SunCoke Energy(US:SXC)2023-02-02 18:23Financial Data and Key Metrics Changes - The company achieved a record adjusted EBITDA of $297.7 million for the full year 2022, exceeding the high end of the revised guidance range of $285 million [6][10] - Full year net income attributable to the company was $1.19 per share, an increase of $0.67 compared to 2021, driven by strong operating results and lower interest expenses [9] - The gross leverage ratio improved from 2.28 times to 1.83 times year-over-year, with gross debt reduced by approximately $83 million in 2022 [12] Business Line Data and Key Metrics Changes - The Domestic Coke segment delivered adjusted EBITDA of $263.4 million, significantly above the revised guidance range [10] - The Logistics segment's adjusted EBITDA increased by approximately $6.2 million year-over-year, reaching $49.7 million due to higher throughput volumes and pricing [34] - Brazil coke adjusted EBITDA is expected to decrease by $5 million to $6 million due to the expiration of technology fees [38] Market Data and Key Metrics Changes - The company anticipates lower price realizations on export coke sales in 2023, which will impact the Domestic Coke adjusted EBITDA, expected to be lower by $22 million to $30 million [14][41] - The order book for foundry coke remains solid, with export sales for Q1 2023 already finalized [40] Company Strategy and Development Direction - The company is focusing on completing the foundry coke expansion project at the Jewell facility to enhance market participation and diversification [20][30] - The company is well-positioned for long-term success, with the youngest domestic cokemaking facilities in North America and leading technology [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the balance sheet and the ability to continue deleveraging while rewarding shareholders [24][62] - The company expects to generate free cash flow between $105 million and $120 million in 2023, allowing for continued capital allocation initiatives [57] Other Important Information - The company returned nearly $24 million to shareholders in 2022, increasing the quarterly dividend from $0.06 to $0.08 per share [8][36] - Capital expenditures for 2023 are expected to be approximately $95 million, including the foundry coke expansion project [57] Q&A Session Summary Question: What stands in the way of significantly higher capital returns to shareholders? - Management indicated that they are focused on growth opportunities, particularly the GPI facility at Granite City, while maintaining a strong balance sheet [46][48] Question: What is the long-term debt target? - The company aims to keep the gross leverage ratio under 3 times and has successfully reduced it to 1.83 times [49][80] Question: Can the Brazil Coke segment recover EBITDA? - Management acknowledged the decline in EBITDA due to the expiration of technology fees but mentioned ongoing discussions with U.S. Steel for potential projects [51][52] Question: What is the expected cadence of pricing for export sales over the next four quarters? - Management expects some improvement in the market as 2023 progresses, with the second half looking better than the first [70] Question: What is the breakdown of capital spending for 2023? - Management indicated that the $95 million capital expenditure includes growth projects, with ongoing maintenance CapEx estimated around $80 million to $85 million [63][64]