Andy Kellogg - IR Mike Rippey - Chairman, President and CEO Fay West - SVP and CFO

Good morning. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to the SunCoke Energy Inc. Second Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Andy Kellogg, Treasurer and Director of Investor Relations, you may begin your conference.

Good morning and thank you for joining us this morning to discuss SunCoke Energy's second quarter 2018 earning. With me are Mike Rippey, President and Chief Executive Officer; Fay West, Senior Vice President and Chief Financial Officer. Following management's prepared remarks, we will open the call for Q&A. This conference call is being webcast live on our Investor Relations section of our website, a replay will be available there later today. If we don't get to your questions on the call today, please feel free to reach out to our Investor Relations. Before I turn things over to Mike, let me remind you that the various remarks that we make on today’s call regarding future expectations constitute forward-looking statements. 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 any non-GAAP financial measures discussed on today's call. With that, I'll now turn things over to Mike.

Thanks, Andy. And thank you all for joining this morning’s call. Before we review second quarter results, I wanted to provide a few brief thoughts on the overall market and where we see things for the balance of the year. In our fourth quarter earnings call, I used the word cautiously optimistic to describe our feelings for the steel market with the focus on addressing import challenges resulting from global overcapacity that our customers continue to face. Since this time, the administration has imposed Section 232 tariffs with a goal of curbing steel imports into the United States. As we stand today, we have seen good demand for steel products and active hot roll pricing and an uptick in utilization rates. All of these allow our customers and the steel market as a whole to be in a healthier position. The HRC benchmark price has continued to rise from approximately $650 per short ton at the beginning of the year to approximately $900 today. We continue to see improving steel demand from the industrial, manufacturing and energy sectors but auto holding fairly steady. Utilization rates are still below 80%. We have seen a positive trend in 2018 with rates increasing from 71% at the beginning of the year to 76% today with the potential for continued improvement as reduction in steel imports take hold. With a more favorable long-term outlook, we have seen an increase in investment activity in the US steel market, most notably our customer U.S. Steel has decided to restart both their A and B glass furnaces at the Granite City Works. While there’s not a direct financial impact for us, we are encouraged with U.S. Steel’s decision and we’ll continue to support our key customer with high quality coke. With the restart of the Granite City…

Thanks, Mike. And good morning, everyone. Before reviewing the second quarter results, I would like to mention an event we experienced earlier this month, which although it did not impact this quarter, it will affect our third quarter results. A fire occurred on our pusher charger machine at Granite City which resulted in approximately 10 days worth of loss production. The necessary repairs have been completed and our facility is now back up and running. We will provide more details on this with our third quarter results but the preliminary impact was considered in our full year guidance. And as Mike mentioned earlier, we remain well positioned to deliver adjusted EBITDA within our guidance range. Turning back to our second quarter results on slide 4. Our second quarter net income attributable to SXC was $4.2 million or $0.06 per share. EPS was up $0.44 from the prior year, primarily due to strong operating performance and the absence of approximately $12 million of debt extinguishment cost associated with the refinancing completed last year. Q2 adjusted EBITDA of $67.3 million was up 42%, a significant increase over the prior year period. The increase in performance was driven by steady improvement in Indiana Harbor, significantly increased volumes at CMT and lower corporate costs. Looking at our adjusted EBITDA bridge on slide 5, we are encouraged with the strong performance in the second quarter. And as you could see, consolidated adjusted EBITDA is up close to $20 million over the prior year. Our Coke segment as a whole performed well this quarter. Indiana Harbor’s second quarter adjusted EBITDA of $2.8 million is up $5.5 million versus the prior year period. As Mike mentioned earlier, we continue to see healthy operating performance from the rebuild ovens including the 16 A-battery ovens that were completed and…

Thanks, Fay. Wrapping up on Slide 9, we remain focused on operational execution, maximizing the capabilities and performance of our coke and logistics assets, and ensuring successful completion of this year’s oven rebuild campaign at Indiana Harbor. We continue to focus on leveraging CMT’s unique capabilities to secure incremental business. And finally, we are continuously focused on executing on our commitments to shareholders meeting our full year 2018 financial targets and remain on track to do so midway through the year. With that, we can now open it up for Q&A.

This is Mike, I’m not hearing any questions. I’d like to thank everyone that’s on the call for your interest and your investment in SunCoke Energy and we expect if you have any other question later on, please feel free to reach out and talk to our Investor Relations team, they’ll be happy to provide the answers. So again, hearing no questions, I’m going to thank everybody for your participation and we will talk to you again in the third quarter. Thank you.

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