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Edited Transcript of SXC earnings conference call or presentation 5-Nov-19 3:30pm GMT

Q3 2019 SunCoke Energy Inc Earnings Call

Knoxville Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of SunCoke Energy Inc earnings conference call or presentation Tuesday, November 5, 2019 at 3:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Fay West

SunCoke Energy, Inc. - Senior VP & CFO

* Michael G. Rippey

SunCoke Energy, Inc. - President, CEO & Director

* Shantanu Agrawal

SunCoke Energy, Inc. - Director of FP&A and IR

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Conference Call Participants

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* Lucas Nathaniel Pipes

B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst

* Mark Andrew Levin

Seaport Global Securities LLC, Research Division - MD & Senior Analyst

* Matthew Vittorioso

Jefferies LLC, Research Division - Analyst

* Matthew Wyatt Fields

BofA Merrill Lynch, Research Division - Director

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Presentation

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Operator [1]

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Thank you for standing by, and welcome to the SunCoke's Third Quarter 2019 Earnings Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Shantanu Agrawal, Director of Investor Relations. Please go ahead.

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Shantanu Agrawal, SunCoke Energy, Inc. - Director of FP&A and IR [2]

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Good morning, and thank you for joining us today to discuss SunCoke Energy's third quarter 2019 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 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 Mike.

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [3]

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Thanks, Shantanu. Good morning, and thank you all for joining us on today's call. We have quite a few things to cover so let's just get right into it. I'd like to start with our Logistics business and walk through some meaningful challenges we are experiencing.

In previous quarters, I have talked about the thermal coal export market and how it continues to face headwinds, with weak power demand, increased Russian exports and an oversupply of LNG. During the quarter, that trend continued and was exasperated by significant deterioration in the business of our 2 largest customers for CMT. As you know, CMT is underpinned by 2 long-term take-or-pay contracts, each contract for 5 million tons of throughput. Our customers, Murray Energy and Foresight Energy, account for the majority of CMT's adjusted EBITDA and have been challenged by both market conditions and their respective capital structures. The sharp decrease in coal export prices, coupled with declining domestic coal demand, have negatively impacted Murray and Foresight's free cash flows and liquidity positions. Last week, Murray filed for Chapter 11 bankruptcy protection and Foresight extended the grace period for payment on interest by another 60 days. These developments have decreased the number of coal export tons that CMT handled during the quarter and is expected to handle for the balance of 2019. We now anticipate that throughput volumes for the full year at CMT will be approximately 6.5 million tons, 5 million of which will come from our coal export customer, Foresight Energy. Murray has not shipped any meaningful volumes through CMT during the first 9 months of 2019 nor made any payments under its take-or-pay agreement, and we do not anticipate that we'll ship any volumes or make any payments in the fourth quarter.

Due to the financial impact of Murray Energy's Chapter 11 filing on our Logistics business, we're lowering our consolidated EBITDA guidance down to $240 million to $250 million from the previous guidance of $266 million to $276 million. While the strength of our core cokemaking operations will somewhat mitigate the impact from the weakness at CMT, we felt it was prudent to update our guidance given the uncertainty of our CMT customers.

Notwithstanding these significant challenges, we continue to believe in the potential of our CMT business and are highly focused on exploring opportunities for ways we can maximize our operations and diversify the products we move in order to secure new customers and incremental volume through the facility.

Now turning to our financial performance. During the quarter, we generated $66.7 million in adjusted EBITDA and $197.1 million in adjusted EBITDA year-to-date. These results reflect the strong performance of our domestic coke operations and the lower throughput volumes at Convent Marine Terminal. At the heart of our business, our coke operations are performing well, and we are on schedule to complete the final phase of Indiana Harbor rebuilds in the fourth quarter and expect the facility to be back at 1.2 million tons of nameplate capacity in 2020. We have been extremely pleased with the results of our rebuilt ovens to date. We have executed the rebuild process with a methodical and thoughtful approach, and the results at Indiana Harbor are a testament to the hard work of our team.

Looking at our year-to-date results. Domestic Coke EBITDA is up over $18 million versus the prior year period, and we're solidly on track to meet our full year guidance expectations at the top end of the range. As we near the completion of our rebuild process, we anticipate our results will continue to benefit from the more efficient rebuilt ovens as the major portion of the rebuild initiative is now behind us.

While the issues with our CMT customers have presented us with significant challenges to work through, we'll accelerate the initiatives we have undertaken to strengthen our business. In addition, the operational achievements we have made improving efficiency to our fleet earlier this year, we completed our simplification transaction, setting the foundation for a more flexible structure from which we can pursue strategic growth initiatives and return capital to shareholders. I will talk in more detail later to the progress we have made on our capital allocation priorities, but this quarter was a strong one on this front.

In addition to our organic growth initiative at the Indiana Harbor, we have made significant improvement to our balance sheet strength, returned meaningful capital to our shareholders through our dividend and opportunistic share repurchases made during the quarter and established a new $100 million share repurchase authorization.

With that, I will turn it over to Fay to review our third quarter earnings in detail. Fay?

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [4]

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Thanks, Mike, and good morning, everyone. Turning to Slide 4. Our third quarter net loss attributable to SXC was $1.81 per share, reflecting $1.94 per share impairment related to charges we took on our Logistics, goodwill and long-lived assets at CMT. Excluding these noncash charges, adjusted net income attributable to SXC was $0.13 per share, which was down $0.05 versus third quarter 2018, mainly due to the absence of tax benefit recorded in the prior period.

From an adjusted EBITDA perspective, we finished the third quarter at $66.7 million, up $0.7 million versus the third quarter 2018. The increase was due to higher volumes at Indiana Harbor and a decrease in the scope of outage work at Granite City, but these favorable increases were mostly offset by lower throughput volumes at CMT.

Moving to the detailed adjusted EBITDA bridge on Slide 5. As you could see, consolidated adjusted EBITDA was up approximately $0.7 million versus the prior year period. As Mike mentioned, our coke segment performed at a high level and delivered excellent results. The oven rebuilds at Indiana Harbor are yielding higher production and an increase in operating efficiency. The coke segment also benefited this quarter from lower outage-related costs. There was a major outage in the third quarter of last year to perform maintenance on the Herzig and FGD unit at Granite City. As a reminder, the financial impact of planned outages are included in our full year guidance. Planned outages generally result in incremental operating and maintenance cost, lower energy revenue and lower coke volumes. Timing and scope of outages vary year-to-year, which in turn affects the year-over-year comparability.

In terms of our Logistics business, CMT throughput volumes continued to be impacted by lower API2 and Newcastle pricing as well as demand for thermal coal and export markets and the liquidity challenges faced by our customers outlined by Mike. CMT handled only 1.3 million tons this quarter as compared to 3.2 million tons during the third quarter last year, which drove an $11.3 million decrease in adjusted EBITDA. After adding in favorable results in corporate and other, mainly due to mark-to-market adjustments and deferred compensation, we finished the quarter with $66.7 million of adjusted EBITDA.

Looking at Domestic Coke results in detail on Slide 6. Third quarter adjusted EBITDA per ton was $57 on 1,059,000 tons of production. These results reflect an increase in coke production of over 20,000 tons at Granite City and 17,000 tons at Indiana Harbor quarter-over-quarter.

As discussed, the increase in production at Indiana Harbor is mainly due to oven rebuilds. The increase in production at Granite City quarter-over-quarter is due to fewer outage days in 2019. Energy production and operating costs were also favorably impacted at Granite City due to the aforementioned shorter outage.

I want to briefly elaborate on the Indiana Harbor oven rebuild project. As evident from our results, the rebuilt ovens are performing well. The 2019 B battery rebuild campaign is nearing completion, and 40 out of the 57 ovens have returned to service. We are currently rebuilding the remaining 17 B battery ovens and anticipate the final set of ovens coming back online in late November. Based on performance to date, we are well positioned to execute our full year 2019 Indiana Harbor guidance of $22 million of adjusted EBITDA and are on track to achieve the 1.2 million tons production level in 2020. With solid performance through the first 3 quarters of the year, we expect to deliver results at the top end of our full year Domestic Coke adjusted EBITDA per ton guidance of $53 to $55 per ton.

Flipping to Slide 7 to discuss our Logistics business. The Logistics business generated $9.6 million of adjusted EBITDA during the third quarter as compared to $21 million in the prior year period. The decrease in EBITDA is primarily due to the lower throughput volumes at CMT, which we have discussed at length. Our domestic terminals were also impacted by softer demand this quarter, handling approximately 3.4 million tons during the quarter versus 3.7 million in the prior year period.

CMT contributed $7.4 million of adjusted EBITDA on approximately 1.3 million tons in the quarter. Volumes remain depressed based on current market conditions, and as we look forward, given the forward pricing curve of the coal export market and liquidity challenges faced by our customers, we now anticipate that throughput volumes for the full year will be approximately 6.5 million tons in 2019 with 5 million tons coming through Foresight Energy and the remaining 1.5 million tons coming from other products.

As Mike mentioned, Murray Energy has not shipped any meaningful volumes through CMT this year, and we do not anticipate any additional volumes in the fourth quarter. Based on the recent bankruptcy filing by Murray, we do not believe that the existing take-or-pay receivables are collectible, nor do we believe that we will collect take-or-pay amounts that would be earned in the fourth quarter. As a result, we are lowering our full year 2019 Logistics EBITDA guidance to be between $43 million and $45 million versus the previous guidance of $73 million to $75 million. We also recorded a noncash impairment charge related to this, as we've previously discussed.

Our revised guidance includes a $31 million to $33 million adjusted EBITDA contribution from CMT. Lowered guidance mainly reflects the portion of revenue contributed by Murray deemed as non-collectible.

Turning to Slide 8 and our liquidity position for Q3. As you could see on the chart, we ended the third quarter with a cash balance of approximately $94 million. Cash flow from operating activities generated close to $85 million due to strong operating performance, the timing of cash receipts and lower inventory balances. We spent $28.4 million on CapEx in the quarter, which included approximately $11 million on Indiana Harbor oven rebuild work. Full year CapEx is estimated to be between $110 million and $120 million, unchanged from our previous guidance.

During the quarter, we used $46.6 million of cash to extinguish $50 million face value SXCP notes, with an average bond repurchase price of $0.934 on the $1. By the end of the quarter, on an LTM basis, we achieved our leverage ratio target of 3x gross debt-to-EBITDA. We also used $13.2 million to repurchase approximately 2.1 million shares at an average price of $6.38 during the quarter.

Additionally, we refinanced our revolving credit facilities during the quarter, which lowered our interest rate, increased debt capacity and extended the maturity date. In total, we ended the quarter with a strong liquidity position of approximately $338 million.

Before I turn it back over to Mike, I want to highlight that we are also lowering our full year operating cash flow guidance to $150 million to $160 million, which reflects changes in EBITDA guidance due to the financial challenges of our coal export customers. Mike?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [5]

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Thank you, Fay. Slide 9 lays out our capital allocation framework and priorities. Despite the challenges within our Logistics segment, we have aggressively pursued a balanced yet opportunistic approach to capital allocation. Since the announcement of our simplification transaction, we have reiterated multiple times that management is committed to utilizing SunCoke's strong cash flow in the most advantageous and value-enhancing manner for our shareholders. Our capital allocation progress this quarter displays the financial flexibility we have built within the company.

Creating value for shareholders is the goal of our management team and Board. And our solid cash flows allowed us to return meaningful capital to shareholders through a share repurchase plan initiated in early August. Through November 1, we have repurchased approximately 3.8 million shares at an average price of $6.02. In addition to the share repurchases made during the quarter, our Board authorized a new $100 million for future share repurchases, which we expect to execute opportunistically as the market dictates, balanced against the capital needs of our business.

As indicated during the last earnings call, our Board of Directors declared a dividend of $0.06 per share that will be paid on December 2. Towards our goal of improving our leverage position, we have extinguished a total of $58 million of debt year-to-date, which includes repurchasing $50 million face value of SXCP 2025 senior notes at a discount. We have now reached our intended long-term gross leverage target of 3x this quarter. Going forward, our goal is to maintain or improve this leverage ratio while balancing our other capital allocation priorities.

And finally, we continue to pursue organic growth opportunities such as the Indiana Harbor oven rebuilds, which have a very high return on capital. We are keeping a keen eye on the M&A space. But as we have said on every prior occasion, we will remain disciplined. Our actions this quarter demonstrate our commitment to creating value for shareholders through a disciplined and opportunistic approach to capital allocation. We will continue to find ways to leverage the flexibility we have and opportunistically creating value for our shareholders while balancing the needs of the business.

Let's review our revised guidance on Slide 10. We are lowering the consolidated adjusted EBITDA guidance down to $240 million to $250 million from the previous guidance of $266 million to $276 million. There's no change to CapEx. Our coke production guidance, we are now expecting to deliver at the top end of the Domestic Coke adjusted EBITDA per ton guidance of $53 to $55 per ton. The coal export customer bankruptcy also impacts our operating cash flow guidance, lowering it down to $150 million to $160 million versus the previous guidance of $176 million to $191 million. Cash tax guidance remains unchanged.

Moving on to Slide 11 to wrap up. To summarize, we remain confident in the progress we have made, the strength of our core businesses and the strong and flexible foundation we have worked hard to build in our new simplified structure. Through our strong foundation, we have the ability to navigate the challenges facing our CMT business while improving operational efficiency in our coke business and exploring new avenues to leverage our core competencies across the organization.

Finally, our focus remains on generating meaningful long-term value for our shareholders. Our cash flow is strong and provides us significant flexibility to invest in our business, manage our debt position and return capital to shareholders with attractive dividend and opportunistic share repurchases.

With that, we can open up the call for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Matt Vittorioso with Jefferies.

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Matthew Vittorioso, Jefferies LLC, Research Division - Analyst [2]

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So just on the updated guidance. The -- roughly $25 million reduction to your full year EBITDA guidance seems to be a 100% Murray related. So is there any Foresight impact from -- baked into that guidance change? And also, are they -- has Foresight continued to pay its take-or-pay?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [3]

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They have, and you're correct. The updated guidance reflects substantially the Murray situation.

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Matthew Vittorioso, Jefferies LLC, Research Division - Analyst [4]

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Okay. And then -- so I guess, big picture question. As we try to think about 2020, you've got, obviously, the impact of Murray, potentially some additional impact if Foresight goes down a similar path. And then I think on the coke side, hopefully, you'll have some acceleration or some improvement at Indiana Harbor. Any way for us to think about the net of those 3 sort of large moving parts around EBITDA for 2020?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [5]

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Matt, it's premature really for us to be providing any kind of guidance for 2020. We will do that when we announce our fourth quarter results. The comments you make are appropriate. We've continued to experience excellent results from the rebuilt ovens at the harbor works. We expect to complete that rebuild project here in late November of this year and have the full capability of 1.2 million tons available to our customer next year. So that's a good positive for us and one that we've talked about at some length in the past. The new situation is the change in circumstance at CMT with regard to both Murray and potentially FELP. So as that situation, which is quite fluid, evolves, we'll reflect that in our guidance for 2020 at the appropriate time.

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Matthew Vittorioso, Jefferies LLC, Research Division - Analyst [6]

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Okay. And then on capital allocation, thanks for the detail on that. I guess just as I think about priorities, from a debt perspective, you've said that you'll maintain -- you've achieved and you'll look to maintain or even improve that 3x gross leverage. Based on the $240 million to $250 million of EBITDA guidance, assuming you were able to maintain that in 2020, that would imply that you'd still want to take out some additional debt to get down to sort of 3x growth. So would that be a priority over share buybacks? Would you look to achieve and maintain that gross leverage target before you were aggressive with buying back shares?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [7]

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Yes. Matt, it's a good question. It has been a priority of our company to get to this 3x and perhaps below, and it remains -- so having an appropriate level of debt for our company is a priority. It has been a priority and will remain a priority. Your point about if our EBITDA were to be $250 million next year, that's your number, not mine. We would expect to maintain our debt ratio at 3x. And as you suggest, that would require us to pay down additional debt.

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Matthew Vittorioso, Jefferies LLC, Research Division - Analyst [8]

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Yes. Okay. One last one for me just on the coke side. Obviously, there's questions out there around some of the more near-term contract maturities. I think you've got some coming up with Arcelor sooner than later. Any -- I mean, are those conversations that you're having currently? Any high-level insight as to when we might expect some news on those near-term maturities?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [9]

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The maturities you referred to are at the end of 2020. And as you might well expect, we've begun discussions with our customer, and beyond that, we can't comment.

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Operator [10]

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Your next question comes from Matthew Fields with Bank of America.

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Matthew Wyatt Fields, BofA Merrill Lynch, Research Division - Director [11]

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Was -- just for housekeeping purposes, can you give us the effect of currency on the Brazil Coke segment?

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [12]

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It's very nominal. And so I think it -- I think, on an annual basis, it's less than a couple of hundred thousand dollars.

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [13]

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It's completely immaterial.

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [14]

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Yes.

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Matthew Wyatt Fields, BofA Merrill Lynch, Research Division - Director [15]

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Okay. Great. And then on the debt reduction front, following on Matt's question, if kind of -- we're looking at a 2020 where Murray and Foresight are meaningfully less to your results based on potentially new contracts struck as a result of restructuring, do you think of 3.0x as still the bogey with meaningful -- meaningfully less coal exposure? And does that still require you to buy back or reduce debt, like you said you would, still going to that 3x target?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [16]

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So 3x is the target, has been and will be.

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Matthew Wyatt Fields, BofA Merrill Lynch, Research Division - Director [17]

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Okay. Great. And then, obviously, good -- you did a good amount of bond repurchase in the quarter, [$0.93], with bonds in the low-to-mid-80s at this point. Is that something you'd expect to accelerate or continue?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [18]

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We'll look to maintain the leverage ratio of 3x in the most cost-effective manner available to us.

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Matthew Wyatt Fields, BofA Merrill Lynch, Research Division - Director [19]

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Okay. Great. And then just trying to triangulate cash flow for 2020, although it's still early. Based on your '19 CapEx guidance and we kind of exclude Indiana Harbor and some gas sharing, is $65 million to $70 million the way you see kind of a base sort of maintenance CapEx level for SunCoke?

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [20]

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I think that's the right number over a period of time, so $65 million to $75 million ongoing maintenance CapEx. You may have, depending on specific projects, a year where you're higher and a year where you're lower. We will be giving kind of fulsome guidance on both EBITDA as well as CapEx in January, February time frame for 2020. But if you wanted to use that as a rough estimate over a number of years, that's a good number.

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Operator [21]

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Your next question comes from Mark Levin with Seaport.

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Mark Andrew Levin, Seaport Global Securities LLC, Research Division - MD & Senior Analyst [22]

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Great. My questions were asked and answered. Thanks very much.

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [23]

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Thanks, Mark.

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Operator [24]

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Your next question comes from Lucas Pipes with B. Riley.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [25]

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So the implied EBITDA guidance for Q4 in the Logistics business, I believe, is around $10 million. Would that be kind of a combination of FELP and then the river terminals? Or am I missing something there?

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [26]

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Yes. That's all in. And so our CMT guidance on a full year basis is what we're estimating between $31 million and $33 million on a full year. So guidance for CMT is -- in the fourth quarter is between $5 million and $7 million. And the balance then to get to that full year number, Lucas, is going to be from the river terminal.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [27]

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It's very helpful. And if in terms of FELP, you have receivables balance?

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [28]

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So FELP has been shipping tons through the facility all year. As we stand today, they're continuing to move the product here in the fourth quarter, and they are current on their receivables.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [29]

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Very helpful. And then just kind of longer term thinking about CMT. Murray made some comments about the economics of exports in their filing. How do you think about CMT kind of beyond the current volatility? Where is its place in the Gulf? Where do you see market rates? Any sort of color comments on the long-term outlook for this asset would be very much appreciated.

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [30]

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CMT is a very low-cost facility, very highly automated. It's unique in many ways with its ability to receive rail very far down the river as well as its barge capabilities. So the asset itself, we believe, is a low-cost provider down in the region. What you allude to, Lucas, I think, is the challenging conditions that our traditional customers find themselves with API2 prices being down in the mid-50s. And as we've said in the past, numbers above $70 really provide better opportunities for our producers. So it's a very challenging environment right now, and it's most in evidence with the bankruptcies that we've seen, most notably for us, Murray, this year. So notwithstanding the fact that we're a low-cost provider, it's a very challenging market for exporters of coal into the international marketplace right now.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [31]

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With the -- how easily could this capacity allocated to work to other commodities?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [32]

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Well, that's the challenge, obviously, that we face today. Over the past few years, we've been incrementally building our business down there. That's in the presence of 10 million tons of contracted take-or-pay business for the coal customers. Now with the filing of Murray, we have a substantial ability to go out into the marketplace and then fill that capacity. That's going to be our focus now that, that obligation isn't present to us. As we've said in the past, that these supply chains are quite sticky and they'll remain so. So we've got our work to do, and we will do our work, but it's not like flipping a light switch that we simply replace these volumes on short notice. It's going to take a significant effort on our part to replace these volumes. And as you can well imagine, we're already about that process, but it's going to take time.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [33]

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That's very helpful. And then just following up on some of the earlier comments regarding debt repurchases, leverage ratios, share buybacks, obviously, all connected. When -- could you maybe describe opportunistic in a little bit more detail? Do you have a certain -- do you have an expectation around how much capital you will be, for example, returning by year-end or a monthly kind of run rate in terms of the share buyback? Like how -- when we think about the share repurchase authorization, the size of it, how quickly do you anticipate to execute against that?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [34]

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So we can't comment on that point, Lucas. Clearly, the Board authorized a new program with the expectation that we would complete the existing program. So through November, we've given the exact numbers of repurchase that we've done. I believe the number, and somebody can help me if I screw it up, is $23 million of repurchases through November 1. We have approximately $14 million to go -- $16 million to go relative to the existing program. So we have a program that continues and we didn't authorize $100 million new program if we didn't think we would exhaust the existing program.

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Fay West, SunCoke Energy, Inc. - Senior VP & CFO [35]

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And I would just -- sorry. Go ahead, Lucas. I was just going to say -- and so we're not -- we can't be terribly prescriptive on how we're going to execute that, but it's we need to just remember that we've established the dividend. We put something in place that was sustainable and we believe -- and the Board will go through this kind of process as it normally does to establish a dividend but that is something that is sustainable for our company and even in light of kind of the situation that we find ourselves in with CMT. We also were really kind of clear on in our desire to maintain that 3x leverage target, right? And so -- and we'll have more information as we develop our 2020 plan, as we develop our 2020 free cash flow and our CapEx. But clearly, the maintenance of the dividend, the -- maintaining our leverage ratio at 3x and then executing against the share repurchases opportunistically, those are our priorities and there will be some fluidity to that.

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Operator [36]

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Your next question comes from Matthew Fields with Bank of America.

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Matthew Wyatt Fields, BofA Merrill Lynch, Research Division - Director [37]

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Sorry for the follow-up. Appreciate the color on the share repurchases through November 1. Have you repurchased any bonds through November 1 as well?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [38]

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What we've disclosed is what we've purchased.

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Matthew Wyatt Fields, BofA Merrill Lynch, Research Division - Director [39]

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Okay. So nothing subsequent to quarter-end?

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [40]

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Correct.

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Operator [41]

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And that's all the time that we have for questions. With that, I'll turn the call back to the presenters for any closing remarks.

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Michael G. Rippey, SunCoke Energy, Inc. - President, CEO & Director [42]

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So with that, I'd like to thank all of you for joining us on our call this morning. And as always, we appreciate your continued interest in SunCoke and talking to you soon. Thanks again.

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Operator [43]

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This concludes today's conference call. You may now disconnect.