SunCoke Energy, Inc. Q4 FY2025 earnings call

• Safety: SunCoke Energy, Inc., excluding Phoenix, ended 2025 with a total recordable incident rate of 0.55. - Financial results: 2025 consolidated adjusted EBITDA was $219,200,000. Domestic coke segment impacted by mix change and contract issues. - Capital allocation: 2025 saw acquisition of Phoenix, progress on capital allocation priorities. Returned ~$41,000,000 to shareholders via quarterly dividend. - 2026 expectations: Anticipate meaningful recovery with optimized coke fleet, extended contracts, improved market conditions for terminals, and full year of Phoenix Global. Focus on deleveraging and returning capital to shareholders.

Domestic coke segment: 2025 full year adjusted EBITDA was $170,000,000, down $64,700,000 from prior year. Impacted by change in mix of contract and spot coke sales, lower Granite City contract extension economics, and Algoma breach of contract. Industrial Services segment (includes former logistics segment and new Phoenix Global business): 2025 full year adjusted EBITDA was $62,300,000, a year-over-year increase of $11,900,000, primarily driven by addition of Phoenix Global, partially offset by lower terminals handling volumes due to market conditions. Corporate and other expenses: $13,100,000, an increase of $800,000 year over year, including results from legacy coal mining and Brazil coke making businesses

• 2026 consolidated adjusted EBITDA expected between $230,000,000 and $250,000,000. - Domestic coke adjusted EBITDA expected to be lower by $2,000,000 to $8,000,000, primarily driven by lower coke sales tons. - Industrial Services adjusted EBITDA expected to be higher by $28,000,000 to $38,000,000, primarily driven by full year of Phoenix Global and improvement in market conditions for terminals. - Corporate and other expenses expected to be higher by $5,000,000 to $9,000,000, primarily driven by normalized employee bonus expense and Phoenix integration-related IT costs. - Anticipate CapEx in 2026 between $90,000,000 and $100,000,000, operating cash flow between $230,000,000 and $250,000,000, and free cash flow between $140,000,000 and $150,000,000

• Litigation risk related to Algoma's breach of contract, with ongoing arbitration and pursuit of recovery. - Risk associated with Haverhill One closure, including need for significant capital investment to restart and related workforce and O&M cost reductions. - Impact of Middletown turbine failure and severe winter weather on operations, affecting first quarter results and production recovery timelines

Q: Of course. So on the last call, you discussed pursuing all legal means to enforce the Algoma contract. But now with Haverhill One 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?

A: Sure. And thanks for the question. We continue to pursue Algoma in an arbitration. We are 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, you know, the amounts that are owed by Algoma and what we are 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 $70,000,000 and this is in 2025. So if you look at our guidance summary, there is a deferral cash receipt from Algoma for $30,000,000 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 turn down of our facility. So that amount that you see, that $30,000,000, it actually represents part but not the full amount of the Algoma losses for the breach of contract in 2025. But, again, as I said, that breach is 2025, but also ongoing, and we are pursuing not just our losses from our losses in 2026. Beyond that, I cannot really provide detail on the outcome of the litigation since it is active litigation, but I will 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 are looking at bridging our 2025 to our 2026 guidance, is really as a matter of coincidence the losses from in 2025 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 without Algoma is not meaningfully different. And so I hopefully that is helpful if you are thinking about bridging the years, but really beyond that, I cannot say more because we are in active litigation.

Q: Haverhill One 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 coal side from the closure?

A: Sure. So the Haverhill One could be restarted, but it would require a significant capital investment and it would take about twelve to eighteen 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 meaningful a meaningful return to do it. And, you know, sitting here today with the market conditions being what they are and Algoma's breach, we do not really see any economic value in the asset. I think it is important to note that, you know, we do not have any sort of environmental or other remediation related costs for Haverhill One. So no reclamation, no remediation. We have some non-material costs to remain in sort of compliance. But they are minimal. And then in terms of the savings that we will see from Haverhill One, we have a reduction in our workforce and obviously some other costs related to ongoing O&M for that facility.

Q: I am assuming all those costs are incorporated in guidance already?

A: They are.

Q: Second, I wanted to touch on, you know, 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 is said, you know, come back maybe midyear. Obviously, the recent Arctic weather impacting operations as well. So maybe a couple things there. Like, what is the cost on the turbine? You know, again, how should that impact operations in sounds like the first half? And then, you know, additionally, like, when will most of the IT integration and bonus expense items hit that you guys talked about?

A: Sure. Why do not I start with the weather and the turbine outage? So obviously, you have seen this across the space. Like, 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 on Lake Michigan. And so was significant lost production there, and you are 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 six 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 will not 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 I, while not being able to give sort of plant-specific EBITDAs, you know, that we do not 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 is going to aggregate to approximately a $10,000,000 impact in the first quarter. And then again, we do not expect to see the turbine up and the recoveries from the power in the second in the second quarter. So that may help you a little bit as you are trying to build out the cadence of the year.

Q: Maybe one last question. expected improvement in tons handled. Could you kind of walk us through what is driving the in the Industrial segment? Is this mainly the KRT expansion and 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 2026 as well.

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