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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________________________
FORM 10-Q
 _____________________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-35243 
 _____________________________________________________________________
SUNCOKE ENERGY, INC.
(Exact name of registrant as specified in its charter)
 ______________________________________________________________________ 
Delaware 90-0640593
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1011 Warrenville Road, Suite 600
Lisle, Illinois 60532
(630) 824-1000
(Registrant’s telephone number, including area code)
 ____________________________________________________________ 
Securities registered pursuant to section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share SXC New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     ý  Yes    ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filerý
Non-accelerated filer¨Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes    ý  No
As of April 29, 2022, there were 83,380,822 shares of the Registrant’s $0.01 par value Common Stock outstanding.


SUNCOKE ENERGY, INC.
TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
SunCoke Energy, Inc.
Consolidated Statements of Income
(Unaudited)
 Three Months Ended March 31,
 20222021
 (Dollars and shares in millions, except per share amounts)
Revenues
Sales and other operating revenue$439.8 $359.9 
Costs and operating expenses
Cost of products sold and operating expenses
338.0 274.0 
Selling, general and administrative expenses18.0 15.3 
Depreciation and amortization expense35.2 32.4 
Total costs and operating expenses391.2 321.7 
Operating income48.6 38.2 
Interest expense, net8.0 12.7 
Income before income tax expense40.6 25.5 
Income tax expense10.0 7.3 
Net income30.6 18.2 
Less: Net income attributable to noncontrolling interests1.1 1.7 
Net income attributable to SunCoke Energy, Inc.$29.5 $16.5 
Earnings attributable to SunCoke Energy, Inc. per common share:
Basic$0.35 $0.20 
Diluted$0.35 $0.20 
Weighted average number of common shares outstanding:
Basic83.2 82.8 
Diluted84.2 83.5 
(See Accompanying Notes)
1

SunCoke Energy, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited) 
 Three Months Ended March 31,
 20222021
 
(Dollars in millions)
Net income$30.6 $18.2 
Other comprehensive income (loss):
Reclassifications of prior service benefit and actuarial benefit amortization to earnings, net of tax0.1 0.1 
Currency translation adjustment1.3 (0.7)
Comprehensive income32.0 17.6 
Less: Comprehensive income attributable to noncontrolling interests1.1 1.7 
Comprehensive income attributable to SunCoke Energy, Inc.$30.9 $15.9 
(See Accompanying Notes)
2

SunCoke Energy, Inc.
Consolidated Balance Sheets
March 31, 2022December 31, 2021
(Unaudited)
 (Dollars in millions, except
par value amounts)
Assets
Cash and cash equivalents$79.7 $63.8 
Receivables, net99.5 77.6 
Inventories 194.1 127.0 
Other current assets10.0 3.5 
Total current assets383.3 271.9 
Properties, plants and equipment (net of accumulated depreciation of $1,195.0 million and $1,160.1 million at March 31, 2022 and December 31, 2021, respectively)
1,266.1 1,287.9 
Intangible assets, net34.7 35.2 
Deferred charges and other assets21.6 20.4 
Total assets$1,705.7 $1,615.4 
Liabilities and Equity
Accounts payable$168.1 $126.0 
Accrued liabilities48.9 52.4 
Current portion of financing obligation3.2 3.2 
Interest payable6.1  
Income tax payable3.9 0.6 
Total current liabilities230.2 182.2 
Long-term debt and financing obligation625.0 610.4 
Accrual for black lung benefits58.7 57.9 
Retirement benefit liabilities21.3 21.8 
Deferred income taxes174.3 169.0 
Asset retirement obligations11.9 11.6 
Other deferred credits and liabilities22.4 27.1 
Total liabilities1,143.8 1,080.0 
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued shares at both March 31, 2022 and December 31, 2021
  
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 98,754,995 and 98,496,809 shares at March 31, 2022 and December 31, 2021, respectively
1.0 1.0 
Treasury stock, 15,404,482 shares at both March 31, 2022 and December 31, 2021
(184.0)(184.0)
Additional paid-in capital722.3 721.2 
Accumulated other comprehensive loss(15.3)(16.7)
Retained earnings (deficit)1.0 (23.4)
Total SunCoke Energy, Inc. stockholders’ equity525.0 498.1 
Noncontrolling interest36.9 37.3 
Total equity561.9 535.4 
Total liabilities and equity$1,705.7 $1,615.4 
(See Accompanying Notes)
3

SunCoke Energy, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended March 31,
 20222021
 (Dollars in millions)
Cash Flows from Operating Activities
Net income$30.6 $18.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense35.2 32.4 
Deferred income tax expense5.3 3.1 
Share-based compensation expense1.1 0.5 
Changes in working capital pertaining to operating activities:
Receivables, net(21.9)0.5 
Inventories(66.9)(8.9)
Accounts payable41.9 12.9 
Accrued liabilities(3.9)(3.7)
Interest payable6.1 11.0 
Income taxes3.3 3.8 
Other(8.1)(5.0)
Net cash provided by operating activities22.7 64.8 
Cash Flows from Investing Activities
Capital expenditures(12.9)(20.1)
Other investing activities(0.1) 
Net cash used in investing activities(13.0)(20.1)
Cash Flows from Financing Activities
Proceeds from revolving facility137.0 161.8 
Repayment of revolving facility(122.0)(194.1)
Repayment of financing obligation(0.8)(0.7)
Dividends paid(5.0)(5.1)
Cash distribution to noncontrolling interests(1.5) 
Other financing activities(1.5)(1.0)
Net cash provided by (used in) financing activities6.2 (39.1)
Net increase in cash and cash equivalents15.9 5.6 
Cash and cash equivalents at beginning of period63.8 48.4 
Cash and cash equivalents at end of period$79.7 $54.0 
Supplemental Disclosure of Cash Flow Information
Interest paid, net of capitalized interest of zero and $0.1 million, respectively
$0.9 $0.5 
Income taxes paid$1.4 $0.4 
(See Accompanying Notes)
4

SunCoke Energy, Inc.
Consolidated Statements of Equity
Three Months Ended March 31, 2022
(Unaudited)
Common StockTreasury StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
(Deficit)
Earnings
Total  SunCoke
Energy, Inc.  Equity
Non-controlling
Interests
Total
Equity
SharesAmountSharesAmount
(Dollars in millions)
At December 31, 202198,496,809 $1.0 15,404,482 $(184.0)$721.2 $(16.7)$(23.4)$498.1 $37.3 $535.4 
Net income— — — — — — 29.5 29.5 1.1 30.6 
Reclassifications of prior service benefit and actuarial benefit amortization to earnings, net of tax— — — — — 0.1 — 0.1 — 0.1 
Currency translation adjustment— — — — — 1.3 — 1.3 — 1.3 
Share-based compensation— — — — 2.5 — — 2.5 — 2.5 
Share issuances, net of shares withheld for taxes258,186 — — — (1.4)— — (1.4)— (1.4)
Dividends— — — — — — (5.1)(5.1)— (5.1)
Cash distribution to noncontrolling interests— — — — — — — — (1.5)(1.5)
At March 31, 202298,754,995 $1.0 15,404,482 $(184.0)$722.3 $(15.3)$1.0 $525.0 $36.9 $561.9 

SunCoke Energy, Inc.
Consolidated Statements of Equity
Three Months Ended March 31, 2021
(Unaudited)
Common StockTreasury StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Deficit
Total  SunCoke
Energy, Inc.  Equity
Non-controlling
Interests
Total
Equity
SharesAmountSharesAmount
(Dollars in millions)
At December 31, 202098,177,941 $1.0 15,404,482 $(184.0)$715.7 $(17.1)$(46.6)$469.0 $31.9 $500.9 
Net income— — — — — — 16.5 16.5 1.7 18.2 
Reclassifications of prior service benefit and actuarial benefit amortization to earnings, net of tax— — — — — 0.1 — 0.1 — 0.1 
Currency translation adjustment— — — — — (0.7)— (0.7)— (0.7)
Share-based compensation— — — — 0.5 — — 0.5 — 0.5 
Share issuances, net of shares withheld for taxes204,416 — — — (0.9)— — (0.9)— (0.9)
Dividends— — — — — — (5.0)(5.0)— (5.0)
At March 31, 202198,382,357 $1.0 15,404,482 $(184.0)$715.3 $(17.7)$(35.1)$479.5 $33.6 $513.1 
5

SunCoke Energy, Inc.
Notes to the Consolidated Financial Statements
1. General
Description of Business
SunCoke Energy, Inc. (“SunCoke Energy,” “SunCoke,” “Company,” “we,” “our” and “us”) is the largest independent producer of high-quality coke in the Americas, as measured by tons of coke produced each year, and has more than 60 years of coke production experience. We have designed, developed, built, own and operate five cokemaking facilities in the United States (“U.S.”), which have collective nameplate capacity to produce approximately 4.2 million tons of blast furnace coke per year. Additionally, we have designed and operate one cokemaking facility in Brazil under licensing and operating agreements on behalf of ArcelorMittal Brasil S.A. (“ArcelorMittal Brazil”), which has approximately 1.7 million tons of annual cokemaking capacity. Our cokemaking ovens utilize efficient, modern heat recovery technology designed to combust the coal’s volatile components liberated during the cokemaking process and use the resulting heat to create steam or electricity for sale. The majority of our coke is used in the blast furnace production of steel and is sold under long-term, take-or-pay agreements with our steelmaking customers. Our coke is also used in the foundry production of casted iron, as well as exported to international customers seeking high-quality products for their blast furnaces.
We also own and operate a logistics business that provides handling and/or mixing services to steel, coke (including some of our domestic cokemaking facilities), electric utility, coal producing and other manufacturing based customers. Our logistics business has the collective capacity to mix and/or transload more than 40 million  tons of coal and other aggregates annually and has storage capacity of approximately 3 million tons.
Basis of Presentation
The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim reporting. Certain information and disclosures normally included in financial statements have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In management’s opinion, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The results of operations for the period ended March 31, 2022 are not necessarily indicative of the operating results expected for the entire year. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.
2. Inventories
The components of inventories were as follows:
March 31, 2022December 31, 2021
 
(Dollars in millions)
Coal$116.0 $63.5 
Coke29.5 16.6 
Materials, supplies and other48.6 46.9 
Total inventories$194.1 $127.0 
6

3. Intangible Assets
Intangible assets, net, include Goodwill allocated to our Domestic Coke segment of $3.4 million at both March 31, 2022 and December 31, 2021, and other intangibles detailed in the table below, excluding fully amortized intangible assets.
March 31, 2022December 31, 2021
Weighted - Average Remaining Amortization YearsGross Carrying AmountAccumulated AmortizationNetGross Carrying AmountAccumulated AmortizationNet
(Dollars in millions)
Customer relationships2$6.7 $5.1 $1.6 $6.7 $5.0 $1.7 
Permits2031.7 3.5 28.2 31.7 3.1 28.6 
Other281.6 0.1 1.5 1.6 0.1 1.5 
Total$40.0 $8.7 $31.3 $40.0 $8.2 $31.8 
Total amortization expense for intangible assets subject to amortization was $0.5 million for both the three months ended March 31, 2022 and 2021.
4. Income Taxes
At the end of each interim period, we make our best estimate of the effective tax rate and the impact of discrete items, if any, and adjust the rate as necessary.
The Company recorded income tax expense of $10.0 million and $7.3 million for the three months ended March 31, 2022 and 2021, respectively, resulting in an effective tax rate of 24.6 percent and 28.6 percent, respectively, as compared to the 21.0 percent federal statutory rate. During both periods, the difference between the Company’s effective tax rate and the federal statutory rate primarily reflects the impact of state taxes and disallowed expenses. The impact of state taxes in 2022 included the revaluation of certain deferred tax liabilities due to changes in apportioned state tax rates, which resulted in an income tax benefit of $1.0 million.
5. Accrued Liabilities
Accrued liabilities consisted of the following:
March 31, 2022December 31, 2021
 
(Dollars in millions)
Accrued benefits$16.9 $21.7 
Current portion of postretirement benefit obligation2.6 2.6 
Other taxes payable11.8 9.2 
Current portion of black lung liability5.4 5.4 
Accrued legal4.6 4.5 
Other7.6 9.0 
Total accrued liabilities$48.9 $52.4 
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6. Debt and Financing Obligation
Total debt and financing obligation, including the current portion of the financing obligation, consisted of the following:
March 31, 2022December 31, 2021
 
(Dollars in millions)
4.875 percent senior notes, due 2029 ("2029 Senior Notes")
$500.0 $500.0 
$350.0 revolving credit facility, due 2026 ("Revolving Facility")
130.0 115.0 
5.346 percent financing obligation, due 2024
11.2 12.0 
Total borrowings641.2 627.0 
Debt issuance costs(13.0)(13.4)
Total debt and financing obligation$628.2 $613.6 
Less: current portion of financing obligation3.2 3.2 
Total long-term debt and financing obligation$625.0 $610.4 
Revolving Facility
As of March 31, 2022, the Revolving Facility had a $130.0 million outstanding balance, leaving $220.0 million available. Additionally, the Company has certain letters of credit totaling $23.6 million, which do not reduce the Revolving Facility's available balance.
Covenants
Under the terms of the Revolving Facility, the Company is subject to a maximum consolidated net leverage ratio of 4.50:1.00 and a minimum consolidated interest coverage ratio of 2.50:1.00. The Company's debt agreements contain other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions including our ability to pay a dividend or repurchase our stock.
If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Revolving Facility could be declared immediately due and payable. The Company has a cross default provision that applies to our indebtedness having a principal amount in excess of $35.0 million.
As of March 31, 2022, the Company was in compliance with all applicable debt covenants. We do not anticipate a violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing.
7. Commitments and Contingent Liabilities
Legal Matters
The Company is a party to certain pending and threatened claims, including matters related to commercial disputes, employment claims, personal injury claims, common law tort claims and environmental claims. Although the ultimate outcome of these claims cannot be ascertained at this time, it is reasonably possible that some portion of these claims could be resolved unfavorably to the Company. Management of the Company believes that any liability which may arise from these claims would not have a material adverse impact on our consolidated financial statements. SunCoke's threshold for disclosing material environmental legal proceedings involving a government authority where potential monetary sanctions are involved is $1.0 million.
Black Lung Benefit Liabilities
The Company has obligations related to coal workers’ pneumoconiosis, or black lung, benefits to certain of its former coal miners and their dependents. Such benefits are provided for under Title IV of the Federal Coal Mine and Safety Act of 1969 and subsequent amendments, as well as for black lung benefits provided in the states of Virginia, Kentucky and West Virginia pursuant to workers’ compensation legislation. The Patient Protection and Affordable Care Act (“PPACA”), which was implemented in 2010, amended previous legislation related to coal workers’ black lung obligations. PPACA provides for the automatic extension of awarded lifetime benefits to surviving spouses and changes the legal criteria used to assess and award claims.
We adjust our liability each year based upon actuarial calculations of our expected future payments for these benefits. Our independent actuarial consultants calculate the present value of the estimated black lung liability annually based on
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actuarial models utilizing our population of former coal miners, historical payout patterns of both the Company and the industry, actuarial mortality rates, disability incidence, medical costs, death benefits, dependents, discount rates and the current federally mandated payout rates. The estimated liability may be impacted by future changes in the statutory mechanisms, modifications by court decisions and changes in filing patterns driven by perceptions of success by claimants and their advisors, the impact of which cannot be estimated. The estimated liability was $64.1 million and $63.3 million at March 31, 2022 and December 31, 2021, respectively, of which the current portion of $5.4 million was included in accrued liabilities on the Consolidated Balance Sheets in both periods.
On February 1, 2013, SunCoke obtained commercial insurance for black lung claims in excess of a deductible for employees with a last date of employment after that date. Also during 2013, we were reauthorized to continue to self-insure black lung liabilities incurred prior to February 1, 2013 by the U.S. Department of Labor's Division of Coal Mine Workers' Compensation ("DCMWC") in exchange for $8.4 million of collateral. In July 2019, the DCMWC required that SunCoke, along with a number of other companies, file an application and supporting documentation for reauthorization to self-insure our legacy black lung obligations incurred prior to February 1, 2013. The Company provided the requested information in the fourth quarter of 2019. The DCMWC subsequently notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations; however, the reauthorization is contingent upon the Company providing collateral of $40.4 million to secure certain of its black lung obligations. This proposed collateral requirement is a substantial increase from the $8.4 million in collateral that the Company currently provides to secure these self-insured black lung obligations. The reauthorization process provided the Company with the right to appeal the security determination. SunCoke exercised its right to appeal the DCMWC’s security determination and provided additional information supporting the Company’s position in May 2020 and February 2021. If the Company’s appeal is unsuccessful, the Company may be required to provide additional collateral to receive the self-insurance reauthorization from the DCMWC, which could potentially reduce the Company’s liquidity.
8. Share-Based Compensation
Equity Classified Awards
During the three months ended March 31, 2022, the Company granted share-based compensation to eligible participants under the SunCoke Energy, Inc. Long-Term Performance Enhancement Plan (“SunCoke LTPEP”). All awards vest immediately upon a qualifying termination of employment, as defined by the SunCoke LTPEP, following a change in control.
Restricted Stock Units Settled in Shares
The Company issued 309,721 stock-settled restricted stock units (“RSUs”) to certain employees to be settled in shares of the Company’s common stock during the three months ended March 31, 2022. The weighted average grant date fair value was $7.66 per unit and was based on the closing price of our common stock on the day of the grant. The RSUs vest in three annual installments beginning one year from the date of grant.
Performance Share Units
Performance share units (“PSUs”) were granted to certain employees to be settled in shares of the Company's common stock during the three months ended March 31, 2022, for which the service period will end on December 31, 2024, and will vest during the first quarter of 2025. The service period for certain retiree eligible participants is accelerated. The Company granted the following PSUs:
SharesWeighted Average Grant Date Fair Value per Unit
PSUs(1)(2)
154,860 $8.40 
(1)The PSU awards are split 50/50 between the Company's three year cumulative Adjusted EBITDA (as defined in Note 12) performance measure and the Company's three-year average pre-tax return on capital performance measure for its coke and logistics businesses and unallocated corporate expenses.
(2)The number of PSUs ultimately awarded will be determined by the above performance measures versus targets and the Company's three-year total shareholder return (“TSR”) as compared to the TSR of the companies making up the Nasdaq Iron & Steel Index (“TSR Modifier”). The TSR Modifier can impact the payout between 80 percent and 120 percent of the Company's final performance measure results.
The award may vest between 25 and 200 percent of the original units granted. The fair value of the PSUs granted during the three months ended March 31, 2022 is based on the closing price of our common stock on the date of grant as well as a Monte Carlo simulation for the valuation of the TSR Modifier.
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Liability Classified Awards
Restricted Stock Units Settled in Cash
During the three months ended March 31, 2022, the Company issued 247,123 restricted stock units to certain employees to be settled in cash (“Cash RSUs”), which vest in three annual installments beginning one year from the grant date and are part of the SunCoke LTPEP. The weighted average grant date fair value of the Cash RSUs granted during the three months ended March 31, 2022 was $7.54 per unit and was based on the closing price of our common stock on the day of grant.
The Cash RSU liability is adjusted based on the closing price of our common stock at the end of each quarterly period and was $1.1 million at March 31, 2022 and $1.9 million at December 31, 2021.
Cash Incentive Awards
The Company also granted long-term compensation to eligible participants under the SunCoke Energy, Inc. Long-Term Cash Incentive Plan (“SunCoke LTCIP”), which became effective January 1, 2016. The SunCoke LTCIP is designed to provide for performance-based, cash-settled awards. All awards vest immediately upon a qualifying termination of employment, as defined by the SunCoke LTCIP, following a change in control.
The Company issued awards with an aggregate grant date fair value of approximately $2.0 million during the three months ended March 31, 2022, for which the service period will end on December 31, 2024 and will vest during the first quarter of 2025. The service period for certain retiree eligible participants is accelerated. The awards are split 50/50 between the Company's three-year cumulative Adjusted EBITDA performance and the Company's three-year average pre-tax return on capital for its coke and logistics businesses and unallocated corporate expenses.
The cash incentive award liability at March 31, 2022 was adjusted based on the Company's three-year cumulative Adjusted EBITDA performance and adjusted average pre-tax return on capital for the Company's coke and logistics businesses and unallocated corporate expenses. The cash incentive award liability was $4.6 million at March 31, 2022 and $4.1 million at December 31, 2021.
Summary of Share-Based Compensation Expense
Below is a summary of the compensation expense, unrecognized compensation costs, and the period for which the unrecognized compensation cost is expected to be recognized over:
Three Months Ended March 31,
20222021March 31, 2022
Compensation Expense(1)
Unrecognized Compensation CostWeighted Average Remaining Recognition Period
(Dollars in millions)(Years)
Equity Awards:
RSUs$0.3 $0.3 $2.4 1.2
PSUs0.7 0.1 $3.7 1.1
Total equity awards$1.0 $0.4 
Liability Awards:
Cash RSUs$0.7 $0.8 $3.1 2.1
Cash incentive award1.0 0.2 $5.7 1.5
Total liability awards$1.7 $1.0 
(1)Compensation expense recognized by the Company is included in selling, general and administrative expenses on the Consolidated Statements of Income.
The Company issued $0.1 million and $0.1 million of share-based compensation to the Company's Board of Directors during both the three months ended March 31, 2022 and 2021, respectively.
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9. Earnings per Share
Basic earnings per share (“EPS”) has been computed by dividing net income attributable to SunCoke Energy, Inc. by the weighted average number of shares outstanding during the period. Except where the result would be anti-dilutive, diluted EPS has been computed to give effect to share-based compensation awards using the treasury stock method.
The following table sets forth the reconciliation of the weighted-average number of common shares used to compute basic EPS to those used to compute diluted EPS:
 
Three Months Ended March 31,
 
20222021
 
(Shares in millions)
Weighted-average number of common shares outstanding-basic
83.2 82.8 
Add: Effect of dilutive share-based compensation awards
1.0 0.7 
Weighted-average number of shares-diluted
84.2 83.5 

The following table shows equity awards that are excluded from the computation of diluted earnings per share as the shares would have been anti-dilutive:
  Three Months Ended March 31,
 20222021
(Shares in millions)
Stock options1.8 2.9 
Total1.8 2.9 
10. Fair Value Measurement
The Company measures certain financial and non-financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs.
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.
Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Certain assets and liabilities are measured at fair value on a recurring basis. The Company's cash and cash equivalents were measured at fair value at March 31, 2022 and December 31, 2021 based on quoted prices in active markets for identical assets. These inputs are classified as Level 1 within the valuation hierarchy.
Certain Financial Assets and Liabilities not Measured at Fair Value
At March 31, 2022 and December 31, 2021, the fair value of the Company’s total debt was estimated to be $612.0 million and $625.1 million, respectively, compared to a carrying amount of $641.2 million and $627.0 million, respectively. The fair value was estimated by management based upon estimates of debt pricing provided by financial institutions, which are considered Level 2 inputs.
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11. Revenue from Contracts with Customers
Cokemaking
Our blast furnace coke sales are largely made pursuant to long-term, take-or-pay coke sales agreements primarily with Cleveland-Cliffs Steel Holding Corporation and Cleveland-Cliffs Steel LLC, both subsidiaries of Cleveland Cliffs Inc. and collectively referred to as "Cliffs Steel", United States Steel Corporation ("U.S. Steel"), and Algoma Steel Inc. The take-or-pay provisions in our agreements require our customers to purchase coke volumes as specified in the agreements or pay the contract price for any tonnage they do not purchase. The take-or-pay provisions of our agreements also require us to deliver minimum annual tonnage. As of March 31, 2022, our coke sales agreements have approximately 13.9 million tons of unsatisfied or partially unsatisfied performance obligations, which are expected to be delivered over a weighted average remaining contract term of approximately six years.
Foundry coke sales are generally made under annual agreements with our customers for an agreed upon price and do not contain take-or-pay volume commitments. Export coke sales are generally made on a spot basis at the current market price.
Revenues on all coke sales are recognized when performance obligations to our customers are satisfied in an amount that reflects the consideration that we expect to receive in exchange for the coke.
Logistics
In our logistics business, handling and/or mixing services are provided to steel, coke (including some of our domestic cokemaking facilities), electric utility, coal producing and other manufacturing based customers. Materials are transported in numerous ways, including rail, truck, barge or ship. We do not take possession of materials handled, but rather act as intermediaries between our customers and end users, deriving our revenues from services provided on a per ton basis. The handling and mixing services consist primarily of two performance obligations, unloading and loading of materials. Revenues are recognized when the customer receives the benefits of the services provided, in an amount that reflects the consideration that we will receive in exchange for those services.
The long-term, take-or-pay agreement between Convent Marine Terminal ("CMT") and Javelin Global Commodities (UK) Ltd. was extended during the first quarter of 2022, which includes 4 million take-or-pay tons in both 2023 and 2024. Estimated take-or-pay revenue of approximately $47.5 million from all of our multi-year logistics contracts is expected to be recognized over the next 3 years for unsatisfied or partially unsatisfied performance obligations as of March 31, 2022.
Disaggregated Sales and Other Operating Revenue
The following table provides disaggregated sales and other operating revenue by product or service, excluding intersegment revenues:    
Three Months Ended March 31,
 20222021
 (Dollars in millions)
Sales and other operating revenue:
Cokemaking$395.9 $320.1 
Energy14.7 14.8 
Logistics18.7 15.9 
Operating and licensing fees9.4 8.5 
Other1.1 0.6 
Sales and other operating revenue$439.8 $359.9 

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The following tables provide disaggregated sales and other operating revenue by customer:
Three Months Ended March 31,
20222021
(Dollars in millions)
Sales and other operating revenue:
Cliffs Steel$264.4 255.7 
U.S. Steel60.5 51.0 
Other114.9 53.2 
Sales and other operating revenue$439.8 $359.9 

12. Business Segment Information
The Company reports its business through three segments: Domestic Coke, Brazil Coke and Logistics. The Domestic Coke segment includes the Jewell, Indiana Harbor, Haverhill, Granite City and Middletown cokemaking facilities. Each of these facilities produces coke, and all facilities except Jewell recover waste heat, which is converted to steam or electricity.
The Brazil Coke segment includes the licensing and operating fees payable to us under long-term contracts with ArcelorMittal Brazil, under which we operate a cokemaking facility located in Vitória, Brazil through at least 2023.
Logistics operations are comprised of CMT, Kanawha River Terminal ("KRT"), Lake Terminal, which provides services to our Indiana Harbor cokemaking facility, and Dismal River Terminal ("DRT"), which provides services to our Jewell cokemaking facility. Handling and mixing results are presented in the Logistics segment.
Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other, which also includes activity from our legacy coal mining business.
Segment assets are those assets utilized within a specific segment and exclude taxes.

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The following table includes Adjusted EBITDA, as defined below, which is the measure of segment profit or loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:    
 
Three Months Ended March 31,
 
20222021
 (Dollars in millions)
Sales and other operating revenue:
Domestic Coke$411.6 $335.3 
Brazil Coke9.4 8.5 
Logistics18.8 16.1 
Logistics intersegment sales7.5 6.6 
Elimination of intersegment sales(7.5)(6.6)
Total sales and other operating revenues$439.8 $359.9 
Adjusted EBITDA:
Domestic Coke$76.0 $63.5 
Brazil Coke4.2 4.5 
Logistics12.6 10.9 
Corporate and Other, net(9.0)(8.3)
Total Adjusted EBITDA $83.8 $70.6 
Depreciation and amortization expense:
Domestic Coke$31.3 $28.7 
Brazil Coke 0.1 
Logistics3.6 3.3 
Corporate and Other0.3 0.3 
Total depreciation and amortization expense
$35.2 $32.4 
Capital expenditures:
Domestic Coke$11.1 $16.4 
Brazil Coke0.1 0.1 
Logistics1.7 3.6 
Total capital expenditures$12.9 $20.1 
The following table sets forth the Company's segment assets:
March 31, 2022December 31, 2021
(Dollars in millions)
Segment assets
Domestic Coke$1,450.5 $1,370.6 
Brazil Coke19.4 18.0 
Logistics203.5 202.9 
Corporate and Other32.3 23.9 
Total assets$1,705.7 $1,615.4 
The Company evaluates the performance of its segments based on segment Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for any impairments, restructuring costs and gains or losses on extinguishment of debt. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses.
Management believes Adjusted EBITDA is an important measure in assessing operating performance. Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be
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considered a substitute for net income or any other measure of financial performance presented in accordance with GAAP. Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Below is a reconciliation of Adjusted EBITDA to net income, which is its most directly comparable financial measure calculated and presented in accordance with GAAP:
 Three Months Ended March 31,
 20222021
 (Dollars in millions)
Net income attributable to SunCoke Energy, Inc.$29.5 $16.5 
Add: Net income attributable to noncontrolling interests1.1 1.7 
Net income$30.6 $18.2 
Add:
Depreciation and amortization expense35.2 32.4 
Interest expense, net8.0 12.7 
Income tax expense10.0 7.3 
Adjusted EBITDA$83.8 $70.6 
Subtract: Adjusted EBITDA attributable to noncontrolling interests(1)
2.1 2.6 
Adjusted EBITDA attributable to SunCoke Energy, Inc.
$81.7 $68.0 
(1)Reflects noncontrolling interest in Indiana Harbor.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains certain forward-looking statements of expected future developments, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe in our filings with the SEC, including this Quarterly Report on Form 10-Q, and under “Cautionary Statement Concerning Forward-Looking Statements.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is based on financial data derived from the financial statements prepared in accordance with the United States generally accepted accounting principles (GAAP) and certain other financial data that is prepared using a non-GAAP measure. For a reconciliation of the non-GAAP measure to its most comparable GAAP component, see Non-GAAP Financial Measures at the end of this Item and Note 12 to our consolidated financial statements.
Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flow.
Overview
SunCoke Energy, Inc. (“SunCoke Energy,” “SunCoke,” “Company,” “we,” “our” and “us”) is the largest independent producer of high-quality coke in the Americas, as measured by tons of coke produced each year, and has more than 60 years of coke production experience. We have designed, developed, built, own and operate five cokemaking facilities in the United States (“U.S.”), which have collective nameplate capacity to produce approximately 4.2 million tons of blast furnace coke per year. Additionally, we have designed and operate one cokemaking facility in Brazil under licensing and operating agreements on behalf of ArcelorMittal Brasil S.A. (“ArcelorMittal Brazil”), which has approximately 1.7 million tons of annual cokemaking capacity. Our cokemaking ovens utilize efficient, modern heat recovery technology designed to combust the coal’s volatile components liberated during the cokemaking process and use the resulting heat to create steam or electricity for sale. The majority of our coke is used in the blast furnace production of steel and is sold under long-term, take-or-pay agreements with our steelmaking customers. Our coke is also used in the foundry production of casted iron, as well as exported to international customers seeking high-quality products for their blast furnaces.
We also own and operate a logistics business that provides handling and/or mixing services to steel, coke (including some of our domestic cokemaking facilities), electric utility, coal producing and other manufacturing based customers. Our logistics business has the collective capacity to mix and/or transload more than 40 million tons of coal and other aggregates annually and has storage capacity of approximately 3 million tons.
Market Discussion
The ongoing global coke trade imbalance, driven by a decrease in global coke supply and certain geopolitical events, including the Russian invasion of Ukraine and the related sanctions imposed on Russia during the first quarter of 2022, have increased demand for export coke out of the U.S. This increase in demand and the related escalating coke prices have benefited our export coke sales during the first quarter of 2022. Export coke tonnage is produced utilizing capacity in excess of tons contracted in our long-term, take-or-pay Domestic Coke sales agreements, which are not impacted by global coke trade imbalance and the rise of coke prices.
During the first quarter of 2022, natural gas prices have remained high, continuing to increase global demand for coal to meet European energy needs. Additionally, geopolitical events discussed above have further contributed to the increased coal demand in Europe. Higher demand has driven up the benchmark price for coal delivery into northwest Europe. The increase in global demand for coal has benefited certain CMT customers and is expected to continue to favorably impact export coal volumes through CMT as well as our handling rates.
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First Quarter Key Financial Results
Our consolidated results of operations were as follows:
 Three Months Ended March 31,Increase (Decrease)
 20222021
 (Dollars in millions)
Net income$30.6 $18.2 $12.4 
Net cash provided by operating activities
$22.7 $64.8 $(42.1)
Adjusted EBITDA
$83.8 $70.6 $13.2 
Results for the three months ended March 31, 2022 reflect a strong start to the year. The improved operating results as compared to the same prior year period were driven by favorable pricing on our export coke sales. Operating cash flows during the current year period reflect the impact of higher coal prices and timing of payments. See detailed analysis of the quarter's results throughout the MD&A. See Note 12 to our consolidated financial statements for the definition and reconciliation of Adjusted EBITDA, a non-GAAP measure.
Recent Developments and Items Impacting Comparability
There were no unusual events during the three months ended March 31, 2022 significantly impacting comparability to the prior year period.
Results of Operations
The following table sets forth amounts from the Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, respectively:
 
Three Months Ended March 31, Increase (Decrease)
 
20222021
 
(Dollars in millions)
Revenues
Sales and other operating revenue$439.8 $359.9 $79.9 
Costs and operating expenses
Cost of products sold and operating expenses
338.0 274.0 64.0 
Selling, general and administrative expenses18.0 15.3 2.7 
Depreciation and amortization expense35.2 32.4 2.8 
Total costs and operating expenses391.2 321.7 69.5 
Operating income48.6 38.2 10.4 
Interest expense, net8.0 12.7 (4.7)
Income before income tax expense40.6 25.5 15.1 
Income tax expense10.0 7.3 2.7 
Net income30.6 18.2 12.4 
Less: Net income attributable to noncontrolling interests1.1 1.7 (0.6)
Net income attributable to SunCoke Energy, Inc.$29.5 $16.5 $13.0 

Sales and Other Operating Revenue and Costs of Products Sold and Operating Expenses. Sales and other operating revenue and costs of products sold and operating expenses increased for the three months ended March 31, 2022 compared to the same prior year period, primarily driven by higher coal prices in our Domestic Coke segment. Revenues further benefited from favorable pricing on export coke sales in our Domestic Coke segment.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased slightly during the three months ended March 31,2022 as compared to the same prior year period, driven by higher employee related expenses,
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partially offset by a $0.9 million favorable change in period-over-period, mark-to-market adjustments on deferred compensation as compared to the same prior year period.
Depreciation and Amortization Expense. Depreciation and amortization expense increased during the three months ended March 31, 2022 as a result of depreciable assets placed into service since the prior year period.
Interest Expense, Net. Interest expense, net benefited during the three months ended March 31, 2022 from a lower interest rate on the Senior Notes, which decreased to 4.875 percent from 7.500 percent as a result of the debt refinancing during the second quarter of 2021.
Income Tax Expense. Income tax expense during the three months ended March 31, 2022 reflects the impacts of revaluation of certain deferred tax liabilities due to changes in the apportioned state tax rates, resulting in a benefit of approximately $1.0 million. See Note 4 to our consolidated financial statements for further detail.
Noncontrolling Interest. Net income attributable to noncontrolling interest represents a 14.8 percent third-party interest in our Indiana Harbor cokemaking facility and fluctuates with the financial performance of that facility.
Results of Reportable Business Segments
We report our business results through three segments:
Domestic Coke consists of our Jewell facility, located in Vansant, Virginia, our Indiana Harbor facility, located in East Chicago, Indiana, our Haverhill facility, located in Franklin Furnace, Ohio, our Granite City facility located in Granite City, Illinois, and our Middletown facility located in Middletown, Ohio.
Brazil Coke consists of operations in Vitória, Brazil, where we operate the ArcelorMittal Brazil cokemaking facility.
Logistics consists of CMT, located in Convent, Louisiana, KRT, located in Ceredo and Belle, West Virginia, Lake Terminal, located in East Chicago, Indiana, and DRT, located in Vansant, Virginia. Lake Terminal and DRT are located adjacent to our Indiana Harbor and Jewell cokemaking facilities, respectively.
Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other, including activity from our legacy coal mining business.
Management believes Adjusted EBITDA is an important measure of operating performance, which is used as the primary basis for the chief operating decision maker to evaluate the performance of each of our reportable segments. Adjusted EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP. See Note 12 to our consolidated financial statements.

18

Segment Financial and Operating Data
The following tables set forth financial and operating data:
 
Three Months Ended March 31,Increase (Decrease)
 
20222021
 
(Dollars in millions)
Sales and other operating revenues:
Domestic Coke$411.6 $335.3 $76.3 
Brazil Coke9.4 8.5 0.9 
Logistics18.8 16.1 2.7 
Logistics intersegment sales7.5 6.6 0.9 
Elimination of intersegment sales(7.5)(6.6)(0.9)
Total sales and other operating revenues$439.8 $359.9 $79.9 
Adjusted EBITDA(1):
Domestic Coke$76.0 $63.5 $12.5 
Brazil Coke4.2 4.5 (0.3)
Logistics12.6 10.9 1.7 
Corporate and Other, net(9.0)(8.3)(0.7)
Total Adjusted EBITDA $83.8 $70.6 $13.2 
Coke Operating Data:
Domestic Coke capacity utilization(2)
99 %101 %(2)%
Domestic Coke production volumes (thousands of tons)
975 1,036 (61)
Domestic Coke sales volumes (thousands of tons)
962 1,038 (76)
Domestic Coke Adjusted EBITDA per ton(3)
$79.00