SunCoke Energy, Inc. Aktie

Good day, and welcome to the Q1 2026 SunCoke Energy, Inc. Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Sharon Doyle, IR Manager. Please go ahead.

Thanks, Nick. Good morning, and thank you for joining us to discuss SunCoke Energy's first quarter 2026 results. With me today are Katherine Gates, President and Chief Executive Officer, and Shantanu Agrawal, Senior Vice President and Chief Financial Officer. This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. Following management's prepared remarks, we will open the call for Q&A. 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, Sharon. Good morning, and thank you for joining us on today's call. This morning, we announced SunCoke Energy's first quarter results. I want to share a few highlights before turning it over to Shantanu to discuss the results in detail. We're pleased with our performance in the first quarter, delivering consolidated adjusted EBITDA of $56.5 million, reflecting strong operational execution. Our Industrial Services business performed well during the quarter with sequential improvement in terminals handling volumes and with Phoenix performing to our expectations.

As discussed on our fourth quarter 2025 earnings call, our coke plants were impacted by severe winter weather and the Middletown turbine failure. Earlier today, we also announced a quarterly dividend of $0.12 per share payable to shareholders on June 2, 2026. This is our 27th consecutive quarter announcing a dividend. While the dividend is evaluated on a quarterly basis by our Board, we expect the dividend to continue as part of our well-balanced capital allocation strategy. We had strong operating cash flow generation of $72.7 million and ended the quarter with ample liquidity of $262 million.

As previously discussed, we are running at full capacity and sold out for the full year. With the continued seamless integration of Phoenix, the resumption of power production at Middletown and continued strong operational execution, we are confident we will achieve full year 2026 consolidated adjusted EBITDA within our guidance range of $230 million to $250 million. With that, I'll turn it over to Shantanu to review our first quarter earnings in detail. Shantanu?

Thanks, Katherine. Turning to Slide 4. Net loss attributable to SunCoke was $0.05 per share in the first quarter of 2026, down $0.25 versus the prior year period. The decrease was primarily driven by higher depreciation expense, the shutdown of our Haverhill 1 cokemaking facility, severe winter weather and the lower power sales due to Middletown turbine failure, partially offset by lower income tax expense. Consolidated adjusted EBITDA for the first quarter of 2026 was $56.5 million compared to $59.8 million in the prior year period. The decrease in adjusted EBITDA was primarily driven by the impact of severe winter weather on our coke operations, lower power sales from the Middletown turbine failure and the shutdown of Haverhill 1, mostly offset by the addition of Phoenix.

Moving to Slide 5 to discuss our domestic coke business performance in detail. First quarter domestic coke adjusted EBITDA was $35.3 million and coke sales volumes were 842,000 tons compared to $49.9 million and 898,000 tons in the prior year period. The decrease in adjusted EBITDA was primarily driven by severe winter weather impacting our operations, lower power sales due to the turbine failure at Midtown and lower coke sales volume due to the Haverhill 1 shutdown. While we experienced a slow start to the year, we are already seeing improvement in our coke operations in the second quarter with more favorable weather conditions. We are confident we'll make up the lost production from the first quarter during the balance of the year. Additionally, we are expecting power production to resume at Middletown late in the second quarter. We are reaffirming our full year domestic coke adjusted EBITDA guidance of $162 million to $168 million.

Now moving on to Slide 6 to discuss our Industrial Services results. Our Industrial Services segment generated $26.2 million of adjusted EBITDA in the first quarter of 2026 compared to $13.7 million in the prior year period. The increase in adjusted EBITDA was primarily driven by the addition of Phoenix results, partially offset by a change in mix of products handled at the terminals. First quarter total terminal handling volumes were 5.6 million tons, representing a substantial improvement versus the fourth quarter of 2025. Steel customer volumes serviced were 5.6 million tons in the first quarter. We expect our Industrial Services segment to continue delivering strong results throughout the balance of the year and are reaffirming our full year 2026 Industrial Services adjusted EBITDA guidance range of $90 million to $100.

Now turning to Slide 7 to discuss our liquidity position for Q1. SunCoke ended the first quarter with a cash balance of $104.4 million and revolver availability of $158 million, representing ample liquidity of $262 million. We generated strong operating cash flow of $72.7 million during the quarter, mainly driven by a reduction in coal and coke inventory and used $26 million for debt paydown. We spent $17 million on CapEx and paid $10.7 million in dividends at the rate of $0.12 per share this quarter. SunCoke has a strong track record of generating steady free cash flow, and we expect the trend to continue throughout the year. As Katherine mentioned earlier, we intend to continue utilizing our free cash flow to pay down debt as well as to reward our long-term shareholders via dividends, which is reviewed and approved on a quarterly basis by our Board of Directors. With that, I will turn it back over to Katherine.

Thanks, Shantanu. Wrapping up on Slide 8. As always, safety is our first priority. Our excellent safety performance in 2025 has continued into the beginning of 2026, and the team remains committed to maintaining strong safety and environmental performance throughout the year. Robust safety and environmental standards set SunCoke apart and are central to our reliable delivery of high-quality coke and industrial services. We continue to be confident in our operations for 2026 with our profitable long-term coke business underpinned by the 3 pillars of Indiana Harbor, Middletown and Jewel Foundry, which have consistently delivered excellent performance and results.

With our Haverhill I and Granite City cokemaking contracts extended and all spot blast and foundry coke sales finalized, we're sold out for the full year. We also maintain a positive outlook for our Industrial Services segment. 2026 will benefit from a full year of Phoenix adjusted EBITDA contribution and improvement in market conditions at our terminals. Our efforts will continue on the seamless integration of Phoenix, maintaining the strength of our core businesses as well as assessing new growth opportunities across all of our businesses.

As always, we take a balanced yet opportunistic approach to capital allocation. On the back of our steady and healthy cash flow generation, our focus will remain on utilizing our free cash flow to support our capital allocation priorities. We will use excess cash to continue paying down our revolver balance with the goal of gross leverage below 3x by the end of 2026 and beyond. We also plan to continue returning capital via the quarterly dividend as approved by our Board, which has always been well received by our long-term shareholders. We continuously evaluate the capital needs of the business, our capital structure and the need to reward our shareholders, and we'll make capital allocation decisions accordingly.

We are committed to maximizing value for all of our stakeholders, which means operating and investing in our assets in the best and most efficient way possible. Overall, we see the strong fundamentals of our business and expect our 2026 results to be reflective of that. We are confident that we'll be able to deliver full year consolidated adjusted EBITDA within our guidance range of $230 million to $250 million. With that, let's go ahead and open up the call for Q&A.

[Operator Instructions] The first question will come from Nathan Martin with the Benchmark Company.

Thanks, operator. Good morning, everyone. Just to start out, within the Domestic Coke segment, adjusted EBITDA per ton, I guess, roughly $42, obviously below the $48 to $50 per ton full year guidance that you guys just reiterated. What was the main driver or drivers there? How much of that was lower power sales maybe at Middletown? And then can you guys help us bridge kind of that full year range as we move throughout the rest of the year?

Yes. Nate, I mean, as we mentioned, the two main factors of us performing lower versus kind of our full year guidance is the winter weather impact to our operations and the Middletown turbine impact, right? And they were both very comparable, right? And if you recall, when we gave out our -- when we were in the Q4 2025 earnings call, we talked about that this quarter is roughly $10 million off versus kind of the run rate. So I think that still holds true from that perspective.

And then looking forward, as we mentioned, the Middletown turbine is expected to be back in late Q2. So you will see that impact through majority of Q2 with no power production there. But then we should be able to make that back up in Q3 and Q4. So you should see a much significant improvement in Q3 and Q4 as the power production comes back up.

Appreciate that, Shantanu. Is it fair to consider the Middletown impact in 2Q could be roughly half of that $10 million to maybe $5 million headwind or so in the second quarter?

That's kind of in the ballpark, yes.

Okay. Great. Appreciate that. And then maybe shifting to the Industrial segment. It looks like revenues were flat to actually slightly down quarter-over-quarter. However, adjusted EBITDA was actually up about, what, $3 million, $3.5 million. So are there any cost savings or efficiency gains there we should think about driving this? I know you guys previously called out potential opportunities to improve things within Phoenix or maybe it's related to the improvements on the terminal side. Just any additional color would be helpful there.

Yes. So on the terminal side, as we lined out, you're comparing Q4 '25 to Q1 '26, right? And we are seeing significant improvement in the volumes that we are handling at terminals. And we expect the kind of the market environment to continue and to continue to improve for the rest of the year. So we are much very hopeful and kind of that kind of our plan reflects that, that terminals will continue to improve and do well through the rest of the year. So there is improvement coming from that.

And then on the Phoenix side, obviously, right, like kind of this is our second full quarter of running Phoenix under the SunCoke umbrella. And as we go through the remainder of the 2026, we expect to see some more of those synergies come through. There are some of the drag costs, right, like we are implementing kind of the software kind of merging them together. So there is some drag cost of that. But as you get through rest of the 2026, you should see some cost improvement in Phoenix, and that is built into our guidance for Industrial segment.

Okay. Got it. And then those costs, just jumping to SG&A for a second. Was that kind of behind the increase there in the quarter? Was that the IT, I think bonus expense items that you previously mentioned as well? And how should we think about SG&A kind of going forward?

No. So in 2025, the accrual for the bonuses are different for '25 versus '26 given the performance of the company, and that is the main driver of the difference in SG&A.

Should we expect it to kind of repeat at that level, Shantanu? Or will it kind of come back down a little bit from the first quarter?

Q1 2026 should be the run rate for the rest of the year.

[Operator Instructions] The next question will come from Henry Hearle with B. Riley Securities.

To start off, I wanted to ask, to what extent could your logistics terminals be a beneficiary of the Section 303 DPA determination on the coal supply chains and export terminals? And then could you guys pursue potential DoD funding as well?

Yes. Thanks for your question. I think as we look ahead, we really -- we see the market, as Shantanu said, improving throughout the year, and we've already seen that quarter-over-quarter. I don't think that those are going to be drivers to additional throughput necessarily. I mean, I think we'll have to see. But when we give our guidance with respect to Industrial Services and with respect to the performance of the terminal specifically, we really are looking at market conditions. And as we look back in time, there's been various regulatory initiatives over time. But at the end of the day, it really seems driven by demand primarily internationally for coal.

Got it. And then are you guys able to share specifically what percent or what share of the volumes at CMT are thermal export tons?

So Henry, going forward, we -- like since it's one segment, the Industrial Services, we are not kind of breaking out. We are giving one number for our terminals and one number for like the Phoenix business, the steel customer volume service. But if you go back and look at historical data where we used to break out, the ratio should remain the same. That should kind of give you a good guidance on what those numbers are.

Got it. And given the conflict in the Middle East over the past couple of months, have you seen a kind of sizable increase in those export thermal tons? Would that be fair to say?

We -- it's a good question. We are seeing certainly some higher pricing in the market, and that is leading to higher demand, and that is part of how we look at the market as getting stronger as we move forward throughout the year, we don't see any signs of that weakening. And so we've seen higher demand due to the higher prices. So yes, there's definitely sort of a flow-through from that conflict and the focus on coal in light of the challenges that we're seeing on the oil and gas side.

This concludes our question-and-answer session. I would like to turn the conference back over to Katherine Gates for any closing remarks.

Thank you all again for joining us this morning and for your continued interest in SunCoke. Let's continue to work safely today and every day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Q4 2025 SunCoke Energy, Inc. Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead, sir.

Thanks, Nick. Good morning, and thank you for joining us this morning to discuss SunCoke Energy's Fourth Quarter and Full Year 2025 results as well as 2026 guidance.

With me today are Katherine Gates, President and Chief Executive Officer; and Mark Marinko, Senior Vice President and Chief Financial Officer.

This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. Following management's prepared remarks, we'll open the call for Q&A. 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 apply to the remarks we make today. These documents are available on our website as a 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 today. Before we get started, I'd like to congratulate Mark on his previously announced retirement. Mark has been instrumental in guiding SunCoke through critical phases of our evolution including the recent acquisition of Phoenix and the entire SunCoke team wishes him the best in his retirement.

I would also like to congratulate Shantanu Agarwal on his well-deserved appointment as Chief Financial Officer. Shantanu has acquired deep knowledge of SunCoke's business during his 11 years at the company. He is ideally situated to continue our focus on financial discipline, operational excellence, strategic growth and creating long-term value for shareholders.

I want to share a few highlights from 2025 before I turn it over to Mark to review the results in detail. First, I want to recognize another year with remarkable safety performance. SunCoke, excluding Phoenix, ended the year with a total recordable incident rate of 0.55. Safety is our first priority, and I'd like to thank all of our employees for their continued commitment to exceptional safety performance.

Turning to our financial results. We delivered consolidated adjusted EBITDA of $219.2 million. These results reflect the addition of Phoenix for 5 months as well as lower terminals handling volumes driven by market conditions. The Domestic Coke segment was impacted by the change in mix of contract and spot coke sales, coupled with lower economics on the Granite City contract extension and the breach of contract by Algoma.

We have extended our Granite City coke making contract with U.S. Steel through December 2026 at similar economics to the 2025 extension. We have also extended our Haverhill II contract with Cleveland-Cliffs through December 2028 with key provisions similar to the previous contracts.

In addition, we have the new take-or-pay coal handling agreement at KRT that began in the second quarter of 2025. We will benefit from a full year of that contract in 2026. We also made great progress on our capital allocation priorities in 2025 with the acquisition of Phoenix. The integration is progressing well, and we are excited for the growth potential in this business.

In 2025, we also returned approximately $41 million to our shareholders via our quarterly dividend. We expect to continue our quarterly dividend throughout 2026.

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 loss attributable to SunCoke was $1 per share, down $1.28 versus the fourth quarter of 2024, primarily driven by onetime items totaling $0.85 per share net of tax, including a noncash asset impairment charge, primarily due to the closure of Haverhill I, site closure costs were primarily related to Phoenix operating sites and restructuring and transaction costs, primarily related to the acquisition of Phoenix.

Fourth quarter net loss was also impacted by lower coke sales volumes in the Domestic Coke segment due to the breach of contract by Algoma. Our full year net loss attributable to SunCoke was $0.52 per share, down $1.64 versus the full year 2024. The decrease was primarily driven by onetime items totaling $0.97 per share net of tax, including a noncash asset impairment charge, primarily due to the closure of Haverhill I, acquisition-related transaction and restructuring costs and Phoenix operating site closure costs.

Full year net loss was also impacted by the change in mix of contract and spot coke sales. Coupled with lower economics on the Granite City contract extension in the domestic coke segment, partially offset by lower income tax expense driven by capital investment tax credits. Consolidated adjusted EBITDA for the fourth quarter 2025 was $56.7 million, down $9.4 million versus the prior year period. The decrease was mainly driven by lower coke sales volumes due to the breach of contract by Algoma, lower economics on the Granite City contract extension and lower terminals handling volumes due to market conditions, partially offset by the addition of Phoenix Global.

On a full year basis, we delivered adjusted EBITDA of $219.2 million, down $53.6 million versus the prior year. The year-over-year decrease was primarily driven by the change in mix of contract and spot coke sales, lower economics on the Granite City contract extension, lower coke sales volumes due to the breach of contract by Algoma and lower terminals handling volume due to market conditions, partially offset by the addition of Phoenix Global.

Turning to Slide 5 to discuss the year-over-year adjusted EBITDA variance in detail. Our Domestic Coke business delivered full year adjusted EBITDA of $170 million, down $64.7 million from the prior year period. Results were impacted by the change in mix of contract and spot coke sales, the lower Granite City contract extension economics and the Algoma breach of contract.

Our Industrial Services segment, which includes the former Logistics segment and new Phoenix Global business delivered full year adjusted EBITDA of $62.3 million, representing a year-over-year increase of $11.9 million. The increase is primarily driven by the addition of Phoenix Global, partially offset by lower terminals handling volumes due to market conditions.

Finally, our corporate and other expenses, which includes results from our legacy coal mining business and Brazil Coke making business were $13.1 million, an increase of $800,000 year-over-year.

Turning to Slide 6 to discuss capital deployment in 2025. We generated operating cash flow of $109.1 million in 2025. Net cash provided by operating activities was negatively impacted by 2 items: number one, the accounting treatment of a portion of Phoenix Global's acquisition price; Phoenix's management incentive plan and transaction costs, cash payments totaling $29.3 million were included in the acquisition price but flowed through our operating cash flow as a use of cash. Number two, the $30 million impact from the breach of contract by Algoma, representing the total outstanding accounts receivable and coke and coal inventory on the books at year-end. Without the impact of these 2 onetime items, our operating cash flow would have been approximately $59 million higher.

Net borrowing on our revolver was $193 million, cash acquired from the Phoenix Global acquisition was $24.3 million. And after factoring in the $29.3 million flowing through operating cash flow, the net purchase consideration for Phoenix was $295.8 million.

Capital expenditures came in at $66.8 million, which is slightly below our revised guidance of $70 million due to the timing of CapEx payments. We also returned capital to our shareholders in the form of $0.48 per share annual dividend, which was a use of approximately $41 million of cash. We ended 2025 with a cash balance of $88.7 million and $132 million of availability on our $325 million revolver, resulting in strong liquidity of approximately $221 million.

Now I'd like to turn to our expectations for 2026. Slide 8 lays out our SunCoke's historical adjusted EBITDA, free cash flow generation, annual dividends paid per share and gross leverage. SunCoke has a strong track record of generating steady free cash flow, and we expect the trend to continue with the addition of Phoenix Global. Our deliberate and careful capital allocation decisions over the last several years have strengthened our balance sheet and financial position while continuing to reward our long-term shareholders. We refinanced our debt and prioritized deleveraging in the midst of COVID-19 which allowed us to significantly lower our interest expense, resulting in higher free cash flow conversion. We expanded both our foundry market presence and participation in the spot market -- spot blast coke market during '23 and '24, while our terminals expanded both their customer base and their services.

With our leverage target and sight, we prioritize return of capital to shareholders by establishing a quarterly dividend and increasing net dividend each year for 3 years in a row. While our 2025 results reflect the challenging market conditions we operated in during the year, we still generated positive free cash flow for the year. We anticipate meaningful recovery in 2026 with an optimized coke fleet, extended coke-making contracts at Granite City and Haverhill II, improved market conditions for our terminals and a full year of Phoenix Global.

With deleveraging as our priority, we plan to use excess free cash flow to pay down the outstanding borrowing on our revolver and anticipate 2026 year-end gross leverage around 2.45x., comfortably below our long-term target of 3x. As Katherine mentioned earlier, we also intend to continue utilizing our free cash flow to reward our shareholders with our regular dividend, which is reviewed and approved on a quarterly basis by our Board of Directors.

Moving to 2026 guidance summary on Slide 9. We expect consolidated adjusted EBITDA to be between $230 million and $250 million in 2026. Domestic Coke adjusted EBITDA is expected to be lower by $2 million to $8 million, primarily driven by approximately 220,000 lower contract blast coke sales tons. With the closure of Haverhill I, our revised capacity is now 3.1 million blast furnace equivalent tons. We will be running at full utilization and are sold out for the year.

Industrial Services adjusted EBITDA is expected to be higher by $28 million to $38 million in 2026, primarily driven by a full year of Phoenix Global and our expectations for improvement in market conditions for our terminals. Corporate and other expenses are expected to be higher by $5 million to $9 million, primarily driven by normalized employee bonus expense and Phoenix integration-related IT costs. We expect 2026 corporate expenses to be comparable to 2023 and 2024 spending.

Moving on to Slide 10 to discuss Domestic Coke segment in detail. In 2026, we expect our Domestic Coke adjusted EBITDA to be between $162 million and $168 million, with sales of approximately 3.4 million tons, which includes contract, foundry and spot blast coke. We have optimized our coke fleet with the closure of Haverhill 1 operations due to the breach of contract by Algoma. The approximately 500,000 ton reduction in coke production and sales represent our lowest margin tons. As a result, we expect a modest increase in the domestic coke adjusted EBITDA per ton in 2026. Our revised total domestic coke blast furnace equivalent capacity is now approximately 3.7 million tons.

We have extended our Granite City coke making contract through December 31, 2026, at similar economics to the 2025 extension. We have also extended our Haverhill II contract through December 2028 with similar economics to previous contracts and will provide Cleveland-Cliffs with 500,000 tons of coke annually. Our coke fleet will be operating at full utilization in 2026. We have approximately 3 million tons contracted under long-term take-or-pay agreements and the remaining capacity is sold out for the year between the foundry and spot markets.

Finally, we are experiencing a slower-than-normal start to 2026. Our Middletown coke plant experienced a turbine failure during a planned outage, which is impacting power production. This is an insured event, and we expect the turbine to be back in operation midyear. Additionally, the severe winter weather we all experienced over the last few weeks has impacted several of our operations as well. The impact of these events is reflected in our 2026 guidance.

Moving to Slide 11 to discuss Industrial Services in more detail. 2026 Industrial Services adjusted EBITDA is estimated to be between $90 million and $100 million. Our outlook for 2026 reflects our expectations for improvement in market conditions. We will have a full year of Phoenix Global in our results for the year. As our terminals handling volumes are largely market-driven, our current guidance assumes improved market conditions in 2026. We have included partial synergies in our 2026 guidance and expect to continue recognizing synergies in 2027. We expect approximately 24 million tons of terminals handling volumes and approximately 22 million tons of steel customer volumes serviced.

Moving to Slide 12. Once again, we expect consolidated adjusted EBITDA to be between $230 million and $250 million. Our Domestic Coke segment is expected to deliver adjusted EBITDA between $162 million and $168 million, while the Industrial Services segment is expected to deliver between $90 million and $100 million in adjusted EBITDA. We anticipate CapEx in 2026 between $90 million and $100 million, driven by a full year of Phoenix CapEx requirements. We expect 2026 operating cash flow to be between $230 million and $250 million, and our free cash flow is expected to be between $140 million and $150 million.

With that, I'll turn it back over to Katherine.

Thanks, Mark. Wrapping up on Slide 13. As always, safety is our first priority. We're coming off of another year of excellent safety performance and the team remains committed to maintaining strong safety and environmental performance in 2026. Robust safety and environmental standards sets SunCoke apart and are central to our reliable delivery of high-quality coke and industrial services.

In 2026, our focus will be on utilizing our free cash flow to support our capital allocation priorities. We will use excess cash to pay down our revolver balance with a goal of gross leverage below 3x by the end of 2026 and beyond. We also plan to continue returning capital to shareholders via the quarterly dividend.

In addition, our efforts will continue on the seamless integration of Phoenix, maintaining the strength of our core businesses as well as assessing new growth opportunities across all areas of our business. As always, we continuously evaluate the capital needs of the business, our capital structure and the need to reward our shareholders, and we'll make capital allocation decisions accordingly. We continue to see SunCoke being well positioned for long-term success. We continue to invest in our Coke and industrial services assets to ensure that they are safe, efficient, reliable and environmentally compliant, putting SunCoke in the best position to grow and diversify our customer and product base.

Finally, we're pleased to share that we plan to host a virtual Investor Day on Thursday, February 26. We're looking forward to discussing the recent developments at SunCoke and having some one-on-one conversations.

With that, let's go ahead and open up the call for Q&A.

[Operator Instructions]

The first question will come from Nick Giles with B. Riley Securities.

This is Henry -- here on for Nick Giles. First off, Mark, congratulations on your retirement, and Shantanu on the CFO appointment.

Thank you.

So on your last call, you discussed -- of course. So on the last call, you discussed pursuing all legal means to enforce the Algoma contract and recover any financial losses. But now with Haverhill I closed and subsequent impairment charges, could you give us some more color on the current status of litigation and what are some of the likely outcomes?

Sure. And thanks for the question. We continue to pursue Algoma in it's in an arbitration. We're pursuing all legal means to recover our losses. So we absolutely believe we have an enforceable contract. This is a clear breach of contract by Algoma, and we expect to prevail in our litigation with them.

The breach by Algoma is actually ongoing. We had sales to them in 2025 as well as in 2026. So if you think about this in terms of the amounts that are owed by Algoma and what we're pursuing, in our third quarter call, we said that we had that the impact to the working capital for the breach by Algoma could be up to $70 million, and this is in 2025. So if you look at our guidance summary, there's a deferral of cash receipt from Algoma for $30 million in 2025.

So you can see that we are actually able to do much better and mitigate that potential loss through sales to third parties and also through the turndown of our facility. So that amount that you see, that $30 million, it actually represents part, but not the full amount of the Algoma losses for the breach of contract in '25. But again, as I said, that breach is ongoing, and we are pursuing not just our losses from 2025 but also our losses in 2026.

Beyond that, I can't really provide detail on the outcome of the litigation since it is active litigation, but I'll emphasize again that this is a clear breach of contract, and we expect to recover.

The other thing that I can say that might provide some color and be helpful is that if you're looking at bridging our 2025 to our 2026 guidance, is really as a matter of coincidence, the losses from Algoma in '25 are very similar to what we would have expected to have lost in 2026. So in other words, what we would have made last year with Algoma and this year with Algoma is not meaningfully different. And so hopefully, that's helpful if you're thinking about bridging the years. But really beyond that, I can't say more because we are in active litigation.

Okay. Yes, that's very helpful. And then moving over to Phoenix Global. Are you guys still anticipating an annual EBITDA contribution of roughly $60 million in synergies of $5 million to $10 million in this 2026 guidance?

Yes, we are.

Okay. And then could you also remind us of any of the onetime integration costs that you incurred with Phoenix Global in 4Q? And then should we expect any more in 1Q of this year?

So the related just to Phoenix, the onetime is you had some site closure costs of about $3.9 million. That's really related to some international sites that during due diligence, we identified that we would like to close down. There were some transaction costs of about $600,000 as well.

Really related to the Phoenix.

That's the Phoenix side, yes.

Next question will come from Nathan Martin with The Benchmark Company.

First, I would also like to congratulate Shantanu on his upcoming promotion and of course, wish Mark well in his retirement.

The Haverhill II closure. First question there, is that permanent? Or would you guys be able to reopen if market conditions improve? And then what savings, if any, do you see on the cost side from the closure?

Sure. So the Haverhill I could be restarted, but it would require a significant capital investment and it would take about 12 to 18 months to restart. So that facility was taken down completely cold. So we would certainly be willing to restart that facility, but we would need to see a meaningfully -- a meaningful return to do it.

And sitting here today with the market conditions being what they are in Algoma's breach, we don't really see any economic value in the asset. I think it's important to note that we do not have any sort of environmental or other remediation-related costs for Haverhill I. So no reclamation, no remediation. We have some nonmaterial costs to remain in sort of compliance. But they are minimal. And then in terms of the savings that we'll see from Haverhill I we have a reduction in our workforce and obviously some other costs related to ongoing O&M for that facility.

And Katherine, assuming all those costs are incorporated in guidance already?

They are.

Okay. Perfect. Second, I wanted to touch on maybe EBITDA cadence? Like how should we think about that as we go through the year. You guys called out the Middletown turbine failure. I think that's come back maybe midyear. Obviously, the recent Arctic weather impacting operations as well. So maybe a couple of things there. Like what's the cost on the turbine?

Again, how should that impact operations and it sounds like the first half. And then additionally, like when will most of the IT integration and bonus expense items hit that you guys talked about?

Sure. Why don't I start with the weather and the turbine outage. So Obviously, you've seen this across the space. We had an absolutely brutal start to the year. So between the extreme storms, the extreme freeze, as Mark mentioned, really, all of our facilities were impacted Phoenix sites, terminals and our coke plants. And the impact was really the most acute at Indiana Harbor, which sits on a Peninsula in Lake Michigan.

And so there was significant lost production there. And you're going to see that come through in the first quarter results. But we do have the balance of the year to make that up at our other facilities. With respect to the Middletown turbine outage, so not only did that impact our fourth quarter because we had 6 weeks of lost power that was not built into our revised guidance. But we also had the entire really first half, as you mentioned, where we will have that turbine down. We will be addressing the unexpected failure. And it is an insured event, but we won't see any earnings associated with the power production at Middletown until the turbine is back up, and we have recovered the amounts that were owed for that lost power from the insurer.

So while not being able to give sort of plant-specific EBITDA, you know that we don't do. What I can tell you is that the impact from those events, the Middletown turbine and the weather that impacted the first quarter, that's going to aggregate to approximately a $10 million impact in the first quarter. And then, again, we don't expect to see the turbine up and the recoveries from the power in the second quarter. So that may help you a little bit as you're trying to build out the cadence of the year?

Yes. No, that's definitely helpful, Katherine. Appreciate that. And then maybe just related, while you're talking about the power production, is there anything we need to think about for power at Haverhill I with that being down, any losses there?

No. That facility did not produce power. So no impact.

Okay. Appreciate that. Maybe one last question. Could you kind of walk us through what's driving the expected improvement in tons handled in the industrial segment? Is this mainly the KRT expansion and the take-or-pay there, you mentioned earlier. How should we think about CMT, I believe you guys still also have some small take-or-pay there for 2016 as well?

Sure. So yes. We have built into our guidance a full year of the new contract that we began in the middle of 2025 at KRT. We're also expecting some modest recovery overall across both KRT and CMT. And you're seeing that come through in the guidance as well.

This concludes our question-and-answer session. I would like to turn the conference back over to Katherine Gates, President and CEO, for any closing remarks.

Thanks. I want to thank everyone for joining us today. And again, thank the SunCoke team for their hard work and excellent safety performance in 2025. We're looking forward to speaking with everyone on the 26th. Let's continue to work safely today and every day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Q3 2025 SunCoke Energy, Inc. Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead, sir.

Thanks, Nick. Good morning, and thank you for joining us to discuss SunCoke Energy's third quarter 2025 results. With me today are Katherine Gates, President and Chief Executive Officer; and Mark Marinko, Senior Vice President and Chief Financial Officer.

This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. Following management's prepared remarks, we'll open the call for Q&A. 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. This morning, we announced SunCoke Energy's third quarter results I want to share a few highlights before turning it over to Mark to discuss the results in detail.

We delivered Q3 2025 consolidated adjusted EBITDA of $59.1 million representing a sequential improvement over the second quarter, although not to the extent we expected at the end of Q2. We completed the acquisition of Phoenix Global on August 1, and are pleased with the progress we've made on integration activities thus far. We expect to begin recognizing synergies in 2026. Phoenix's financial results will be reported in our new Industrial Services segment, which also includes our former Logistics segment.

During the quarter, we also extended our coke-making agreement with U.S. Steel at Granite City through the end of 2025. With the Phoenix acquisition complete and an updated view of market conditions driving the balance of 2025, we are revising our consolidated adjusted EBITDA guidance range to between $220 million and $225 million. Our updated guidance is inclusive of the addition of 5 months of Phoenix results, partially offset by the impact of a deferral of the sale of approximately 200,000 coke tons due to a breach of contract by one of our customers.

Our revised guidance contemplates the production and storage and inventory of the 200,000 tons of coke until there is a resolution of the issue. Any changes to these assumptions could impact our guidance range. We are actively pursuing all legal means to enforce the contract.

Earlier today, we also announced a quarterly dividend of $0.12 per share payable to shareholders on December 1, 2025. This is our 25th consecutive quarter announcing a dividend. While the dividend is evaluated on a quarterly basis by our Board, we expect to continue the dividend to reward our long-term shareholders.

With that, I'll turn it over to Mark to review our third quarter earnings in detail. Mark?

Thanks, Katherine. Turning to Slide 4. Net income attributable to SunCoke was $0.26 per share in the third quarter of 2025, down $0.10 versus the prior year period. The decrease was primarily driven by the mix of contract and spot coke sales coupled with lower economics from the Granite City contract extension in the Domestic Coke segment. Additionally, an $0.11 per share impact is due to the absence of the gain on elimination of the majority of legacy black lung liabilities recorded in Q3 2024.

Transaction and restructuring costs had an impact of $0.09 per share in the quarter. These dilutive impacts were partially offset by a $0.32 per share improvement driven by lower income tax expense driven by capital investment tax credits.

Consolidated adjusted EBITDA for the third quarter of 2025 was $59.1 million compared to $75.3 million in the prior year period. The decrease in adjusted EBITDA was primarily driven by the mix of contract and spot coke sales and unfavorable economics on the Granite City contract extension in the Domestic Coke segment. lower transloading volumes at the logistics terminals and the absence of the $9.5 million gain on the elimination of the majority of legacy black lung liabilities recorded in the third quarter of 2024 partially offset by the addition of 2 months of Phoenix global results.

Moving to Slide 5 to discuss our Domestic Coke business performance in detail. Third quarter domestic coke adjusted EBITDA was $44 million and coke sales volumes were 951,000 tons compared to $58.1 million and 1,027 000 tons in the prior year period. The decrease in adjusted EBITDA was primarily driven by the change in mix of contracted spot coke sales resulting in lower pricing and lower economics and volumes at Granite City from the contract extension. Lower cold coke yields at Haverhill and a weather event at Indiana Harbor resulted in lower production volumes during the quarter as well.

While this quarter's performance didn't fully meet our expectations, we did realize modest improvement over the second quarter with sequentially higher adjusted EBITDA and coke production and sales tons. During our second quarter earnings call, we projected a more favorable mix of coke sales in the second half of the year with higher contract volumes driving improvement in the Domestic Coke segment. However, due to the breach of contract by one of our customers, we had marginally lower sales volumes in the third quarter and currently expect a significant impact to results in the fourth quarter.

For that reason, we are updating our guidance to reflect the impact of approximately 200,000 tons of unsold blast furnace coke production, which will be stored in inventory. Our full year 2025 Domestic Coke adjusted EBITDA is now expected to be between $172 million and $176 million.

Now moving on to Slide 6 to discuss our new Industrial Services segment. Our Industrial Services segment, which includes our logistics business, and our Phoenix Global business generated $18.2 million of adjusted EBITDA in the third quarter of 2025 compared to $13.7 million in the prior year period. The increase in adjusted EBITDA was primarily driven by the addition of 2 months of Phoenix Global results, partially offset by lower volumes at our logistics terminals due to unfavorable market conditions.

Going forward, the Industrial Services segment will report total volumes handled by our logistics terminals and customer volumes serviced at our Phoenix Global sites. The third quarter total logistics handling volumes were 5.2 million tons. Phoenix customer volume service were 3.8 million tons for the 2 months included in third quarter results.

Similar to the Domestic Coke segment, the improvement in logistics business during the third quarter did not match what we previously anticipated due to persistent weak market conditions. While we expect to see further improvement quarter-over-quarter, the full year logistics business contribution is expected to be moderately lower than previously guided. We are updating our full year Industrial Services adjusted EBITDA guidance to between $63 million and $67 million, reflecting 5 months of Phoenix Global results and lower-than-expected volume improvement at logistics terminals in the second half of the year.

Now turning to Slide 7 to discuss our liquidity position for Q3. SunCoke ended the third quarter with a cash balance of $80.4 million and revolver availability of $126 million, representing ample liquidity of $206 million post acquisition.

Net cash provided by operating activities was $9.2 million and was negatively impacted by 2 items: number one, the accounting treatment of a portion of Phoenix Global's acquisition price. Phoenix's management incentive plan and transaction cost cash payments totaled $29.3 million were included in the acquisition price but flowed through our operating cash flow as a use of cash.

Number two, the timing of cash receipts of $23 million at quarter end, which was subsequently received in October. Without the impact of these 2 onetime items, our operating cash flow would have been approximately $52 million higher.

Net borrowing on our revolver was $199 million, cash acquired from the Phoenix Global acquisition was $24.3 million, and after factoring in the $29.3 million flowing through our operating cash flow, the net purchase consideration for Phoenix was $295.8 million. We spent $25.5 million on CapEx and paid $10.1 million in dividends at the rate of $0.12 per share this quarter.

SunCoke has a strong track record of generating steady free cash flow, and we expect the trend to continue with the addition of Phoenix Global. As Katherine mentioned earlier, we intend to continue utilizing our free cash flow to reward our shareholders with a regular dividend, which is reviewed and improved on a quarterly basis by our Board of Directors.

Let's move to Slide 8 to discuss our updated 2025 guidance. The summary is our full year 2025 adjusted EBITDA guidance. We now expect domestic coke adjusted EBITDA between $172 million and $176 million, reflecting the impact of a deferral of approximately 200,000 coke sales tons. We expect Industrial Services adjusted EBITDA between $63 million and $67 million, reflecting the addition of 5 months of Phoenix Global contribution, partially offset by lower volumes at our logistics terminals due to weak market conditions.

Consolidated adjusted EBITDA is now expected to be between $220 million and $225 million. Any changes to the assumptions related to the deferral of the coke sales could impact our guidance range. We have updated our CapEx guidance to approximately $70 million, reflecting lower CapEx at our coke plants plus the inclusion of Phoenix's portion of CapEx.

Our free cash flow guidance has changed significantly due to several factors. Last quarter, we updated our free cash flow guidance to include the favorable impact from tax law changes and lower CapEx spend partially offset by transaction and debt issuance costs. We are now also expecting a $70 million unfavorable impact to our free cash flow for the full year, resulting from the deferral of cash receipts from our customers' breach of contract. This estimate is based on the information we have as of today.

As Katherine mentioned, we intend to pursue all avenues to recover our losses from this event, and it is possible that we will reach a conclusion by later this year or early next year. Additionally, the $29.3 million related to Phoenix's management incentive plan and transaction costs, which were reflected in the acquisition price are now running through operating cash flow and impacting our free cash flow for the year. We now expect free cash flow in the range of negative $10 million to 0 and expect $62 million to $72 million in operating cash flow for the full year.

With that, I will turn it over to Katherine.

Thanks, Mark. Wrapping up on Slide 9. While we're not in a position to give guidance for 2026 at this time, we are optimistic about what is to come next year. We continue to have a strong, profitable long-term coke business, underpinned by the 3 pillars of Indiana Harbor, Middletown and Jewell Foundry, which have consistently delivered excellent performance and results.

Our Granite City coke plant is distinctly tied to U.S. Steel's need for Coke as well as the granulated pig iron project. Our Haverhill plant is tied to Cleveland-Cliffs, Algoma and the spot market, which remains weak. We're in active dialogue with Cliffs on contract negotiations, but have not signed a final contract yet. We'll have more to say on these plants when we give our 2026 guidance.

We continue to have a positive long-term outlook for our Industrial Services segment. 2026 will benefit from a full year of Phoenix Global adjusted EBITDA contribution. We believe the headwinds we are facing in the logistics business are transitory with modest recovery expected in the logistics business next year. As always, we take a balanced yet opportunistic approach to capital allocation.

On the back of our steady and healthy cash flow generation, we intend to continue our quarterly dividend as approved by our Board, which has always been well received by our long-term shareholders. We continuously evaluate the capital needs of the business, our capital structure and the need to reward our shareholders, and we'll make capital allocation decisions accordingly.

We're committed to maximizing value for all of our stakeholders which means operating and investing in our assets in the best and most efficient way possible. Overall, we see the strong fundamentals of our business and expect our 2026 results to be an improvement over 2025.

Let's go ahead and open up the call for Q&A.

[Operator Instructions] And your first question today will come from Nick Giles with B. Riley Securities.

This is Henry Hearle on for Nick Giles today. So to start off, following the deferral of the 200,000 tons, what is your level of confidence that incremental deferrals won't occur? And then also, would you be able to specify which facilities this deferral is from?

So thanks for the question. The 200,000 tons are tons that we anticipate making and putting into inventory for 2025. So as you think about the guidance that we're giving for 2025, it contemplates the production and storage of that coke. We don't talk about specific facilities and contracts in detail.

What I can tell you and what you do know is that we make and produce coke for Algoma out of our Haverhill facility. We have flexibility to produce and make coke for Algoma and other customers out of other facilities. But the customer that is in breach of contract and that is resulting in our producing and storing these tons and having the impact on our guidance for 2025 is Algoma.

Okay. And then we also mentioned that you're pursuing remedies. What do those currently look like?

So I know you can appreciate that from a legal perspective, there really is very little that we can say. What I will say is that we absolutely think that we have an enforceable contract. We are working with counsel. These are what we call long-term take-or-pay contracts. So without being able to get into litigation strategy and talk about it in more detail, it's very important to note that we think that we have an enforceable contract. We're working with counsel. We're pursuing all of our legal remedies in order to recover any financial losses that have occurred from their breach.

Right. And if the contract cannot be enforced in the off chance that happens, where do you go next?

Well, we -- I mean, we think that the contract hand and will be enforced, and we're pursuing the proper legal avenues to do that. And so what we're doing now, including the assumed production and storage of this coking inventory doesn't impact our ability to recover those financial losses. So we expect to be able to recover and we're going through the process to do that.

Okay. And then one more for me before I turn it over. So according to our math, if you annualize those 200,000 tons, you get 800,000 tons. And at $47 per ton that would be an EBITDA impact of around $40 million. And this year, you've drawn $272 million year-to-date on your revolver and you're guiding to near free cash flow breakeven. Could you please walk us through your level of confidence in retaining the dividend and liquidity going forward?

So Henry, one thing to note, the 200,000 tons, that is the total exposure left for this year to Algoma. So that's the extent of it. It's not that it's 200,000 on an annual basis or anything like that. That's just the exposure that we have to Algoma that is being currently being produced and stored and that's what kind of the disputed amount is.

And your next question today will come from Nathan Martin with Seaport Global.

It's actually with The Benchmark company, but good morning, everyone. Sticking with the Domestic Coke business for a second, can you guys talk about your strategy for 2026 that you're unable to renew Granite City and Haverhill production under a long-term contract?

Yes, absolutely. I mean we're really -- as I sort of said in my remarks, we're really optimistic for 2026. So if you think about the different pieces that we have going into the year, first, we're going to have a full year of the Phoenix results and we expect to have the synergies that we talked about when we announced the transaction. So that will be flowing through in '26.

I mentioned that when we sort of build our '26 with logistics, we see that some of the challenges we had this year in terms of just the market imbalance domestic, having higher prices than international, we had 2 customer force majeure events there. Those really caused us to be lower than what our expectations were at the time of Q2. But as we look to 2026, we see modest recovery in that portion of our Industrial Services segment.

So then when you think about Coke, you really have the pillars of the Coke business. And those are Middletown, which is a very profitable contract through December 2032. Indiana Harbor likewise through September 2035 and then you have our foundry coke business, which we continue to grow and has had very strong results for us out of Jewell.

With Haverhill, we are in active discussions with Cliffs for a contract with our anticipated coke coming out of that facility, although as I mentioned earlier, we can supply out of other locations. So that we're in active dialogue with Cliffs. If we are not able to contract for the full capacity of that plant, then we would have to obviously look at selling into the spot market or selling to others in the North American market, seaborne market, what have you. If we couldn't do that profitably, then in that case, we would have to look at rationalizing our facility.

And then with respect to Granite City, that is, as I mentioned, really a plant that's very much tied to U.S. Steel. We're in active discussions with U.S. Steel regarding the extension of that contract. But if we weren't able to extend that contract either because of they're not needing coke or not moving forward with the GPI project. In that instance, then we would not expect to continue to run that facility because it's just so tied to U.S. Steel. But as I said before, we are in active discussions with U.S. Steel regarding the extension of Granite City, we are in active discussions with Cliffs regarding the extension of what I'll call the Haverhill contract.

And as we look ahead to '26 and we think about having that full year of Phoenix results, having the modest recovery on the logistics side and then really having that for foundation of Middletown and Indiana Harbor and Jewell foundry, we expect that our results in 2026 are going to be stronger than 2025.

Katherine, I appreciate that thorough rundown. Just maybe any updates you can give on that Granite City GPI project in those negotiations you just referred to?

You just appreciate that obviously, those are -- those discussions are confidential, but they are ongoing. So we expect that we'll have more to say when we give guidance in early '26.

Okay. That's fair. Maybe shifting over to the new industrial segment. Is there any way to break out how much of the $18 million in adjusted EBITDA was specifically from Phoenix?

So kind of when we announced the Phoenix acquisition, right, like we laid out their LTM EBITDA of around $60 million on an annual basis. So that's kind of a good baseline to use like on a -- like you can divide it by 12 and take it a monthly number. So that's kind of a good proxy for what the Phoenix contribution is and going forward, right, like because it's one segment now, we look at it as like Industrial Services. They're similar businesses, logistics -- formerly logistics and Phoenix Global going forward. We are going to be reporting them together. But that's a good proxy to use for these results.

Okay, Shantanu. And then from a I guess from a customer volume perspective, right, the 3.8 million tons you guys shipped from the legacy Phoenix business over the 2 months. Is that a good run rate for a monthly call it, 1.2 million tons. So that kind of gets you to that $60 million EBITDA number you just referred to.

Yes, roughly. I mean, I think we'll give a more refined number when we give the 2026 guidance, that will be a yearly number. but it's in the ballpark, the 1.9 million tons of customer volume service, we are calling it. That's a good monthly number to get to the $60 million annual EBITDA.

Okay. Perfect. I'll pass it on. Appreciate the time everybody in best luck in the fourth quarter.

This concludes our question-and-answer session. I would like to turn the conference back over to Katherine Gates for any closing remarks.

Thank you, guys, again for joining us on today's call and your continued interest in SunCoke. Let's continue to work safely today and every day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the SunCoke Energy Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead.

Thank you. Good morning, and thank you for joining us this morning to discuss SunCoke Energy's second quarter 2025 results.

With me today are Katherine Gates, President and Chief Executive Officer; and Mark Marinko, Senior Vice President and Chief Financial Officer.

This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. Following management's prepared remarks, we'll open the call for Q&A. If we do not get 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. This morning, we announced SunCoke Energy's second quarter results. I want to share a few highlights before turning it over to Mark to discuss the results in detail.

We delivered Q2 2025 consolidated adjusted EBITDA of $43.6 million, driven by the timing and mix of contract and spot coke sales as well as lower volumes at CMT.

During the quarter, we announced the acquisition of Phoenix Global for $325 million. We are happy to share that we received the necessary regulatory approvals faster than anticipated and now expect to close on August 1.

Additionally, we amended and extended our revolving credit facility originally due June 2026 during the month of July. The covenants are similar to the previous agreement, and it is now maturing in July 2030.

Earlier today, we also announced a $0.12 per share dividend payable to shareholders on September 2, 2025. From a balance sheet perspective, we ended the second quarter with a strong liquidity position of $536.2 million. I'd like to take this opportunity to review the fundamentals of the Phoenix acquisition.

Let's turn to Slide 4. Phoenix Global is a leading provider of mission-critical services to major steel producing companies. SunCoke will purchase 100% of the common units of Phoenix for $325 million on a cash-free, debt-free basis, representing an acquisition multiple of approximately 5.4x on a March 31, 2025, last 12 months adjusted EBITDA of $61 million.

This transaction is expected to be immediately accretive for SunCoke. We will fund the purchase through a combination of cash on hand and borrowing on our amended and extended revolver, which is fully undrawn with $325 million of borrowing capacity. We expect to recognize between approximately $5 million and $10 million in annual synergies from this transaction.

After closing, we will plan to host investor conferences where we will share updated guidance for SunCoke, including Phoenix.

Turning to Slide 5 to revisit the transaction benefits to SunCoke. Phoenix is an excellent strategic fit with the core elements of our business, namely customers, capabilities and contracts. With the addition of these operations, SunCoke's reach will now extend to new industrial customers including electric arc furnace operators that produce carbon steel and stainless steel.

Phoenix's global footprint will add to our existing Brazil footprint as well as select international markets. Phoenix's operations provide high-value site-based services that are mission-critical to operational efficiency and reliability for steel mills.

SunCoke has a reputation as a critical partner in the steel value chain and as a reliable provider of high-quality industrial services through our Logistics business. Similar to SunCoke, Phoenix's contracts are long term in nature with contractually guaranteed fixed revenue and pass-through components.

Additionally, under its current contracts, Phoenix does not take ownership of major consumables, reducing exposure to commodity price volatility. Phoenix offers a well-capitalized asset portfolio, having invested approximately $75 million since June 2023 on new equipment or the refurbishment of existing equipment.

New customers and new markets provide multiple paths for future organic growth. By leveraging SunCoke's strong financial position and operational excellence, we will build upon Phoenix's success to better serve our existing and new customers.

Following the closing of the transaction, we expect Phoenix's operations will be combined with our Logistics segment to form a new Industrial Services segment. We are pleased to have a strong operator within SunCoke to lead the new operations in addition to our engineering and technical teams.

He will be joined by certain Phoenix employees whose knowledge and experience will be beneficial to the successful integration. We are excited to welcome Phoenix's team members to the SunCoke family, as we build on the strong foundation set by the business in recent years.

With that, I'll turn it over to Mark to review our second quarter earnings in detail. Mark?

Thanks, Katherine. Turning to Slide 6. Net income attributable to SunCoke was $0.02 per share in the second quarter of 2025, down $0.23 versus the prior year period. The decrease was primarily driven by the timing and mix of lower contract coke sales, coupled with lower economics from the Granite City contract extension in the Domestic Coke segment.

Additionally, CMT volumes in the Logistics segment were lower due to market conditions. Finally, transaction costs of $5.2 million related to the acquisition of Phoenix Global also impacted earnings per share.

Consolidated adjusted EBITDA for the second quarter of 2025 was $43.6 million compared to $63.5 million in the prior year period. The decrease in adjusted EBITDA was primarily driven by the timing and mix of lower contract coke sales and unfavorable economics on the Granite City contract extension in the Coke segment, and lower transloading volumes at CMT and the Logistics segment, partially offset by lower legacy black lung expenses in Corporate and Other.

Moving to Slide 7 to discuss our Domestic Coke business performance in detail. Second quarter domestic coke adjusted EBITDA was $40.5 million and coke sales volumes were 943,000 tons. The decrease in adjusted EBITDA as compared to the prior year period was primarily driven by the change in mix of contract and spot coke sales at Haverhill.

Additionally, spot coke sales margins are significantly lower than the contract coke sales margins due to the current challenging market conditions. Lower economics and volumes at Granite City from the contract extension also impacted Domestic Coke results.

We believe the second quarter to be the trough of 2025 and with higher contract coke sales expected in the second half of the year, we are reaffirming our Domestic Coke adjusted EBITDA guidance range of $185 million to $192 million.

Now moving on to Slide 8 to discuss our Logistics business. Our Logistics business generated $7.7 million of adjusted EBITDA in the second quarter of 2025. And our terminals handled combined throughput volumes of 4.8 million tons. The decrease in adjusted EBITDA was primarily driven by lower transloading volumes at CMT due to tepid market conditions.

Our previously announced barge unloading capital expansion project at KRT has been completed and is operating. We expect to see benefits from the new take-or-pay coal handling agreement starting in the third quarter and reaffirm our full year Logistics adjusted EBITDA guidance range of $45 million to $50 million.

Now turning to Slide 9 to discuss our liquidity position for Q2. SunCoke ended the second quarter with a cash balance of $186.2 million and a fully undrawn revolver of $350 million. Net cash provided by operating activities was $17.5 million that was impacted by income tax and interest payments as well as $5.2 million in transaction costs.

We spent $12.6 million on CapEx and paid $10.2 million in dividends at the rate of $0.12 per share this quarter. In total, we ended the quarter with a strong liquidity position of $536.2 million.

Our free cash flow guidance has changed as a result of the transaction costs related to the Phoenix acquisition, extension of the revolving credit facility and the new tax bill that was recently passed. We did not previously include transaction or debt issuance costs in our free cash flow guidance, but we now expect to incur between $12 million and $14 million related to these transactions during the year.

Additionally, as a result of changes in tax laws, we are now expecting our cash taxes to be between $5 million and $9 million. We have also lowered our CapEx guidance to approximately $60 million during the year. We now expect our free cash flow guidance to be between $103 million and $118 million. Our operating cash flow guidance is unchanged.

With that, I will turn it back over to Katherine.

Thanks, Mark. Wrapping up on Slide 10. The acquisition of Phoenix is a result of SunCoke's disciplined pursuit of profitable growth to reward long-term shareholders. SunCoke is well known for our best-in-class safety, advanced technology, operational discipline and strong financial position.

We remain focused on safely executing against our operating and capital plan and maintaining the strength of our core businesses, while working to integrate Phoenix's operations. Phoenix is a service provider of choice for steelmakers, and we look forward to continuously engaging with their customers to find new opportunities to expand the scope of services provided as well as enter into new contracts at other sites.

As always, we take a balanced yet opportunistic approach to capital allocation. 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 see improvement in both Logistics and Domestic Coke in the second half of the year, and we are reaffirming our full year consolidated adjusted EBITDA guidance range of $210 million to $225 million.

With that, let's go ahead and open up the call for Q&A.

[Operator Instructions]. The first question comes from Nick Giles with B. Riley Securities.

This is Henry Hearle on for Nick Giles. So to start off, you reaffirmed your annual guidance and my math implies roughly 22% increase in quarterly EBITDA for the remainder of the year to reach the low end of your guidance at $210 million. So my question is, can you walk us through the drivers of the improvement from here? And what are your assumptions around [Audio Gap] coke sales volumes?

Sure, Henry. Thanks for the question. So as we talked about, if you look at our Q1 Domestic Coke EBITDA per ton, it was $55. And our Q2 Domestic Coke adjusted EBITDA per ton is around $42 a ton, right? And if you take the average of those 2, we are right in the range of $46 to $48, that is kind of our annual guidance.

So in Q3 and Q4 or the second half of the year, we expect to kind of get back to our average full year EBITDA per ton range where the mix -- it was all about the mix, that's why we are talking about the mix between contract and spot sales, right? In the Q1, we were very heavy on the contract side; in Q2, we were very heavy on the spot side.

So in Q3 and Q4, this will kind of become normalized and will have roughly 2 million to 2.1 million tons of coke sales in the second half, getting us closer to the 4 million tons guidance of the total coke sales, with the average sales -- average adjusted EBITDA margin of $46 to $48 a ton. So that's kind of on the coke side.

On the Logistics side, we saw surprisingly lower volumes in May and June at CMT. And we are already seeing those volumes get picked up in July. They were a couple of shipments in June that did not -- the timing of the ship kind of shifted to July. So we're going to pick that up in Q3. So we'll go back to our normal run rate EBITDA at -- for Logistics as a whole in the second half. And that's how we are getting to our full year adjusted EBITDA guidance range of $210 million to $225 million.

Understood. And then could you also talk about the macro drivers of Phoenix Global? So I understand you have a large share of fixed and contracted revenues in place. I'm hoping to get more color on what moves the needle in the long term?

Sure. So I think the short answer to your question is that we'll have a lot more to say on Phoenix when we go out and do our Investor Days and roadshow following the close. As I've said, we're going to be closing on August 1, and then we'll be working through opening balance sheet, taxes, some other valuation work. So we're going through that process now.

I think what I can say in terms of drivers going forward is that we're very excited about having the EAF exposure, which really diversifies our customer base. And as I said on our call when we signed, I think it's very, very critical to us that we use this as a platform for organic growth. So when we think about drivers, we see opportunities with our technical and our engineering teams to look to the customers and expand the suite of services that we're providing at sites where we're already operating as well as looking to new sites to bring on new business.

What we said when we signed is that Phoenix had a last 12 months trailing adjusted EBITDA of about $61 million and what I can say today is that, that business, despite some of the cyclicality and some of the challenges in the steel sector right now that, that is still not an unreasonable number to put out there as you think ahead to Phoenix.

So we feel good about the business today and the foundation and then our opportunity to expand it, bringing our operational excellence and our engineering and technical expertise.

I appreciate the color there. And then one more for me. Could you also talk about the recent conversations with your largest customer? And if there is any potential for renewal of the Haverhill contract? Or any other color on how to think about your contracts that are rolling off this year and the split between contracted versus blast coke?

Yes, absolutely. Frankly, we were extremely surprised by the comments on the Cliffs earnings call, given that we are in active discussions with Cliffs on contract renewal. As we said back in January, we knew that Cliffs did not need more coke in 2025 and that's why we announced in January that we were essentially sold out, even though the pricing in the spot market is not what we wanted it to be, but we sold out and we sold into the spot market knowing that Cliffs would not need more coke from us in 2025. So that is unchanged. But at the same time, we were continuing contract discussions with Cliffs, and we are continuing those discussions with them today.

In terms of specific detail on volumes, et cetera, as you know, we don't talk about the specifics of our contract negotiations with our customers, so I can't really say more than that other than that we are in active discussions with them.

[Operator Instructions]. The next question comes from Nathan Martin with The Benchmark Company.

Maybe just following up on that last line of questioning. I think you said surprised maybe by some of the comments Cliffs made. They indicated they've got plenty of internal coke production post the Stelco acquisition that don't need any third party coke kind of going forward.

If that's the case, like how do you guys go about planning another long-term contracts for that production in Haverhill? Is it a case where whoever Stelco was selling to previously could it be a potential option? Or could the shift to Cliffs using more internal coke lead to a balanced disruption in the market that needs to be addressed with supply curtailments?

Sure. I mean, I think just the starting point is, well, obviously, we continue to be in active discussions with Cliffs. But we have also and, you've seen this over time, we've looked for ways to profitably sell our coke when we are not selling on a long-term contract basis. So whether that is selling foundry and selling more foundry going forward, that's certainly a very profitable avenue for us, and we've continued to grow our market share in the foundry market.

We would also look to profitably sell our blast coke to other customers. So while we obviously can't get into any sort of discussions on that front, we've been able to profitably sell our blast coke even at these depressed prices, selling into North America. We would continue to look to sell into the seaborne market if that was profitable. So that will continue to be our focus just as it has been in the past years.

I appreciate that, Katherine. Any thoughts like does this potentially upset supply/demand balance here in North America or not necessarily, if they continue or start using more internal coke?

Well, I think as we've said before, there is a volume of coke that is needed for the volume of steel that's being produced. So if, for example, Cliffs is now using more of the Stelco coke, Stelco coke that was being used by another customer, as you pointed out before, would be a customer that we would pursue going forward. So from an overall kind of supply/demand balance, we would understand that as being there today and we would try to take advantage of that if things were moving.

And Nate, I would want to add a little bit. This is Shantanu. I mean like if they're running at full capacity, I think the question is more on the Cliffs side. If there is a capacity rationalization permanently on their side on one of the blast furnaces, that definitely disrupts the supply/demand balance of coke, right?

Then the structure looks very different. In the long run, if one of the blast furnaces, which have been running for a longer time goes down, then yes, it definitely disturbs the supply/demand balance of coke within Canada and the U.S and that makes it a little bit challenging for us from the contract perspective, right?

But if the assumption is that they continue running the blast furnaces, which they have been running and their demand stays the same, as Katherine mentioned, there is demand for that coke to go there.

Got it, Shantanu. I appreciate that. Maybe shifting to the Logistics business. Again, you called out the weakness at CMT. Was that mainly coal or was that any other products there first? And then how do you view kind of export coal demand over the next few quarters? Are you guys assuming any benefit at all from price adjustment given where the indices are today?

Well, in terms of products, we move products other than coal through CMT, including iron ore and including pet coke. So there is a mix of products there, but the vast majority of the volumes there are coal for export. We have seen higher domestic pricing and higher demand, as we kind of look at the market today.

And so that higher demand domestically can impact volumes being shipped internationally just based on that pricing. But at the same time, as Shantanu mentioned earlier, we look at the volumes that we're shipping in July and we look at what we have in our plan for the balance of the year, and we're reaffirming our Logistics guidance based on what we see going forward. We are comfortable with that.

In terms of any sort of price adjustment mechanism, we have not had a price adjustment thus far under the new contract, and we didn't contemplate that in our guidance for 2025.

Got it. That's helpful, Katherine. And then just back to the guidance for a second. I know you reiterated your full year adjusted EBITDA guidance for the segment. But I don't think I saw any update to the volume guidance. So should we assume you still feel good about handling, I think it was around 22.9 million tons for the full year?

And if so is that increase in tonnage here in the second half versus the first half mainly expected to come from the KRT expansion?

That's right. Yes.

Okay. Perfect. Maybe just one final one. Again, congratulations on successfully amending and extending your revolver. Obviously, capacity did come down a little bit to 325 million from 350 million. I know you previously said, I think you expected to borrow about $230 million on the revolver for Phoenix. That lower capacity, does that impact your plans at all there for financing and then does it still leave enough room to continue pursuing the GPI project?

Yes. So Nate, I mean, actually, our borrowing amount for the acquisition is lower. It's closer to $200 million to $210 million on the revolver being more -- having more cash available on the balance sheet. So we're using that. And then that leaves us more than enough capacity to kind of work through the working capital changes. As you know, we have been undrawn on the revolver for like at least a couple of years. So that leaves us enough capacity for our working capital day-to-day work.

On the GPI side, now that we have done the Phoenix acquisition, if we do the GPI project, that will kind of lead us into a separate borrowing and it will be some sort of term loan or a note or something like that. So that will be a separate financing deal when we get into the GPI project.

Makes sense, Shantanu. And I guess I should just go ahead and ask, are there any updates on that GPI project? Any additional thoughts or discussions you guys are having with Nippon at this point?

So we are in active discussions with U.S. Steel. I guess, at this point, we would say U.S. Steel because it is truly U.S. Steel with Nippon, but we are in active discussions, but I don't have anything to share at this point.

This concludes our question-and-answer session. I would like to turn the conference back over to Katherine Gates for any closing remarks. Please go ahead.

Thank you all again for joining us this morning and for your continued interest in SunCoke. We look forward to announcing the completion of the Phoenix Global acquisition. Let's continue to work safely today and every day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.