Hello, and welcome to today's SunCoke Energy Fourth Quarter 2023 Earnings Call. My name is Jordan, and I'll be coordinating your call today. I'm now going to hand over to Shantanu Agrawal, VP Finance and Treasurer, to begin. Shantanu, please go ahead.

Thanks, Jordan. Good morning, and thank you for joining us this morning to discuss SunCoke Energy's fourth quarter and full year 2023 results, as well as 2024 guidance. With me today are Mike Rippey, Chief Executive Officer; Katherine Gates, President; 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 Katherine, 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 Katherine.

Thanks, Shantanu. Good morning. Thank you all for joining us today. Earlier today, we announced SunCoke 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 2023. I want to start by thanking all of our SunCoke employees for their contributions in achieving our 2023 objectives. The dedication of our team is evident through our strong operational performance and our financial results. Slide 3 lays out our key objectives for 2023 and how we performed against those objectives. We delivered consolidated adjusted EBITDA of $268.8 million, modestly exceeding the high end of our guidance range of $265 million. Strong Domestic Coke operational performance drove our results, while our Logistics business faced headwinds due to challenging market conditions. We generated $138.9 million of free cash flow, exceeding the high end of our guidance range of $120 million. We continue to build on the success of our foundry coke business with the completion of the foundry screener project in 2023. This investment improves our handling efficiency and allows us to continue growing our foundry market participation. Our plants ran full in 2023, and we were able to successfully sell all non-contracted tons into the foundry and spot blast coke markets. We also extended our Indiana Harbor contract with Cleveland-Cliffs through September 2035, with key provisions similar to the prior agreement. The renewal affirms our mutually beneficial relationship with Cleveland-Cliffs and positions Indiana Harbor well for the future. We also made great progress on our capital allocation priorities in 2023. We deployed free cash flow to reduce our gross debt by approximately $44 million, ending the year with a gross leverage ratio of 1.86x on a last 12-month adjusted EBITDA basis. We returned approximately $31 million to our shareholders, having increased our quarterly dividends from $0.08 per share to $0.10 per share during 2023. We expect the continuation of our quarterly dividends throughout 2024. Lastly, we continue to work on the development of the GPI project at Granite City. With that, I'll turn it over to Mark to review our fourth quarter and full year earnings in detail. Mark?

Thanks, Katherine. Turning to Slide 4. The fourth quarter net income attributable to SunCoke was $0.16 per share, up $0.02 versus the fourth quarter of 2022. Our full year 2023 net income attributable to SunCoke was $0.68 per share, down $0.51 versus the full year 2022. Tax adjustments of $0.29 per share recorded in the third quarter of 2022 and the third quarter of 2023 impacted EPS primarily due to tax law changes in the U.S. and Brazil in both 2022 and 2023. Excluding the impact of these adjustments, EPS was lower by $0.22 per share year-over-year, primarily driven by lower contribution margins on non-contracted blast coke sales. Consolidated adjusted EBITDA for the fourth quarter 2023 was $62.3 million, up $3.4 million versus the fourth quarter of 2022. The increase was primarily driven by higher coal-to-coke yields and favorable O&M recovery on long-term take-or-pay contracts from our domestic coke plants, partially offset by lower volumes at CMT and higher non-cash legacy liability expense at corporate. On a full year basis, we delivered adjusted EBITDA of $268.8 million, down $28.9 million versus record results of $297.7 million in 2022. The year-over-year decrease was primarily driven by lower contribution margins on non-contracted blast coke sales, lower volumes in the Logistics segments, and higher non-cash legacy liability expenses, partially offset by higher coal-to-coke yields and lower employee-related costs. Turning to Slide 5 to discuss the year-over-year adjusted EBITDA variance in detail. Our Domestic Coke business operated at full capacity but was impacted by lower contribution margins from non-contracted blast coke sales. This was partially offset by higher coal-to-coke yields on long-term take-or-pay contracts. The Domestic Coke segment delivered full year adjusted EBITDA of $247.8 million, modestly above our full year Domestic Coke guidance range. Results from our Brazil Coke segment were impacted by the absence of technology fees, which expired at the end of 2022. Including Brazil, our coke operations delivered adjusted EBITDA of $256.9 million. The Logistics segment adjusted EBITDA decreased by $5.4 million year-over-year, driven by lower throughput volumes at CMT as a result of weak commodity market conditions. The Logistics segment delivered full year adjusted EBITDA of $44.3 million. Finally, our Corporate and Other expenses were higher by $2.5 million year-over-year, mainly due to higher non-cash legacy liability expenses, which were partially offset by lower employee-related expenses. Turning to Slide 6 to discuss capital deployment in 2023. We generated very strong operating cash flow of $249 million during 2023, partially driven by the timing of favorable working capital changes, which allowed us to make good progress on our capital deployment initiatives. Capital expenditures came in at $109.2 million, which was above our guidance, mainly due to the timing of certain projects. We expect to see an offset in 2024, which is why our CapEx guidance of $75 million to $80 million is lower than our normal run rate. We reduced gross debt outstanding by $43.8 million in 2023, with no outstanding balance on our revolver at year-end. During 2023, we also returned capital to our shareholders in the form of a $0.36 per share annual dividend, which was a use of approximately $31 million of cash. As mentioned by Katherine, we increased our dividend by 25%. That is from $0.08 to $0.10 per share during the third quarter of 2023. In total, we ended 2023 with a cash balance of $140.1 million and strong liquidity of approximately $490 million, setting the stage for continued progress against our capital allocation priorities in 2024. Now I'd like to turn to our guidance expectations for 2024. We expect consolidated adjusted EBITDA to be between $240 million and $255 million in 2024. Domestic Coke adjusted EBITDA is expected to be lower by $3 million to $10 million, driven primarily by our expectation of lower coal-to-coke yield value on contracted blast coke sales due to lower coal pricing. We expect to continue running our coke fleet at full capacity. Brazil Coke adjusted EBITDA will be flat to better by $1 million. 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. Logistics adjusted EBITDA is expected to be lower by $9 million to $14 million in 2024. We anticipate lower volume and pricing at CMT year-over-year, driven by weak commodity markets. Lastly, we expect our Corporate and Other segment expense to be higher by approximately $3 million to $5 million, driven by normalized non-cash legacy liability expenses.

Thanks, Mark. Wrapping up on Slide 12. As always, safety is our first priority, and we'll continue to focus on strong safety and environmental performance in 2024. Robust safety and environmental standards set SunCoke apart and are central to our reliable delivery of high-quality coke and logistics services. In 2024, we will continue to focus our efforts on adding new customers and products at CMT as well as further broadening our foundry and spot blast coke 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 will make capital allocation decisions accordingly. Looking beyond 2024, we see SunCoke being well positioned for long-term success. We believe that coke supply will continue to exit the market as many assets are underinvested and significantly aging. SunCoke has the newest coke-making facilities in North America with leading technology. We continue to invest in our facilities to ensure that they are safe, efficient, reliable, and environmentally compliant. The strong operational performance that comes from these investments provides us with the basis to grow and diversify our customer and product base. With that, let's go ahead and open up the call for Q&A.

Our first question comes from Lucas Pipes of B. Riley Securities. The line is yours.

Thank you very much, operator. Good morning, everyone. My first question is on the balance sheet. Can you remind us what are your net debt targets? And ultimately, what is the goal? Is it to get to net debt 0? Some of your peers in the industry have done that. Do you look to build a sufficient cash buffer to kind of pay off that debt as you generate the cash? Or create a balance to take out the maturity when it comes to or are you ultimately looking to refinance it? I would appreciate your color on that. Thank you.

Yes, Lucas, this is Shantanu. I can take that question. Our long-term target has always been a gross leverage of 3x or lower, and that still remains the target. Right now, we are in a position that we are well below that target, and we are very happy with that, but that's kind of our long-term target. And as we have discussed before, we have this GPI project that we are working on, which will potentially require funding from our cash flows and some borrowing on the revolver. That's kind of what we have in front of us to make sure that we are within the target there.

And so, yes. No, I guess it would be helpful to understand how much lower than 3x you might consider going. For this year 2024, how should we think about uses of excess cash, right? You're generating free cash flow. You have a dividend. What happens to the cash above and beyond that?

Yes. So Lucas, the way to think about it is that once we sign this GPI project and this project goes ahead and we start spending capital on that, we expect our leverage to go back to 3x or so. The cash flow that we're going to be generating in 2024 is an anticipation to save for this project and spend on this project.

Okay. Have you had discussions with the potential new owners of Granite City?

Yes. So Lucas, this is Katherine. We are working with U.S. Steel now on the GPI project, and we look forward to working with Nippon in the future.

And is it reasonable to expect that you could conclude a deal prior to the sale of U.S. Steel to Nippon Steel closing? What do you think the deal needs to close first before you can close the Granite City deal, if any, at all?

Yes. Lucas, what I would say is we're just continuing to work with U.S. Steel now, and that's really what our focus is on the GPI project, and we'd welcome working with Nippon. But we can continue to work with U.S. Steel on the project now.

Okay. I appreciate it. I'll turn it over. Thank you.

Our next question comes from Nathan Martin of The Benchmark Company. Please go ahead.

Thanks, operator. Good morning, everyone. Congratulations on full year '23 results. Maybe just a quick follow-on to Lucas' Granite City line of questioning. The other piece to consider Granite City's contract, I believe, expires at the end of this year. So does that maybe put a little bit more pressure or speed up the process at all as far as coming to a decision ahead of that contract expiry?

Thanks, Nathan. The coke contract is actually part of our discussions with U.S. Steel on the GPI project.

Does that speed up the process at all, or can those things be mutually exclusive? Could you extend that contract and still not reach an agreement on the GPI project?

Well, we're certainly continuing to work with U.S. Steel, and that the coke contract is part of that. I mean we would expect as part of the GPI project that the coke plant would continue to supply the coke needed for GPI and run throughout the time that the project is being developed and constructed.

Right. And I think you said, obviously, the goal would be to extend that contract maybe for another 10 years post completion of the project, assuming that that's...

Absolutely. Exactly. You would envision that the coke contract would be coterminous with any GPI agreement.

Okay, moving on to the Logistics business. You mentioned in your prepared remarks and in the slide deck about some pressures on the export coal front that are expected to result in a decline in coal shipments this year at CMT. First, I understand there is a take-or-pay agreement. Can you confirm how many tons that involves? Secondly, it appears that the guidance suggests a year-over-year decrease in other product shipments from CMT as well. Is that correct? Also, could you provide an update on the initiatives aimed at increasing shipments of those other products? I believe you touched on that briefly in your closing remarks, Katherine.

Thanks, Nathan. Yes, we have a take-or-pay agreement at CMT with our customer for coal, amounting to 4 million tons. We expect to exceed that minimum amount slightly. For other products, our guidance is somewhat lower than last year, but not significantly so. As Katherine mentioned in our prepared remarks, one of our initiatives this year is to seek opportunities at CMT and explore additional products there. That will be our focus this year.

Appreciate that, Shantanu. And then just to confirm, is this the last year for the take-or-pay on the coal side of the business?

The contract can be extended and Javelin is obviously a customer of ours, and we're in continuous dialogue with them.

Got it. Thank you, Katherine. And then maybe just one more. On the Domestic Coke side of the business. You mentioned 3.6 million tons contracted already for this year remaining going to the foundry and the spot market. I think it would be helpful to get some more color from you guys on the health of both the foundry and even the export coke market today. And just how you see that shaping out for the rest of 2024?

Yes, we are completely sold out for our spot coke sales in the first quarter. We have also finalized a significant portion of our foundry and blast sales. We anticipate operating at full capacity as we have historically, but it's important to note that seaborne markets do not contract a year in advance. While we expect to sell out, it will happen in due time. The foundry markets are robust, and we have largely finalized those sales for 2024, so we are optimistic about the future.

All right, great. Appreciate the comment. Thanks for your time. I'll leave it there. Best of luck in '24.

Thank you.

We now have a follow-up question from Lucas Pipes of B. Riley Securities. The line is yours.

Thank you again, operator. Thank you for taking my follow-on question. I'm sorry if I missed it, but what is the amount of coke business that is not fixed or committed at this point?

That's 650,000 tons, Lucas. It's the same as last year. We talked about the mix. That's a 650,000 blast coke equivalent, which is what we are selling into the foundry and spot blast coke market.

Got it. And that's equivalent. So that's some amount of foundry, some amount of blast, and I guess you take the foundry times to make it equivalent. And so the way to think about it is that those tons would be kind of open to price movements starting Q2 and through the rest of the year.

The spot piece is foundry sales. The way it works is, more or less, as Katherine said, we have finalized the sales of the foundry coke throughout the year, and the price for those are fixed at the start of the year. It's the spot side, which can fluctuate in pricing Q2 and beyond.

And is that also 650,000 tons? Or is that a different number?

No. I don't know the total of foundry and spot blast is 650,000.

And what is the amount subject to spot price variations?

We are not in a position to disclose the difference between the foundry and the spot blast coke due to the small size of both markets. However, you can consider that out of the 650,000, there is a portion for foundry and a portion for spot, so the amount is not significant.

Okay. So a couple of hundred thousand tons is probably the right way to think about it, that's subject to price and price...

I cannot comment on that.

Have you purchased or committed to a price for all the coal needed to convert into this coke? Are you locked in on the inside?

No, we haven't. Since we began the spot blast sales, we have aligned our coal purchases with those sales. As the spot blast sales typically do not sell out more than three to six months in advance, we aim to coordinate our coal purchases accordingly. We are utilizing a mix of spot and foundry, so we need to consider that. However, we have not fully secured our coal requirements for 2024 because there are still some outstanding sales of spot blast coke in the latter half of the year.

Got it. Got it. So essentially, if you would try to kind of match that up in real time on the supply side...

Exactly.

Thank you very much, Shantanu. Regarding the Granite City discussions, especially in light of the Nippon Steel and U.S. Steel deal announcement, there has been extensive coverage about the union and the commitments to workers in the industry. Considering the labor implications of Granite City and the pig iron conversion project, what are your thoughts on that? I would appreciate your insights.

Well, the message there is that the Granite City GPI project is something where we would look forward to working with the union. We're working with U.S. Steel now. We work well with the United Steelworkers. As you know, most of our plants are unionized with the steelworkers. We work well with them, and we look forward to working with them on the GPI project.

Has the union taken a position on this conversion?

They have not. I want to thank everyone for joining us today. And again, thank the SunCoke team for their hard work. We're looking forward in 2024, and we see great potential to meet our financial targets and to create value for our stakeholders. Thank you.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.