking our fixed or structural cost as well. So I'm very, very pleased with the cost discipline that everyone's been able to evidence this year. There is no reason to think that we can't maintain that kind of discipline. Certain costs will come back because they are variable, but we're not doing anything to take any risks with regard to the long-term reliability of our assets. So we're not in any way starving an asset. You can do that in the short term; you can cut back on R&M and save some costs. That's not what's going on here. So we're not sacrificing our future to generate these kinds of margins today. Your first question on the foundry side, why now, it really goes back over a year. We saw over a year ago that certain of the foundry producers, domestic producers were shutting down. We saw foundry customers looking to import. So we started to take a very serious review of our ability to profitably produce this product in a very reliable, very consistent way to meet customer demand. So it goes back a while. We also, of course, hear the same things you do about blast furnace participation market share in the future, and we thought it advisable to develop into another market. So we've put a lot of work into this. And clearly, no one could have foreseen the pandemic and the effects on demand in the domestic steel segments. So the timing was not motivated by the current challenges that the market faces. But clearly, it's fortuitous that it all came together with regard to us proving out the ability to produce in this time period. So it's really not a new idea here at SunCoke, but rather it's something we've been working on, like I say, for over a year. So it's not new. And the value of participating in the market, the ideas of diversification of market and customer aren't new to us either.

Very good to hear. Mike and team, really appreciate the efforts and continued. Best of luck. Thank you.

Thank you. Your final question comes from the line of Matthew Sandschafer with Mesirow Financial. Matthew, your line is open.

A couple of quick questions. What percentage of the foundry coke market right now is supplied by imports?

I think this year it's probably in a 150,000-ton range a quarter.

150,000 a quarter. So how do you expect to gain market share domestically if you want to grow beyond that 100,000? Are there any other mergers planned, or will you need to actively acquire customers in competitive situations?

Well, our focus is to be a long-term reliable supplier, no different than what we have with our integrated customers. If we make a quality product and we do so reliably and we're cost-efficient, market share will naturally come to us. Customers, whether it's steel customers, whether it's foundry coke customers, they look for diversity in their supply base for a variety of good reasons, and we'll stand ready to really be a preeminent supplier. We've made the investments. So we've got good balance sheet. We have the ability to commit ourselves through this market for the long-term, no different than the integrated blast furnace market. So we're going to earn our way by, again, producing a reliable high-quality coke product in a cost-efficient manner.

Okay. Regarding the ArcelorMittal extensions, what is the cost structure at Jewell and Haverhill with the new volume levels? Are these levels sufficient to generate enough profit to justify continued investment in these assets considering the high fixed costs and capital intensity of the business?

The short answer is yes. We have the newest coke oven fleet in North America, which gives us an advantage. We are a low-cost producer and will not compromise our leading position. Typically, our capital expenditures for maintenance and repair are in the range of $65 million to $70 million. We expect to continue investing in our assets to maintain their integrity, even though our volumes are lower this year, and we have work to do to fully utilize our facilities. We will approach this from a strong asset position rather than a weakening one.

So the expectation is that you're going to focus on filling out the Jewell and Haverhill demand portfolio instead of reducing capacity?

100% correct.

Okay. So I have a similar question about the foundry coke. Where do you think the demand will come from in the current environment? I know you have excellent assets, but I also understand that a major customer is opting not to commit to purchasing coke from you at that level three years down the line.

The foundry market, similar to our markets in the U.S., is currently experiencing a slight decline. However, we anticipate a recovery. The foundry market is quite diverse, with numerous sub-markets. We are currently working to develop relationships with over 30 customers, ranging from ductile iron pipe producers to manufacturers of manhole covers, crankshafts, and engine blocks for trucks. There is a wide variety of users, and we believe that industrial America will recover over time.

Are you planning to increase the volumes of blast furnace coke at Jewell and Haverhill beyond 400,000? Will you primarily focus on foundry applications to achieve this?

Well, it will be again both with our traditional blast furnace customers as well as our continued success in foundry. For example, you assumed 50% of the foundry market as 300,000 tons, which is 600,000 tons of our blast furnace coke.

This concludes our question-and-answer session. I will now turn the call back over to Mike Rippey for closing remarks.

Thank you. And thank you all for joining us on the call this morning and your continued interest in SunCoke. And we'll look forward if not able currently to visit in person, certainly to take your calls as the period unfolds. So thanks again and have a good day.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.