What changed in this filing

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Item 1. Financial Statements

2023-10-25 compared with 2023-07-26 · 114 added, 79 removed, 635 unchanged (23% of the section changed)

3 unchanged sentences

AND SUBSIDIARIES

(In millions, except share information) June 30,

(In millions, except share information) September 30,

2023 December 31,

44 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share amounts) 2023 2022 2023 2022

8 unchanged sentences

Interest expense, net ( 70 ) ( 64 ) ( 226 ) ( 205 )

Loss on extinguishment of debt — ( 66 ) — ( 80 )

Gain (loss) on extinguishment of debt — 4 — ( 76 )

Net periodic benefit credits other than service cost component 50 49 150 148

21 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

12 unchanged sentences

AND SUBSIDIARIES

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2023 2022

3 unchanged sentences

Depreciation, depletion and amortization 738 788

Impairment of long-lived assets — 29

Deferred income taxes 132 210

1 unchanged sentence

Loss on extinguishment of debt — 76

Impairment of long-lived assets — 29

Changes in operating assets and liabilities:

8 unchanged sentences

Purchase of property, plant and equipment ( 481 ) ( 716 )

Acquisition of FPT, net of cash acquired — ( 31 )

Other investing activities 11 20

2 unchanged sentences

Repurchase of common shares ( 152 ) ( 210 )

Proceeds from issuance of debt 750 —

Repayments of debt — ( 1,319 )

Proceeds from issuance of senior notes 750 —

Repayments of senior notes — ( 1,355 )

Borrowings under credit facilities 3,004 4,650

3 unchanged sentences

Net cash used by financing activities ( 1,140 ) ( 1,199 )

Net increase (decrease) in cash and cash equivalents 8 ( 1 )

Net increase in cash and cash equivalents 5 8

Cash and cash equivalents at beginning of period 26 48

20 unchanged sentences

June 30, 2023 508.7 $ 66 $ 4,841 $ 1,624 $ ( 372 ) $ 1,643 $ 242 $ 8,044

Comprehensive income — — — 264 — 4 11 279

Stock and other incentive plans — — 9 — — — — 9

Common stock repurchases, net of excise tax ( 3.9 ) — — — ( 59 ) — — ( 59 )

Net distributions to noncontrolling interests — — — — — — ( 9 ) ( 9 )

September 30, 2023 504.8 $ 66 $ 4,850 $ 1,888 $ ( 431 ) $ 1,647 $ 244 $ 8,264

(In millions) Number

16 unchanged sentences

June 30, 2022 517.3 $ 66 $ 4,855 $ 1,396 $ ( 246 ) $ 658 $ 265 $ 6,994

Comprehensive income — — — 152 — 152 13 317

Stock and other incentive plans — — 9 — — — — 9

Common stock repurchases ( 2.0 ) — — — ( 34 ) — — ( 34 )

Net distributions to noncontrolling interests — — — — — — ( 18 ) ( 18 )

September 30, 2022 515.3 $ 66 $ 4,864 $ 1,548 $ ( 280 ) $ 810 $ 260 $ 7,268

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8 unchanged sentences

however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or any other future period.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or any other future period.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2023 and March 31, 2023.

NATURE OF BUSINESS

14 unchanged sentences

We review an investment for impairment when circumstances indicate that a loss in value below its carrying amount is other than temporary.

Our investment in affiliates of $ 132 million and $ 133 million as of June 30, 2023 and December 31, 2022, respectively, was classified in Other non-current assets.

Our investment in affiliates of $ 131 million and $ 133 million as of September 30, 2023 and December 31, 2022, respectively, was classified in Other non-current assets.

SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

The excise tax is effective on net stock repurchases that occur after December 31, 2022.

The tax will be recorded in equity as a cost of common shares in treasury.

The tax is recorded in equity as a cost of common shares in treasury.

In September 2022, the FASB issued ASU No.

10 unchanged sentences

Allowance for credit losses as of January 1 $ ( 4 ) $ ( 4 )

Decrease (increase) in allowance ( 3 ) 1

Allowance for credit losses as of June 30 $ ( 7 ) $ ( 3 )

Increase in allowance ( 3 ) ( 1 )

Allowance for credit losses as of September 30 $ ( 7 ) $ ( 5 )

The following table presents the detail of our Inventories on the Statements of Unaudited Condensed Consolidated Financial Position:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

11 unchanged sentences

Supply chain finance programs that extend terms or provide us an economic benefit are classified as short-term financings.

As of June 30, 2023 and December 31, 2022, we had $ 23 million and $ 19 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of June 30, 2023 and December 31, 2022, we had $ 94 million and $ 112 million, respectively, classified as Accounts payable.

As of September 30, 2023 and December 31, 2022, we had $ 21 million and $ 19 million, respectively, deemed as short-term financings that are classified in Other current liabilities .

Additionally , as of September 30, 2023 and December 31, 2022, we had $ 90 million and $ 112 million, respectively, classified as Accounts payable.

CASH FLOW INFORMATION

A reconciliation of capital additions to cash paid for capital expenditures is as follows:

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2023 2022

1 unchanged sentence

Non-cash accruals ( 98 ) ( 10 )

Equipment financed with seller 47 —

Right-of-use assets - finance leases 78 30

1 unchanged sentence

Cash payments (receipts) for income taxes and interest are as follows:

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2023 2022

2 unchanged sentences

Interest paid on debt obligations net of capitalized interest 1

1 Capitalized interest was $ 6 million and $ 5 million for the six months ended June 30, 2023 and 2022, respectively.

1 Capitalized interest was $ 8 million and $ 7 million for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 3 - REVENUES

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

23 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

5 unchanged sentences

EBITDA of noncontrolling interests 1

Loss on extinguishment of debt — ( 66 ) — ( 80 )

Gain (loss) on extinguishment of debt — 4 — ( 76 )

Asset impairment — — — ( 29 )

6 unchanged sentences

The following summarizes our assets by segment:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

1 unchanged sentence

Other Businesses 819 836

Intersegment eliminations ( 531 ) ( 521 )

Total segment assets 17,769 18,385

Corporate/Eliminations 191 370

Corporate 290 370

Total assets $ 18,059 $ 18,755

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

11 unchanged sentences

The following table indicates the carrying value of each of the major classes of our depreciable assets:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

8 unchanged sentences

Property, plant and equipment, net $ 8,837 $ 9,070

1 Includes right-of-use assets related to finance leases of $ 467 million and $ 408 million as of June 30, 2023 and December 31, 2022, respectively.

We recorded depreciation and depletion expense of $ 246 million and $ 485 million for the three and six months ended June 30, 2023, respectively, and $ 249 million and $ 547 million for the three and six months ended June 30, 2022, respectively.

Depreciation and depletion expense for both the three and six months ended June 30, 2022 includes $ 23 million of accelerated depreciation related to the decision to indefinitely idle the coke facility at Middletown Works.

Depreciation and depletion expense for the six months ended June 30, 2022 also includes $ 68 million of accelerated depreciation related to the indefinite idle of the Indiana Harbor #4 blast furnace.

1 Includes right-of-use assets related to finance leases of $ 485 million and $ 408 million as of September 30, 2023 and December 31, 2022, respectively.

We recorded depreciation and depletion expense of $ 247 million and $ 732 million for the three and nine months ended September 30, 2023, respectively, and $ 235 million and $ 782 million for the three and nine months ended September 30, 2022, respectively.

Depreciation and depletion expense for the nine months ended September 30, 2022 includes $ 23 million of accelerated depreciation related to the decision to indefinitely idle the coke facility at Middletown Works and $ 68 million of accelerated depreciation related to the indefinite idle of the Indiana Harbor #4 blast furnace.

NOTE 6 - GOODWILL AND INTANGIBLE ASSETS AND LIABILITIES

The following is a summary of Goodwill by segment:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

4 unchanged sentences

The following is a summary of our intangible assets and liabilities:

June 30, 2023

September 30, 2023

December 31, 2022

14 unchanged sentences

Amortization of all intangible liabilities is recognized in Cost of goods sold .

Amortization expense related to intangible assets was $ 3 million for both the three months ended June 30, 2023 and 2022, and $ 7 million for both the six months ended June 30, 2023 and 2022.

Amortization expense related to intangible assets was $ 3 million for both the three months ended September 30, 2023 and 2022, and $ 10 million for both the nine months ended September 30, 2023 and 2022.

Estimated future amortization expense is $ 3 million for the remainder of 2023 and $ 13 million annually for the years 2024 through 2028.

Income from amortization related to the intangible liabilities was $ 2 million for both the three months ended June 30, 2023 and 2022, and $ 3 million for both the six months ended June 30, 2023 and 2022.

Income from amortization related to the intangible liabilities was $ 1 million for both the three months ended September 30, 2023 and 2022, and $ 4 million for both the nine months ended September 30, 2023 and 2022.

Estimated future income from amortization is $ 1 million for the remainder of 2023 and $ 5 million annually for the years 2024 through 2028.

4 unchanged sentences

Annual Effective

Interest Rate June 30,

Interest Rate September 30,

2023 December 31,

24 unchanged sentences

as borrower under our ABL Facility.

3 Our ABL Facility annual effective interest rate was 7.091 % and 5.602 %, respectively, as of June 30, 2023 and December 31, 2022.

3 Our ABL Facility annual effective interest rate was 7.148 % and 5.602 %, respectively, as of September 30, 2023 and December 31, 2022.

6.750% 2030 Senior Notes - 2023 Offering

2 unchanged sentences

The 6.750% 2030 Senior Notes were issued in a private placement transaction exempt from the registration requirements of the Securities Act.

The 6.750% 2030 Senior Notes bear interest at a rate of 6.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2023.

The 6.750% 2030 Senior Notes bear interest at a rate of 6.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on October 15, 2023.

The 6.750% 2030 Senior Notes mature on April 15, 2030.

12 unchanged sentences

The Fourth ABL Amendment removed the LIBOR option for variable rate loans due to its cessation and replaced it with a SOFR option.

Borrowings under the amended ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a SOFR

rate, in each case, plus an applicable tiered margin.

Borrowings under the ABL Facility bear interest, at our option, at a base rate or, if certain conditions are met, a SOFR rate, in each

case, plus an applicable tiered margin.

The base rate is equal to the greater of the federal funds rate plus 0.5 % or the term SOFR plus 1.25 %.

As of June 30, 2023, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

As of September 30, 2023, we were in compliance with the ABL Facility liquidity requirements and, therefore, the springing financial covenant requiring a minimum fixed charge coverage ratio of 1.0 to 1.0 was not applicable.

The following represents a summary of our borrowing capacity under the ABL Facility:

(In millions) June 30,

(In millions) September 30,

Available borrowing base on ABL Facility 1

2 unchanged sentences

Borrowing capacity available $ 4,331

1 As of June 30, 2023, the ABL Facility has a maximum available borrowing base of $ 4.75 billion.

1 As of September 30, 2023, the ABL Facility has a maximum available borrowing base of $ 4.75 billion.

The borrowing base is determined by applying customary advance rates to eligible accounts receivable, inventory and certain mobile equipment.

1 unchanged sentence

DEBT MATURITIES

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at June 30, 2023 (in millions):

The following represents a summary of our maturities of debt instruments based on the principal amounts outstanding at September 30, 2023 (in millions):

2023 2024 2025 2026 2027 Thereafter Total

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

3 unchanged sentences

Amortization:

Prior service credits ( 4 ) — ( 8 ) —

Prior service costs (credits) ( 4 ) 1 ( 12 ) 1

Net actuarial gain ( 36 ) ( 3 ) ( 109 ) ( 9 )

Net periodic benefit costs (credits) $ ( 33 ) $ 18 $ ( 98 ) $ 54

Based on funding requirements, we made no defined benefit pension contributions for the three and six months ended June 30, 2023 and June 30, 2022.

Based on funding requirements, we made no contributions to our voluntary employee benefit association trust plans for the three and six months ended June 30, 2023.

We made contributions of $ 28 million and $ 56 million to our voluntary employee benefit association trust plans for the three and six months ended June 30, 2022, respectively.

Based on funding requirements, we made nominal defined benefit pension contributions for the three and nine months ended September 30, 2023.

Based on funding requirements, we made $ 1 million of defined benefit pension contributions for both the three and nine months ended September 30, 2022.

Based on funding requirements, we made no contributions to our VEBA trust plans for the three and nine months ended September 30, 2023.

We made contributions of $ 24 million and $ 80 million to our VEBA trust plans for the three and nine months ended September 30, 2022, respectively.

NOTE 9 - INCOME TAXES

Our 2023 estimated annual effective tax rate before discrete items as of June 30, 2023 is 22 %.

The estimated annual effective tax rate exceeds the U.S.

statutory rate of 21 %, as state income tax expense exceeds the percentage depletion in excess of cost depletion.

The 2022 estimated annual effective tax rate before discrete items as of June 30, 2022 was 22 %.

Our 2023 estimated annual effective tax rate before discrete items as of September 30, 2023 is 19 %.

The estimated annual effective tax rate is less than the U.S.

statutory rate of 21 %, as state income tax expense is less than the percentage depletion in excess of cost depletion.

The 2022 estimated annual effective tax rate before discrete items as of September 30, 2022 was 20 %.

For the nine months ended September 30, 2023, income tax expense includes $ 18 million of discrete benefit, as compared to $ 3 million of discrete expense for the nine months ended September 30, 2022.

NOTE 10 - ASSET RETIREMENT OBLIGATIONS

5 unchanged sentences

The following is a summary of our asset retirement obligations:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

2 unchanged sentences

Long-term asset retirement obligations $ 505 $ 499

1 Includes $ 278 million and $ 277 million related to our active operations as of June 30, 2023 and December 31, 2022, respectively.

1 Includes $ 275 million and $ 277 million related to our active operations as of September 30, 2023 and December 31, 2022, respectively.

The following is a roll forward of our asset retirement obligation liability:

5 unchanged sentences

Remediation payments ( 17 ) ( 33 )

Asset retirement obligation as of June 30 $ 525 $ 532

Asset retirement obligation as of September 30 $ 522 $ 522

NOTE 11 - FAIR VALUE MEASUREMENTS

2 unchanged sentences

A summary of the carrying value and fair value of other financial instruments were as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In millions) Classification Carrying

8 unchanged sentences

Our hedging strategy is to reduce the effect on earnings from the price volatility of these various commodity exposures, including timing differences between when we incur raw material commodity costs and when we receive sales surcharges from our customers based on those raw materials.

Our commodity contracts are designated as cash flow hedges for accounting purposes, and we record the gains and losses for the derivatives in Accumulated other comprehensive income until we reclassify them into Cost of goods sold when we recognize the associated underlying operating costs.

associated underlying operating costs.

Refer to NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE INCOME for further information.

2 unchanged sentences

Notional Amount

Commodity Contracts Unit of Measure Maturity Dates June 30,

Commodity Contracts Unit of Measure Maturity Dates September 30,

2023 December 31,

Natural Gas MMBtu July 2023 - May 2026 152,920,000 127,790,000

Electricity Megawatt hours July 2023 - January 2026 2,810,342 432,043

Tin Metric tons July 2023 - December 2023 90 180

Natural Gas MMBtu October 2023 - August 2026 170,485,000 127,790,000

Electricity Megawatt hours October 2023 - October 2026 3,002,720 432,043

The following table presents the fair value of our cash flow hedges and the classification in the Statements of Unaudited Condensed Consolidated Financial Position:

Balance Sheet Location (In millions) June 30,

Balance Sheet Location (In millions) September 30,

2023 December 31,

8 unchanged sentences

The share repurchase program does not have a specific expiration date.

During both the three and six months ended June 30, 2023, we repurchased 6.5 million common shares, at a cost of $ 94 million in the aggregate, excluding excise tax due under the Inflation Reduction Act of 2022.

During the three and six months ended June 30, 2022, we repurchased 7.5 million and 8.5 million common shares, respectively, at a cost of $ 157 million and $ 176 million in the aggregate, respectively.

As of June 30, 2023, there was $ 666 million remaining under the authorization.

During the three and nine months ended September 30, 2023, we repurchased 3.9 million and 10.4 million common shares, respectively, at a cost of $ 58 million and $ 152 million in the aggregate, respectively, excluding excise tax due under the Inflation Reduction Act.

During the three and nine months ended September 30, 2022, we repurchased 2.0 million and 10.5 million common shares, respectively, at a cost of $ 34 million and $ 210 million in the aggregate, respectively.

As of September 30, 2023, there was $ 608 million remaining under the authorization.

PREFERRED STOCK

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

16 unchanged sentences

Beginning balance $ 1,794 $ 550 $ 1,847 $ 549

Other comprehensive income before reclassifications — 119 — 119

Income tax — ( 28 ) — ( 28 )

Other comprehensive income before reclassifications, net of tax — 91 — 91

Losses (gains) reclassified from AOCI to net income 3

( 35 ) 3 ( 106 ) 4

Income tax expense 2

Income tax expense (benefit) 2

8 ( 1 ) 26 ( 1 )

Net losses (gains) reclassified from AOCI to net income ( 27 ) 2 ( 80 ) 3

8 unchanged sentences

We consolidate SunCoke Middletown as a VIE because we are the primary beneficiary despite having no ownership interest in SunCoke Middletown.

SunCoke Middletown had income before income taxes of $ 10 million and $ 27 million for the three and six months ended June 30, 2023, respectively, compared to $ 7 million and $ 22 million for the three and six months ended June 30, 2022, respectively, that was included in our consolidated income before income taxes.

SunCoke Middletown had income before income taxes of $ 13 million and $ 40 million for the three and nine months ended September 30, 2023, respectively, compared to $ 14 million and $ 36 million for the three and nine months ended September 30, 2022, respectively, that was included in our consolidated income before income taxes.

Additionally, SunCoke Middletown had cash used for capital expenditures of $ 21 million for the nine months ended September 30, 2023, compared to $ 11 million for the nine months ended September 30, 2022, that was included in our consolidated Purchase of property, plant and equipment on the Statements of Unaudited Condensed Consolidated Cash Flows.

The assets of the consolidated VIE can only be used to settle the obligations of the consolidated VIE and not obligations of the Company.

1 unchanged sentence

The Statements of Unaudited Condensed Consolidated Financial Position includes the following amounts for SunCoke Middletown:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share amounts) 2023 2022 2023 2022

37 unchanged sentences

The following is a summary of our environmental obligations:

(In millions) June 30,

(In millions) September 30,

2023 December 31,

29 unchanged sentences

In addition, ArcelorMittal Burns Harbor LLC was served with a subpoena on December 5, 2019, from the United States District Court for the Northern District of Indiana, relating to the August 2019 event and has responded to the subpoena requests, including follow-up requests.

With the resolution of monetary sanctions and injunctive relief requirements under the consent decree, we do not believe that the costs to resolve any other third-party claims, including potential natural resource damages claims, that may arise out of the August 2019 event are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or cash flows.

claims, that may arise out of the August 2019 event are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition, results of operations or cash flows.

In addition to the foregoing matters, we are or may be involved in proceedings with various regulatory authorities that may require us to pay fines, comply with more rigorous standards or other requirements or incur capital and operating expenses for environmental compliance.

2 unchanged sentences

We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due.

we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary.

If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary.

We also recognize tax benefits to the extent that it is more likely than not that our positions will be sustained when challenged by the taxing authorities.

8 unchanged sentences

NOTE 18 - SUBSEQUENT EVENTS

We have evaluated subsequent events through the date of financial statement issuance.

On October 6, 2023, we entered into a membership interest purchase agreement for the sale of the legal entities owning, among other things, our closed coal mines in Pennsylvania.

As a result of the sale, we anticipate a gain of approximately $ 60 million to be recorded during the fourth quarter of 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements