Good morning. My name is Rob, and I will be your conference operator today. I would like to welcome everyone to the SunCoke Energy Second Quarter 2022 Earnings Conference Call. Thank you.

Thanks, Rob. Good morning and thank you for joining us this morning to discuss SunCoke Energy's second quarter 2022 results. With me today are Mike Rippey, 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. 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 the various remarks we make on today's call regarding future expectations constitute forward-looking statements. The cautionary language regarding forward-looking statements in our SEC filings 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 all for joining us today. Today, we announced SunCoke Energy's second quarter results. And before I turn it over to Mark, who will review the results in detail, I want to discuss a few highlights. I want to start by thanking all of our SunCoke employees for their commitment and contributions to our shared goals of working safely and efficiently to deliver high-quality products and services to our customers. Our export and foundry coke initiatives continue to perform well, and we are seeing the positive impact in our financial results. In the Logistics segment, we continue to see increased volumes at our domestic terminals, while CMT benefited from the easing of coal supply and rail delivery issues. For the second quarter of 2022, we delivered consolidated adjusted EBITDA of $71.3 million. Combined with the first quarter's results, this has been a record first half for SunCoke. During the second quarter, we also announced the signing of a nonbinding letter of intent with U.S. Steel that sets out the principal terms and conditions upon which SunCoke will acquire U.S. Steel's Granite City blast furnaces and build a 2 million-ton per year granulated pig iron facility with a 10-year initial term. This proposed project would significantly enhance SunCoke's current footprint, allowing us to become a diversified supplier of coke and metallics for the steel industry. Today, we also announced that our Board of Directors approved a 33% increase in our quarterly dividend from $0.06 to $0.08 per share effective September 1, 2022, the next quarterly payment date. This meaningful increase demonstrates the Board's and senior leadership's confidence in our continued progress and the stability for underlying core businesses. Recognizing both record first-half performance and softening in export coke market conditions for the second half of the year, we are increasing our full-year adjusted EBITDA guidance to $270 million to $285 million from our original guidance of $240 million to $255 million. With that, I will turn it over to Mark to review our second quarter earnings in detail. Mark?

Thanks, Mike. Turning to Slide 4. The second quarter net income attributable to SunCoke was $0.21 per share, up $0.32 versus the prior year period, primarily driven by the absence of a $0.27 per share impact of debt extinguishment-related charges in connection with the refinancing in the second quarter of 2021. Adjusted EBITDA for the second quarter 2022 came in at $71.3 million, up $3.3 million versus second-quarter 2021. The increase was primarily driven by higher margins on export sales and the API2 coal price adjustment benefit at CMT, partially offset by lower coke sales volume due to product mix and timing of outages. Turning to Slide 5 to discuss our liquidity position for Q2. As you can see from the chart, we ended the second quarter with a cash balance of approximately $63 million. Cash flow from operating activities generated close to $44 million. We spent approximately $21 million on CapEx during the quarter, and our debt decreased by almost $31 million. We also paid over $5 million in dividends at the rate of $0.06 per share during the quarter. In total, we ended the quarter with a strong liquidity position of approximately $313 million. As Mike mentioned, we announced a 33% increase in our quarterly dividend, which is consistent with our capital allocation strategy of continued strengthening of the balance sheet, along with rewarding our long-term shareholders. Now turning to Slide 6 to discuss our Domestic Coke business performance and revised full year outlook. Second quarter adjusted EBITDA was $64.3 million, and we sold just over 1 million tons of coke. The $2.9 million increase in adjusted EBITDA as compared to the same prior year period was mainly driven by higher margin on export coke sales, partially offset by lower coke sales and production volume. The period-over-period coke production and sales were negatively impacted by the timing of planned outages at our coke plants as well as due to the change in mix between foundry and blast furnace coke production. As a reminder, foundry tons do not replace blast furnace tons on a ton per ton basis. For example, due to differences in the production process, a single ton of foundry coke replaces approximately 2 tons of blast furnace coke. Given our record first half performance but also recognizing the softening export coke market conditions, we are increasing the Domestic Coke adjusted EBITDA guidance to $247 million to $255 million from original guidance of $229 million to $235 million. Coke sales volume guidance remains unchanged at approximately 4.1 million tons. Turning to Slide 7 to discuss our Logistics business. The Logistics business generated $12.5 million of adjusted EBITDA during the second quarter of 2022 as compared to $11.4 million in the prior year period. The increase in adjusted EBITDA was primarily due to the API2 coal price adjustment benefit at CMT. While our domestic terminals handled higher volumes this quarter as compared to the same quarter last year, margin was negatively impacted by higher fuel costs. The segment handled 5.8 million tons of throughput volumes during the quarter as compared to 5.1 million tons during the prior year period. CMT handled a similar volume as compared to the same prior year period. The coal supply and rail delivery issues, which impacted CMT over the last couple of quarters, seem to be easing off, and that is visible via the uptick in volume as compared to Q4 2021 and Q1 2022. Our domestic terminals handled approximately 700,000 tons more than the same prior year period driven by increased demand for handling services from new customers. Given our strong first half 2022 results and an optimistic outlook for the balance of the year, we are increasing our Logistics full year adjusted EBITDA guidance range to $48 million to $52 million. Turning to Slide 8, which summarizes our revised 2022 guidance. We now expect consolidated adjusted EBITDA to be between $270 million and $285 million as compared to our original guidance of $240 million to $255 million. This incorporates updated profitability expectations from export sales in the coke segment and the continuation of the API2 coal price adjustment benefit at CMT in the Logistics segment through the second half of the year. Our capital expenditures guidance is unchanged at approximately $80 million. Our free cash flow guidance now stands at $120 million to $135 million as compared to original guidance of $110 million to $125 million. We now expect a higher than originally anticipated working capital draw due to an increase in coal inventory values and a change in coal payment terms. With that, I will turn it back over to Mike.

Thanks, Mark. Wrapping up on Slide 9. As always, safety and operational performance are top of mind for our organization. Our efforts will continue to focus on safely executing against our operating and capital plans. We are pleased to see continued growth in demand for services and new customers at our logistics terminals. And based on current projections, we expect a solid second half for our logistics facilities. As I mentioned in the beginning of this call, we're extremely pleased with the success in the foundry and export coke markets. While foundry is a stable market with limited commodity price risk similar to our contractual blast furnace coke sales, the export coke market is much more volatile. We realized the benefit of lower coal costs and export sales during the first half of the year but now expect a softening of export markets in the second half, which is factored into our revised guidance. Importantly, sales into these markets allow our coke plants to run optimally at full capacity. We continue to make progress on our capital allocation strategy during the quarter. From a growth perspective, we continue to work towards an agreement with U.S. Steel on the Granite City GPI manufacturing opportunity. Additionally, our Board of Directors declared a meaningful increase in our quarterly dividend. And finally, on the debt front, we expect our deleveraging initiative to continue as we look to further bring down our revolver balance. As we have done in the past, we continue to evaluate the capital needs of our business, our capital structure, and the commitment to reward shareholders on a continuous basis and will make capital allocation decisions accordingly. Finally, based on the reliability and performance of our operating segments, while factoring in export market conditions in the second half, we look to achieve our revised adjusted EBITDA guidance of $270 million to $285 million for 2022. With that, let's go ahead and open the call for Q&A.

Your first question comes from Lucas Pipes from B. Riley Securities.

Good job on the quarter and raising the guidance. Mike and team, I first wanted to ask about the Granite City deal. And specifically, how should we think about the commodity risks you might take, right? Historically, SunCoke has passed through costs, locked in a margin. Is that the sort of structure we would be looking at for Granite City as well?

Thank you, Lucas, for your question. I appreciate it, as always. While I understand there may be further inquiries about the investment we are looking at with Granite City, it's too early for us to provide any details beyond what we have already made public. We're genuinely excited about this opportunity. We see a strong supply chain in bringing U.S. Steel's iron ore pellets together with the coke we produce at Granite City, transforming it into a GPI, and then utilizing it in the EAS segment. Our goal is to effectively and profitably integrate ourselves into these supply chains, and we view this as a mutually beneficial situation for us and U.S. Steel. A success for our company translates to a success for our shareholders. As we've maintained for many years, we are very careful and disciplined in our strategies. If we proceed with this transaction, we believe it will offer a profitable growth opportunity for our shareholders in the long run. I understand you may feel some frustration, but this is all we can share at this moment, Lucas.

No, that's how things go. I understand. You mentioned there are still a few things to iron out, like if we closed the transaction. What are some of the major items that are still up for negotiation or that need to be settled before this transaction could close?

There's a principal agreement between ourselves and U.S. Steel. There are things that we still need to learn about the overall viability of the project. One can imagine that the capital cost will, of course, be one of those things. And it's in the presence of the public announcement that we've both made, so we can better determine what capital commitment will be required to complete the investments necessary to produce this product. We are now actively in the presence of our public statement looking to ascertain in fullness what's required to make this a truly beneficial undertaking.

Okay. That's helpful. My second question is about the sales mix of coke in 2023, specifically between domestic blast furnace coke, export foundry blast furnace coke, and foundry coke sold domestically. What is the general market split? Should we expect any significant changes to your sales strategy in 2023?

It's a great question, Lucas. We are beginning to explore opportunities for 2023. There hasn't been any significant change in our contractual business, including our traditional coke operations and our export and foundry activities. On the contractual side, there is no meaningful change. We are focusing on the potential growth of our foundry business, which has seen good success so far. We expect these opportunities to continue for our company. Our customers appreciate the quality of our product, the reliability of supply, and the value we provide. As we look into 2023, we can anticipate continued growth in the foundry market, though this may come at the expense of some export sales.

And your next question comes from the line of Nathan Martin from The Benchmark Company.

Lucas kind of hit on the Granite City opportunities, so I'll leave that alone for now. Maybe if I think about a couple of modeling questions. If I'm looking at the Domestic Coke business, your adjusted EBITDA per ton was $79 in the first quarter, $64 in the second quarter. Obviously, you did raise your full year guidance to $60 to $62 per ton, but that would seem to imply a pretty decent falloff in the second half. First, am I thinking about that correctly? If so, what's behind the expected decline? Or could that range maybe still be a little bit conservative? I appreciate any thoughts.

It's an excellent question, Nathan. Clearly, in the first quarter, we benefited, as we indicated in our first-quarter call, from the presence of lower coal costs going into what was a rising export market. So that was a nice tailwind in the first quarter. In the second quarter, we didn't experience that benefit of the reduced coal prices. And what we see now as we go into the back half of the year is some softening in export coal market opportunities. So the change in the second half is reflective of the deceleration and the availability of price in the export market. So that's a good question, and I hope that's a helpful answer.

Got it, Mike. I appreciate that. I was figuring it was probably mainly due to your earlier comments on the softening of export markets. Okay. Maybe next, shifting gears to CMT, specifically on the coal side of things. Looks like you're now expecting around 6 million tons for the full year, which, as I recall, is at the lower end of your initial guidance. You mentioned in your prepared remarks that the coal supply and logistics have both started to ease or improve. And obviously, we know export thermal coal prices remain extremely elevated. So I was just hoping to get maybe a little more color there on why shipments maybe aren't quite as high as I would have expected them to play out.

Well, you're right. We had some catching up to do in the second quarter because there were disruptions in supply in the first. So that was a nice catch-up quarter. And now we're seeing perhaps more normal run rate in the back half. The capacity is there in the facility. If the demand is there and the supply is there, we'll take full advantage of it. But you're 100% correct in acknowledging that global thermal demands remain quite high, and the pricing is favorable to us with regard to the additional price we pick up over certain levels of international pricing, API2.

Mike, could you share your thoughts on the API2 kicker? Is it structured in tiers? Do we gain more from these record prices? Any additional insights would be appreciated.

We don't provide insight into that contract beyond what we've already said, which is that above certain levels, there is that price kicker you mentioned.

Appreciate that. I had to ask. I'm sure you understand. So...

Your next question comes from the line of Karl Blunden from Goldman Sachs.

Congrats on the strong results and guidance raise. I appreciate a lot is still being explored for Granite City, and you mentioned that. I wonder if you could go into some of the timing considerations. Assuming you proceed, is there a sense of when you might need to fund the project and then the types of the sources of capital you might consider based on the volatility we've seen in the market recently?

That's a good question, Karl. We've said in the past, and I think it remains the case, after we've completed our discussion and reached agreement, we expect the construction period of about 2 years prior to startup. So that's kind of the timeline for you. Then with regard to capital needs, we would expect to fund this project out of our cash flows from operations and perhaps some borrowing under our revolvers.

That's helpful. And then as we assess the CapEx needs for the rest of the business in '23, '24, is there some kind of directional thoughts you can provide relative to how you've been running in 2022?

Yes. I think this year is a fairly representative year where we're talking about $80 million. Of course, we're working hard now to manage the negative effects of inflation not only in CapEx, but also on our operating expenses. So kind of a quantum of work you think in that same range of $80 million. And as we come out with guidance in '23, we'll factor in not only specific projects but also inflationary impacts we might experience beyond what we currently have.

And there are no further questions at this time. Mr. Mike Rippey, I turn the call back over to you for some closing remarks.

Well, once again, thank you all for joining us on the call this morning and your continued interest in SunCoke. We look forward to talking ahead in the future. Thanks again. Have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.