Good morning, everyone, and welcome to the SunCoke Energy First Quarter 2024 Earnings Call. My name is Angela, and I will be coordinating your call today. I will now hand you over to your host, Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead.

Thanks, Angela. Good morning and thank you for joining us this morning to discuss SunCoke Energy's first quarter 2024 results. With me today are Mike Rippey, Chief Executive Officer; Katherine Gates, President; and Mark Marinko, Senior Vice President and Chief Financial Officer. Following management's prepared remarks, we'll open the call for Q&A. This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. If we do not get to your questions on the call today, please feel free to reach out to our Investor Relations team. Before I turn things over to Katherine, let me remind you that the various remarks we make on today's call regarding future expectations constitute forward-looking statements. The cautionary language regarding forward-looking statements in our SEC filings apply to the remarks we make today. These documents are available on our website as 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 and thank you for joining us on today's call. Before we get started, I'd like to congratulate Mike Rippey on his previously announced retirement in two weeks. Mike's leadership and contributions have been crucial to the success of SunCoke during his tenure. I've had the privilege of working closely with Mike over the past several years and look forward to having him as an adviser for the company. The entire SunCoke team wishes him the best in his retirement. Moving to first quarter results, I wanted to share a few highlights before turning it over to Mark to discuss the results in detail. First, I'd like to thank all of our SunCoke employees for their contributions to our very good first quarter results. Our domestic coke plants continue to run at full capacity with strong operational performance. Our logistics terminals delivered excellent results, handling 5.5 million tons during the quarter. We saw higher volumes at our domestic terminals due in part to East Coast port congestion caused by the unfortunate incident in Baltimore, which favorably impacted results. Through our collective efforts, we delivered consolidated adjusted EBITDA of $67.9 million. From a balance sheet perspective, we ended the first quarter with a strong liquidity position of $470.1 million. Our gross leverage was approximately 1.86x on a trailing 12-month adjusted EBITDA basis at the end of the quarter. Looking ahead, we're pleased to have all of our spot blast and foundry coke sales finalized for the full year. With this strong start, we are well positioned to achieve our full year adjusted EBITDA guidance range of $240 million to $255 million. With that, I'll turn it over to Mark to review our first quarter earnings in detail. Mark?

Thanks, Katherine. Turning to Slide 4. Net income attributable to SunCoke was $0.23 per share in the first quarter of 2024, up $0.04 versus the prior year period. Adjusted EBITDA for the first quarter 2024 was $67.9 million compared to $67.1 million in the first quarter 2023. The increase in adjusted EBITDA was primarily driven by higher blast coke sales volumes and higher volumes at our domestic logistics terminals, partially offset by lower volumes at CMT. Moving to Slide 5 to discuss our domestic coke business performance in detail. First quarter domestic coke adjusted EBITDA was $61.4 million and coke sales volumes were 996,000 tons. The domestic coke fleet continues to run at full capacity and the increase in adjusted EBITDA as compared to the prior year period was primarily driven by higher blast coke sales volumes. Our full year domestic coke sales tons guidance remains approximately 4.1 million tons. As Katherine mentioned earlier, all spot blast and foundry coke sales are finalized for the full year. Given the strong performance this quarter from our domestic coke segment, we are well positioned to achieve full year domestic coke adjusted EBITDA within our guidance range of $238 million to $245 million. Now moving on to Slide 6 to discuss our logistics business. Our logistics business generated $13 million of adjusted EBITDA in the first quarter of 2024 compared to $13.5 million in the first quarter of 2023. The decrease in adjusted EBITDA was primarily due to lower throughput volumes at CMT, partially offset by higher volumes at our domestic terminals. CMT also recognized limited API2 price adjustment benefit during the quarter. Our terminals handled combined throughput volumes of approximately 5.5 million tons during the first quarter of 2024 as compared to 5.3 million tons during the same prior year period. Our domestic terminals handled 3.6 million tons in Q1 2024, making it the best quarter in terms of volume for the domestic terminals in the past five years. The increase in volume was driven in part by the unfortunate bridge incident in Baltimore, which caused East Coast port congestion. We are pleased with the excellent results from our logistics segment in the first quarter and are well positioned to achieve our logistics full year 2024 adjusted EBITDA and volume guidance, which remain unchanged. Now turning to Slide 7 to discuss our liquidity position for Q1. SunCoke ended the first quarter with a cash balance of $120.1 million. Cash flow from operating activities generated $10 million and was negatively impacted by the timing of working capital changes of approximately $50 million in the quarter. We expect this impact to reverse over the course of the year, and we are reaffirming full year operating cash flow guidance of $185 million to $200 million. We paid $9 million in dividends at the rate of $0.10 per share this quarter and spent $15.5 million on CapEx. In total, we ended the quarter with a strong liquidity position of $470.1 million. With that, I will turn it back over to Katherine.

Thanks, Mark. Wrapping up on Slide 8, as always, safety is our first priority, and we will continue to focus on strong safety and environmental performance. Robust safety and environmental standards set SunCoke apart and are central to our reliable delivery of high-quality coke and logistics services. We remain focused on safely executing against our operating and capital plan for full utilization of our cokemaking assets. We also continue to concentrate our efforts on adding new business at our logistics terminals. And while we were able to finalize all of our spot, blast and foundry coke sales for the full year, we are still focused on future opportunities to broaden our customer base. As we have 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 will make capital allocation decisions accordingly. Finally, we are very pleased with the strong results in the first quarter and we expect to achieve our full year consolidated adjusted EBITDA guidance of $240 million to $255 million. With that, let’s go ahead and open up the call for Q&A.

Thank you, Katherine. The first question is from Lucas Pipes with B. Riley Securities. Your line is open.

Hey, good morning everyone. How are you?

Good morning, Lucas.

So, my first question is on the longer-term outlook for the utilization rates. One of your customers recently commented on an earnings call about the Middletown contract and their desire to replace that blast furnace with DRI. I saw you just renewed a maintenance contract with Fluor. It seems like you have confidence in the long-term need of your existing coke fleet. Could you comment on your outlook, first through the end of this decade and then post-2032?

Sure. Thanks, Lucas. With respect to the Cliffs announcement for their Middletown works, that announcement really has no impact on us. Our contract with Cliffs runs through the end of 2032. In terms of the next decade, there is a long way to go until 2033. We are not going to speculate on the opportunities that are available to us in 2033 today. But what we have said before is that we have the newest coke-making assets, and we continue to make significant investments in them. We do that because we believe we're best positioned to serve the blast furnaces long term.

Got it. When you think about the upcoming near-term contract renewals, I think there is U.S. Steel at the end of this year, then Cleveland-Cliffs with two contracts next year and then Algoma after that. Do you expect more of those tons to shift into either the foundry or merchant or spot blast furnace coke market, or would you expect your current proportion of contracted to spot volumes to stay roughly the same through the next two to three years?

With respect to the Granite City coke contract, as we've said in the past, that coke contract is part of our GPI project and part of those negotiations. With respect to our other contracts with other customers, we are always in dialogue with our customers, but we are not going to comment on any contract discussions.

Okay. But if Middletown were to convert to DRI in 2029, and Middletown coke would maybe backfill some of the Haverhill tons, should we expect contract renewals to be shorter in nature than they've historically been?

Lucas, as I said before, we are not going to comment on our contract discussions with our customers, and we're not going to speculate. I really can’t help you more than that.

On the Granite City side, could you update us on the most recent status of your conversations with U.S. Steel? We are all following the news and it seems tricky; I would appreciate your color on where the project stands today.

With respect to the GPI project, we are continuing to work with U.S. Steel on the GPI project. We are doing the detailed engineering for what would be a first-of-its-kind project right now. We’ll continue to work with U.S. Steel on the GPI project, and we would look forward to working with Nippon in the future.

Any timing for when that detailed engineering might be completed?

That’s an ongoing project with U.S. Steel, and I’m not going to comment further on it.

Understood. And order of magnitude, what sort of capital might we be looking at? I assume there are costs for conversion. I’d be curious about the cash component and any reclamation liabilities that might be assumed, to understand what the capital commitments might be.

Hey Lucas. As we have said before, when we announced this project it was on an assumed basis, and that is how we are progressing. From a cash CapEx perspective, you can think about it as roughly two years of our free cash flows plus some revolver borrowing. That is the order of magnitude as we move forward with this project. We haven’t provided a specific number, but that gives you a sense of the scale.

That is very helpful. I appreciate all the color. I’ll turn it over for now. Thank you.

Thank you.

Thanks, Lucas.

The next question is from Nathan Martin with Benchmark. Your line is open.

Thanks, operator. Good morning, everyone. Congrats on the first quarter results, and Mike, congratulations on your retirement, best of luck.

Much appreciated. Thanks.

Maybe moving over to the Logistics segment for a second — multi-year highs in tons handled there — I think that’s mainly logistics ex-CMT. You mentioned in your prepared remarks that a lot of that was driven by increased shipments due to the outage at Baltimore. There was no update to your logistics volume guidance. Is the expectation that tons come down in subsequent quarters as Baltimore reopens? Or is there a possibility you exceed that original guidance if current levels remain elevated?

Thanks, Nathan. Q1 from a domestic terminals perspective was the best quarter in the last five years, so it was definitely an exceptional quarter. The logistics business can be quite volatile. As we sit here today, we are affirming our guidance. If the market picks up later in the year, we could pick up more volumes and you would see that in the results. But as of today, we confirm our guidance and stick with $30 million to $35 million of logistics EBITDA.

Appreciate that, Shantanu. The Baltimore port looks like the main deep draft terminals and is targeted to be reopened by the end of May. Would you expect to have some benefit in the second quarter?

Not much. We saw some pickup at the start when it happened and then some in Q2, but it is not driving the results materially as we sit here today.

Okay. That’s fair. And then specifically at CMT, you talked about weak commodity markets and weak coal exports. Did you hit your coal take-or-pay minimum during the first quarter from a volume perspective? Is that looked at on a quarterly or annual basis? I think it’s 4 million tons annually. Also, what are your thoughts on export coal demand over the next few quarters and how you expect your API2 price adjustment to trend versus this first quarter?

The take-or-pay is annual. We don't provide coal tons separately, but total CMT did 1.8 million tons in Q1, which is in line with our expectations. We do expect to hit the take-or-pay minimum for the full year. On API2, if you look at the futures, API2 looks improved from the lows, but it can move quickly — it can move $10, $20, $30 in a matter of days. Our profitability is influenced by that, so it is hard to predict. We feel good about our guidance. The long-run outlook for the CMT terminal remains attractive, which is why we value having this terminal. It has performed well in the past, and we continue to believe in it.

Thanks for that, Shantanu. Maybe shifting to the Domestic Coke segment — EBITDA per ton came in above your full year guidance range. Can you talk about the drivers behind that outperformance?

Q1 is typically a quarter with few outages as facilities come out of winter and prepare to run through Q2 and Q3. Except for the first couple of weeks of January, the weather was pretty good, which helped performance. On top of that, higher blast coke sales volumes were driven by timing — spot blast coke sales were unusually front-loaded in Q1 versus the previous year. That helped Q1 domestic coke performance. For the rest of the year, we expect planned outages in Q3 and Q4, which will impact performance during those periods. Contracted sales are pretty ratably laid out. For spot coke, the first quarter was heavily loaded, so the rest of the year will be lower based on that. We have 650,000 equivalent blast and foundry coke tons to sell, and that is spread across the year, with a heavy front load in Q1.

Got it. I appreciate those comments. I'll leave it there. Best of luck in the second quarter. Thank you.

We have a follow-up question from Lucas Pipes with B. Riley Securities. Your line is open.

Thank you for taking my follow-up question. Could you give us an update on the size of the North American blast furnace coke market? There has been the Granite City idling and other utilization changes. What is the market size today?

Lucas, apart from the Granite City idling, things haven't really changed that much in the North American market. There is a lot of announced EAF capacity coming online in the future in two to four years, but as we sit here today, compared to the last two to three years, apart from the Granite City blast furnace shutdown, coke demand across North America hasn't materially changed.

Okay. So what's the market size, roughly?

It's roughly around 8.5 million to 10 million tons of coke being produced in the North American market.

Does that include Algoma and Dofasco and Stelco in Canada?

Correct.

And would you say you have roughly 30% to 40% of the market today?

We have roughly 30% to 35% to 40% of the market based on our contracted volumes; we sell about 3.6 million tons of contracted capacity.

And you sell other blast furnace coke in North America on a spot basis as well?

Yes, we sell in North America and globally, and we also sell foundry coke, which is not included in that contracted number.

So the 30% to 35% was just your contracted volumes?

Correct.

Who is the next closest merchant coke supplier in the U.S. and how large are they?

The other merchant coke producer in the U.S. is DTE, and their capacity is in the 800,000 to 1 million ton range.

Do they have byproduct ovens?

They do have byproduct; they use the traditional coke production methodology.

So integrated capacity is still around 50%?

A little more than 50%, I would say.

How would you describe that fleet? Has it been generally well maintained, or do you have a view on that capacity?

Coke plants that have shut down recently have not required much capital spend. For specifics on other companies' operations, you would need to ask those companies. The recent announcement referenced Clairton, where two batteries were shut down.

What was the utilization rate prior to that shutdown?

For that specific information, you should ask U.S. Steel; we don't track their utilization rates closely enough to comment.

Do you believe you can compete effectively with integrated capacity and take share from there?

Yes. Over the last three years since coming out of COVID, we have maneuvered the market well. The market has constantly changed and we have been able to run at full capacity and profitably, and we continue to believe we will be able to do that.

In terms of your spot coke sales today, have there been increased opportunities due to customer outages in the spot blast furnace coke market in North America?

We don't discuss spot blast furnace coke separately; we report spot blast and foundry coke combined given the market size. We target 650,000 equivalent blast and foundry coke tons to sell, and we intend to sell that in 2024 as planned.

Okay. I appreciate the additional color. Thanks so much for taking my follow-up questions and best of luck.

Thank you.

We currently have no further questions. I will hand back over to Katherine to conclude.

Thank you all again for joining us this morning and for your continued interest in SunCoke. Let's continue to work safely and create value for all of our stakeholders.

This concludes today's call. Thank you for joining. You may now disconnect your lines.