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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-24 · 202 added, 292 removed, 853 unchanged (37% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Income for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Balance Sheets at December 31, 2022 and 2021

4 unchanged sentences

Summary of Significant Accounting Policies

Acquisitions and Divestitures

Customer Concentrations

17 unchanged sentences

We have audited the accompanying consolidated balance sheets of SunCoke Energy, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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SunCoke Energy, Inc.

Consolidated Statements of Operations

Consolidated Statements of Income

Years Ended December 31,

6 unchanged sentences

Depreciation and amortization expense 142.5 133.9 133.7

Long-lived asset and goodwill impairment — — 247.4

Total costs and operating expenses 1,818.8 1,314.5 1,263.3

Operating income (loss) 141.5 69.7 ( 144.3 )

Operating income 153.7 141.5 69.7

Interest expense, net 32.0 42.5 56.3

Loss (gain) on extinguishment of debt, net — 31.9 ( 5.7 )

Income (loss) before income tax expense (benefit) 67.1 19.1 ( 203.1 )

Income tax expense (benefit) 18.3 10.3 ( 54.7 )

Net income (loss) 48.8 8.8 ( 148.4 )

Income before income tax expense 121.7 67.1 19.1

Income tax expense 16.8 18.3 10.3

Net income 104.9 48.8 8.8

Net income attributable to noncontrolling interests 4.2 5.4 5.1

Net income (loss) attributable to SunCoke Energy, Inc.

Net income attributable to SunCoke Energy, Inc.

$ 100.7 $ 43.4 $ 3.7

Earnings (loss) attributable to SunCoke Energy, Inc.

Earnings attributable to SunCoke Energy, Inc.

per common share:

6 unchanged sentences

SunCoke Energy, Inc.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Years Ended December 31,

1 unchanged sentence

(Dollars in millions)

Net income (loss) $ 48.8 $ 8.8 $ ( 148.4 )

Net income $ 104.9 $ 48.8 $ 8.8

Other comprehensive income (loss):

Reclassifications of actuarial loss amortization and prior service benefit to earnings (net of related tax benefit of $ 0.1 million in 2021 and zero for 2020 and 2019)

Reclassifications of actuarial loss amortization and prior service benefit to earnings (net of related tax benefit of $ 0.1 million in both 2022 and 2021, and zero for 2020)

Retirement benefit plans funded status adjustment (net of related tax (expense) benefit of $( 0.9 ) million, $( 0.3 ) million and $ 0.4 million, respectively)

1 unchanged sentence

Currency translation adjustment 0.2 ( 0.9 ) ( 1.2 )

Comprehensive income (loss) 49.2 6.1 ( 149.7 )

Comprehensive income 108.6 49.2 6.1

Comprehensive income attributable to noncontrolling interests 4.2 5.4 5.1

Comprehensive income (loss) attributable to SunCoke Energy, Inc.

Comprehensive income attributable to SunCoke Energy, Inc.

$ 104.4 $ 43.8 $ 1.0

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Receivables, net

Income tax receivable

Other current assets

10 unchanged sentences

Current portion of financing obligation 3.3 3.2

Interest payable

Total current liabilities

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Accumulated other comprehensive loss ( 13.0 ) ( 16.7 )

Retained deficit ( 23.4 ) ( 46.6 )

Retained earnings (deficit) 53.5 ( 23.4 )

Total SunCoke Energy, Inc.

10 unchanged sentences

Cash Flows from Operating Activities:

Net income (loss) $ 48.8 $ 8.8 $ ( 148.4 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Long-lived asset and goodwill impairment — — 247.4

Net income $ 104.9 $ 48.8 $ 8.8

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense 142.5 133.9 133.7

Deferred income tax expense (benefit) 9.3 12.1 ( 63.1 )

Deferred income tax expense 2.3 9.3 12.1

Share-based compensation expense 6.7 6.1 3.8

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Accrued liabilities 8.4 6.3 ( 1.0 )

Interest payable ( 2.0 ) ( 0.2 ) ( 1.4 )

Income taxes 5.5 ( 3.3 ) ( 1.5 )

Other ( 2.8 ) ( 0.3 ) 9.1

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Supplemental Disclosure of Cash Flow Information

Interest paid, net of capitalized interest of $ 0.5 million, $ 0.2 million and $ 2.3 million, respectively

Interest paid, net of capitalized interest of zero , $ 0.5 million and $ 0.2 million, respectively

$ 28.5 $ 40.0 $ 51.8

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At December 31, 2019 98,047,389 $ 1.0 13,783,182 $ ( 177.0 ) $ 712.1 $ ( 14.4 ) $ ( 30.1 ) $ 491.6 $ 26.8 $ 518.4

Net (loss) income — — — — — — ( 152.3 ) ( 152.3 ) 3.9 ( 148.4 )

Net income — — — — — — 3.7 3.7 5.1 8.8

Reclassification of prior service benefit and actuarial loss amortization to earnings (net of related tax) — — — — — 0.1 — 0.1 — 0.1

Retirement benefit plans funded status adjustment (net of related tax benefit of $ 0.4 million)

1 unchanged sentence

Currency translation adjustment — — — — — ( 1.2 ) — ( 1.2 ) — ( 1.2 )

Share-based compensation expense — — — — 4.5 — — 4.5 — 4.5

Share-based compensation — — — — 3.8 — — 3.8 — 3.8

Share issuances, net of shares withheld for taxes 130,552 — — — ( 0.2 ) — — ( 0.2 ) — ( 0.2 )

1 unchanged sentence

Dividends — — — — — — ( 20.2 ) ( 20.2 ) — ( 20.2 )

Cash distribution to noncontrolling interest — — — — — — — — ( 14.2 ) ( 14.2 )

Simplification Transaction:

Share issuances, for the acquisition of Partnership public units 24,818,149 0.3 — — 182.2 — — 182.5 ( 182.5 ) —

Share issuances, for the final Partnership distribution 635,502 — — — — — — — — —

Transaction costs — — — — ( 5.4 ) — — ( 5.4 ) — ( 5.4 )

Deferred tax adjustment — — — — 43.7 — — 43.7 — 43.7

At December 31, 2020 98,177,941 $ 1.0 15,404,482 $ ( 184.0 ) $ 715.7 $ ( 17.1 ) $ ( 46.6 ) $ 469.0 $ 31.9 $ 500.9

Net income — — — — — — 43.4 43.4 5.4 48.8

Reclassification of prior service benefit and actuarial loss amortization to earnings (net of related tax benefit of $ 0.1 million)

— — — — — 0.3 — 0.3 — 0.3

Retirement benefit plans funded status adjustment (net of related tax expense of $ 0.3 million)

— — — — — 1.0 — 1.0 — 1.0

Currency translation adjustment — — — — — ( 0.9 ) — ( 0.9 ) — ( 0.9 )

Share-based compensation — — — — 6.1 — — 6.1 — 6.1

Share issuances, net of shares withheld for taxes 318,868 — — — ( 0.6 ) — — ( 0.6 ) — ( 0.6 )

Dividends — — — — — — ( 20.2 ) ( 20.2 ) — ( 20.2 )

At December 31, 2021 98,496,809 $ 1.0 15,404,482 $ ( 184.0 ) $ 721.2 $ ( 16.7 ) $ ( 23.4 ) $ 498.1 $ 37.3 $ 535.4

(See Accompanying Notes)

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Comprehensive Loss Retained

Deficit Total SunCoke

Earnings Total SunCoke

Equity Non- controlling

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Net income — — — — — — 100.7 100.7 4.2 104.9

Reclassification of prior service cost and actuarial loss amortization to earnings, net of tax — — — — — 0.1 — 0.1 — 0.1

Retirement benefit plans funded status adjustment (net of related tax benefit of $ 0.4 million)

Reclassification of prior service benefit and actuarial loss amortization to earnings (net of related tax benefit of $ 0.1 million)

— — — — — 0.4 — 0.4 — 0.4

Currency translation adjustment — — — — — ( 1.2 ) — ( 1.2 ) — ( 1.2 )

Share-based compensation expense — — — — 3.8 — — 3.8 — 3.8

Share issuances, net of shares withheld for taxes 130,552 — — — ( 0.2 ) — — ( 0.2 ) — ( 0.2 )

Share repurchases — — 1,621,300 ( 7.0 ) — — — ( 7.0 ) — ( 7.0 )

Dividends — — — — — — ( 20.2 ) ( 20.2 ) — ( 20.2 )

At December 31, 2020 98,177,941 $ 1.0 15,404,482 $ ( 184.0 ) $ 715.7 $ ( 17.1 ) $ ( 46.6 ) $ 469.0 $ 31.9 $ 500.9

Net income — — — — — — 43.4 43.4 5.4 48.8

Reclassification of prior service cost and actuarial loss amortization to earnings, net of tax — — — — — 0.3 — 0.3 — 0.3

Retirement benefit plans funded status adjustment (net of related tax expense of $ 0.9 million)

1 unchanged sentence

Currency translation adjustment — — — — — 0.2 — 0.2 — 0.2

Share-based compensation expense — — — — 6.1 — — 6.1 — 6.1

Share-based compensation — — — — 8.1 — — 8.1 — 8.1

Share issuances, net of shares withheld for taxes 318,971 — — — ( 1.2 ) — — ( 1.2 ) — ( 1.2 )

Dividends — — — — — — ( 23.8 ) ( 23.8 ) — ( 23.8 )

Cash distribution to noncontrolling interests — — — — — — — — ( 4.4 ) ( 4.4 )

At December 31, 2022 98,815,780 $ 1.0 15,404,482 $ ( 184.0 ) $ 728.1 $ ( 13.0 ) $ 53.5 $ 585.6 $ 37.1 $ 622.7

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(“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.

Coke is a principal raw material in the blast furnace steelmaking process and is produced by heating metallurgical coal in a refractory oven, which releases certain volatile components from the coal, thus transforming the coal into coke.

Additionally, we own and operate a logistics business, which primarily provides handling and/or mixing services of coal and other aggregates to third-party customers as well as to our own cokemaking facilities.

We have designed, developed, built, own and operate five cokemaking facilities in the United States (“U.S.”) with 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.

Coke is produced by heating metallurgical coal in a refractory oven, which releases certain volatile components from the coal, thus transforming the coal into coke.

Our coke is primarily used as a principal raw material in the blast furnace steelmaking process as well as in the foundry production of casted iron, and the majority of our sales are derived from blast furnace coke sales made under long-term, take-or-pay agreements.

We also export coke to international customers seeking high-quality product for their blast furnaces.

We have designed, developed and built, and we currently own and operate five cokemaking facilities in the United States (“U.S.”) with collective nameplate capacity to produce approximately 4.2 million tons of blast furnace coke per year.

Additionally, we designed and currently 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.

In order to further diversify our business and customer base, we have entered the foundry coke market.

Foundry coke is a high-quality grade of coke that is used at foundries to melt iron and various metals in cupola furnaces, which is further processed via casting or molding into products used in various industries such as construction, transportation and industrial products.

We began producing and selling foundry coke on a commercial scale in 2021.

We also began selling blast furnace coke into the export coke market in 2021, utilizing capacity in excess of that reserved for our long-term, take-or-pay agreements.

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.

This differs from by-product cokemaking, which repurposes the coal’s liberated volatile components for other uses.

We have constructed the only greenfield cokemaking facilities in the U.S.

in over 30 years and are the only North American coke producer that utilizes heat recovery technology in the cokemaking process.

We provide steam pursuant to steam supply and purchase agreements with our customers.

Electricity is sold into the regional power market or pursuant to energy sales agreements.

Our logistics business 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.

The logistics business has terminals in Indiana, West Virginia, Virginia, and Louisiana with collective capacity to mix and/or transload more than 40 million tons of coal and other aggregates annually and has total storage capacity of more than 3 million tons.

Incorporated in Delaware in 2010 and headquartered in Lisle, Illinois, we became a publicly-traded company in 2011, and our stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “SXC.”

We also own and operate a logistics business that provides export and domestic material 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 terminals, which are strategically located to reach Gulf Coast, East Coast, Great Lakes and international ports, have 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.

Consolidation and Basis of Presentation

2 unchanged sentences

Intercompany transactions and balances have been eliminated in consolidation.

Our consolidated financial statements have historically included SunCoke Energy Partners, L.P.

(the “Partnership”), which owned our Haverhill, Middletown, and Granite City cokemaking facilities and Convent Marine Terminal ("CMT"), Kanawha River Terminal ("KRT") and SunCoke Lake Terminal ("Lake Terminal").

On June 28, 2019, the Company acquired the outstanding units of the Partnership not already owned by SunCoke, at which time the Partnership became a wholly-owned subsidiary of SunCoke.

On January 1, 2020, the Partnership merged with and into SunCoke Energy Partners Finance Corp., which is also a wholly-owned subsidiary of the Company.

Net income attributable to noncontrolling interest represents a 14.8 percent third-party interest in our Indiana Harbor cokemaking facility as well as the common public unitholders’ interest in the Partnership prior to the transaction discussed in Note 3.

Net income attributable to noncontrolling interest represents a 14.8 percent third-party interest in our Indiana Harbor cokemaking facility.

Summary of Significant Accounting Policies

10 unchanged sentences

Cost is determined using the first-in, first-out method, except for the Company’s materials and supplies inventory, which are determined using the average-cost method.

The Company primarily utilizes the selling prices under its coke supply agreements to record lower of cost or net realizable value inventory adjustments.

The Company primarily utilizes the contracted sales prices under its coke sales contracts to record lower of cost or net realizable value inventory adjustments.

Properties, Plants and Equipment

2 unchanged sentences

Logistics plant and equipment are generally depreciated over 15 to 35 years.

Depreciation and amortization is excluded from cost of products sold and operating expenses and is presented separately on the Consolidated Statements of Operations.

Depreciation and amortization is excluded from cost of products sold and operating

expenses and is presented separately on the Consolidated Statements of Income.

Gains and losses on the disposal or retirement of fixed assets are reflected in earnings when the assets are sold or retired.

Amounts incurred that extend an asset’s useful life, increase its productivity or add production capacity are capitalized.

Additionally, the Company generally capitalizes interest on capital projects with an expected construction period of one year or longer.

The Company accounts for changes in useful lives, when appropriate, as a change in estimate, with prospective application only.

The Company capitalized interest of $ 0.5 million , $ 0.2 million, and $ 2.3 million in 2021, 2020 and 2019, respectively.

Direct costs, such as outside labor, materials, internal payroll and benefits costs incurred during capital projects are capitalized;

12 unchanged sentences

Therefore, fair market value is generally based on the present values of estimated future cash flows using discount rates commensurate with the risks associated with the assets being reviewed for impairment.

Income tax expense (benefit) is determined by applying the provisions of federal and state tax laws to taxable income (loss) during the period.

We do business in a number of states with differing laws concerning how income subject to each state's tax structure is measured.

These laws, as well as changes in tax legislation, impact what effective tax rate is applied to income generated in each state, and the Company makes estimates of how income will be apportioned among various states based on these factors.

Deferred tax asset and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are projected to be recovered or settled.

3 unchanged sentences

We adjust our liability each year based upon actuarial calculations of our expected future payments for these benefits, including a provision for incurred but not reported losses.

Adjustments are recognized in the period the adjustment occurs as a component of selling, general and administrative expense on the Consolidated Statements of Income.

Postretirement Benefit Plan Liabilities

1 unchanged sentence

Actuarial gains (losses) and prior service costs (benefits) which have not yet been recognized in net income are recognized as a credit (charge) to accumulated other comprehensive income (loss).

The credit (charge) to accumulated other comprehensive income (loss), which is reflected net of related tax effects, is subsequently recognized in net income when amortized as a component of postretirement benefit plans expense included in interest expense, net on the Consolidated Statements of Operations.

Asset Retirement Obligations

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The Company’s asset retirement obligations primarily relate to costs associated with restoring land to its original state.

We determine if an arrangement contains a lease at inception.

We recognize right-of-use assets and lease liabilities associated with leases based on the present value of the future minimum lease payments over the lease term at the commencement date.

Our leases do not provide an implicit rate of return, therefore, we use our incremental borrowing rate at the inception of the lease to calculate the present value of lease payments.

Our incremental borrowing rate is determined through market sources for secured borrowings and approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments in similar economic environments.

Lease terms reflect options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

The Company has elected to apply the short-term lease exception for all asset classes, therefore, excluding all leases with a term of less than 12 months from the balance sheet, and will recognize the lease payments in the period they are incurred.

Additionally, the Company accounts for lease and non-lease components of an arrangement, such as assets and services, as a single lease component for all asset classes on existing leases.

Shipping and Handling Costs

Shipping and handling costs are included in cost of products sold and operating expenses on the Consolidated Statements of Operations and are generally passed through to our customers.

Shipping and handling costs are included in cost of products sold and operating expenses on the Consolidated Statements of Income and are generally passed through to our customers.

The Company has elected the practical expedient under Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers," to account for shipping and handling activities as a promise to fulfill the transfer of coke.

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dollars at the average exchange rates during the period.

Recently Adopted Accounting Pronouncements

No accounting pronouncements adopted during the year ended December 31, 2021 had a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements

In December, 2022 the Financial Accounting Standards Board ("FASB") issued ASU 2022-06 Reference Rate Reform (Topic 848):Deferral of the Sunset Date of Topic 848 as an amendment to previously issued ASU 2020-04 Reference Rate Reform (Topic 848):Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

These updates help limit the accounting impact from contract modifications due to the transition from LIBOR to alternative reference rates that are completed by December 31, 2024.

The Company does not expect the transition from LIBOR to SOFR to have a material impact on the consolidated financial statements and disclosures.

Refer to Note 11 for further detail.

Labor Concentrations

As of December 31, 2022, we have 887 employees in the U.S.

Approximately 41 percent of our domestic employees, principally at our cokemaking operations, are represented by the United Steelworkers union under various

Approximately 40 percent of our domestic employees, principally at our cokemaking operations, are represented by the United Steelworkers union under various contracts.

Additionally, approximately 3 percent of our domestic employees are represented by the International Union of Operating Engineers.

Labor agreements at KRT, Lake Terminal, and Indiana Harbor will expire on April 30, 2022, June 30, 2022, and September 1, 2022, respectively.

We will negotiate the renewal of these agreements in 2022 and do not anticipate any work stoppages.

Labor agreements at KRT, Lake Terminal, and Indiana Harbor were renewed in 2022 and will expire on April 30, 2025, June 30, 2025, and September 1, 2026, respectively.

As of December 31, 2022,we have 285 employees at the cokemaking facility in Vitória, Brazil, all of whom are represented by a union under a labor agreement .

During 2021, the labor agreement at our Vitória, Brazil facility was renewed for an additional year, and it expires on November 30, 2022.

Acquisitions and Divestitures

Simplification Transaction

Prior to June 28, 2019, SunCoke owned a 60.4 percent limited partner interest in the Partnership as well as our 2.0 percent general partner interest.

The remaining 37.6 percent limited partner interest in the Partnership was held by public unitholders.

On June 28, 2019, the Company acquired all 17,727,249 outstanding common units of the Partnership not already owned by SunCoke in exchange for 24,818,149 newly issued SunCoke common shares (the "Simplification Transaction").

Additionally, the final pro-rated quarterly Partnership distribution was settled with 635,502 newly issued SunCoke common shares.

Following the completion of the Simplification Transaction, the Partnership became a wholly-owned subsidiary of SunCoke, the Partnership common units ceased to be publicly traded and the Partnership’s incentive distribution rights were eliminated.

SunCoke controlled the Partnership both before and after the Simplification Transaction.

Therefore, the change in our ownership interest was accounted for as an equity transaction, and no gain or loss was recognized in our Consolidated Statements of Operations for this transaction.

The following table summarizes the non-cash (decreases) increases on our balance sheet related to the Simplification Transaction, reflecting the changes in ownership of the Partnership and a step-up in the tax basis in the underlying assets acquired:

(Dollars in millions)

Noncontrolling interest $ ( 182.5 )

Deferred income taxes $ ( 43.7 )

Common stock $ 0.3

Additional paid-in capital $ 225.9

Additionally, the Company incurred transaction costs totaling $ 11.0 million, of which $ 5.4 million were incurred by SunCoke and were recorded as a reduction to additional paid-in capital on the Consolidated Balance Sheets at December 31, 2019.

The remaining transaction costs were incurred by the Partnership, resulting in $ 4.9 million of expense included in selling, general and administrative expenses on the Consolidated Statements of Operations for the year ended December 31, 2019.

Subsequent to the closing of the Simplification Transaction, SunCoke incurred $ 0.3 million of legal and consulting costs, which were included in selling, general and administrative expenses on the Consolidated Statements of Operations for the year ended December 31, 2019.

The following table summarizes the effects of the changes in the Company's ownership interest in the Partnership on SunCoke's equity in 2019.

There were no changes in SunCoke's ownership interest in consolidated subsidiaries in 2020 or 2021.

Years Ended December 31,

Net loss attributable to SunCoke Energy, Inc.

Increase in SunCoke Energy, Inc.

equity for the purchase of additional interest in the Partnership 182.5

Changes from net loss attributable to SunCoke Energy, Inc.

and transfers to noncontrolling interest $ 30.2

During 2022, the labor agreement at our Vitória, Brazil facility was renewed

for an additional year, and it expires on October 31, 2023.

Customer Concentrations

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Year Ended December 31,

Sales and other operating revenue Percent of Company sales and other operating revenue

Sales and other operating revenue Percent of Company sales and other operating revenue Sales and other operating revenue Percent of Company sales and other operating revenue

(Dollars in millions)

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Years Ended December 31,

Sales and other operating revenue Percent of Company sales and other operating revenue Sales and other operating revenue Percent of Company sales and other operating revenue

Sales and other operating revenue Percent of Company sales and other operating revenue

(Dollars in millions)

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(2) Represents revenues included in our Domestic Coke and Logistics segments.

(3) In March 2020, Cliffs completed the acquisition of AK Steel Holding Corporation ("AK Steel"), and subsequently changed the name of AK Steel to Cleveland-Cliffs Steel Holding Corporation.

(3) In March 2020, Cleveland-Cliffs Inc.

completed the acquisition of AK Steel Holding Corporation ("AK Steel"), and subsequently changed the name of AK Steel to Cleveland-Cliffs Steel Holding Corporation.

In December 2020, Cliffs completed the acquisition of ArcelorMittal USA LLC ("AM USA"), and subsequently changed the name of AM USA to Cleveland-Cliffs Steel LLC.

As stated above, subsequent to the acquisitions we collectively refer to these subsidiaries as Cliffs Steel.

The Company generally does not require any collateral with respect to its receivables.

At December 31, 2021, the Company's receivables balance was primarily due from Cliffs Steel, US Steel, and ArcelorMittal Brazil with receivables due of $ 30.0 million, $ 7.3 million and $ 7.6 million respectively.

At December 31, 2020, the Company’s receivables balance was primarily due from Cliffs Steel and U.S.

Steel, with receivables due of $ 22.9 million and $ 6.3 million, respectively.

As a result, the Company experiences concentrations of credit risk in its receivables with these customers.

These concentrations of credit risk may be affected by changes in economic or other conditions affecting the steel industry.

The components of income (loss) before income tax expense (benefit) are as follows:

The Company generally does not require any collateral with respect to its receivables due under long-term, take-or-pay contracts.

Receivables due from Cliffs Steel and U.S.

Steel were approximately $ 33.5 million and $ 7.1 million as of December 31, 2022, respectively, and $ 30.0 million and $ 7.3 million as of December 31, 2021, respectively.

These balances comprised approximately 39 percent and 48 percent of the Company's receivables balance as of December 31, 2022 and 2021, respectively.

As a result, the Company experiences concentrations of credit risk in its receivables with these customers, which may be affected by changes in economic or other conditions affecting the steel industry.

The components of income before income tax expense are as follows:

Years Ended December 31,

4 unchanged sentences

Total $ 121.7 $ 67.1 $ 19.1

Income tax expense (benefit) consisted of the following:

Income tax expense consisted of the following:

Years Ended December 31,

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State ( 6.3 ) ( 1.7 ) 8.5

Total deferred tax expense (benefit) 9.3 12.1 ( 63.1 )

Total deferred tax expense 2.3 9.3 12.1

Total $ 16.8 $ 18.3 $ 10.3

The reconciliation of income tax expense (benefit) at the U.S.

statutory rate to income tax expense (benefit) is as follows:

The reconciliation of income tax expense at the U.S.

statutory rate to income tax expense is as follows:

Years Ended December 31,

1 unchanged sentence

(Dollars in millions)

Income tax expense (benefit) at U.S.

Income tax expense at U.S.

statutory rate $ 25.6 21.0 % $ 14.1 21.0 % $ 4.0 21.0 %

4 unchanged sentences

( 0.9 ) ( 0.7 ) % 1.6 2.4 % 7.8 41.2 %

Foreign income taxes (3)

4.8 4.0 % — — % — — %

Impact of CARES Act (4)

— — % — — % ( 1.5 ) ( 7.9 ) %

Logistics goodwill impairment — — % — — % 3.3 ( 1.7 ) %

R&D tax credit (5)

( 4.0 ) ( 3.4 ) % — — % — — %

Non-deductible equity compensation 3.0 2.5 % 3.4 4.9 % 1.0 5.5 %

1 unchanged sentence

Change in valuation allowance (3)

( 11.0 ) ( 9.0 ) % 0.5 0.8 % ( 1.3 ) ( 6.9 ) %

Other 0.3 0.2 % ( 0.1 ) ( 0.1 ) % 0.2 0.5 %

Income tax expense (benefit) at effective tax rate $ 18.3 27.2 % $ 10.3 54.3 % $ ( 54.7 ) 26.9 %

(1) No income tax expense is reflected in the Consolidated Statements of Operations for income attributable to noncontrolling interests in our Indiana Harbor cokemaking facility or the Partnership prior to the Simplification Transaction discussed in Note 3.

(2) Changes in state tax laws during 2021 resulted in a state tax benefit of $ 1.3 million, which partially offsets the state tax expense.

Additionally, a change in the tax filing status of our Convent Marine Terminal in Louisiana from a taxable partnership to a member of the consolidated return group resulted in lower apportioned state tax rates and the revaluation of certain deferred tax assets, which resulted in $ 6.5 million of deferred income tax expense in 2020.

Income tax expense at effective tax rate $ 16.8 13.8 % $ 18.3 27.2 % $ 10.3 54.3 %

(1) No income tax expense is reflected in the Consolidated Statements of Income for income attributable to noncontrolling interests in our Indiana Harbor cokemaking facility.

(2) Lower apportioned state tax rates required the revaluation of certain deferred tax liabilities and resulted in deferred tax benefits of $ 4.9 million and $ 1.3 million recorded during 2022 and 2021, respectively.

The decrease in apportioned state tax rates in 2022 was partly driven by the dissolution of SunCoke Energy Partners Finance Corp.

During 2020, lower apportioned state tax rates were primarily the result of a change in the tax filing status of our Convent Marine Terminal in Louisiana from a taxable partnership to a member of the consolidated return group resulted in the revaluation of certain deferred tax assets and deferred tax expense of $ 6.5 million.

(3) During 2022, new regulations impacting foreign tax credit utilization were published, which make foreign taxes paid in future years to certain countries, including Brazil, no longer creditable in the U.S.

As a result of these regulations and the impact of the Company's tax planning, SunCoke released a valuation allowance established on deferred tax assets attributable to existing foreign tax credit carryforwards, resulting in a deferred tax benefit of $ 11.3 million.

Additionally, foreign income taxes paid in 2022 reflected the absence of the generation of foreign tax credits for taxes paid in Brazil due to the new regulations.

(4) On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES Act") was enacted.

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As a result of the CARES Act, SunCoke recorded a tax benefit of $ 1.5 million during 2020.

(5) As part of tax planning, SunCoke conducted an analysis with respect to the Company’s research and development activities, which resulted in a $ 4.0 million deferred tax benefit.

The tax effects of temporary differences that comprise the net deferred income tax liability from operations are as follows:

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Foreign tax credit carryforward (2)

Federal net operating loss (3)

State tax credit carryforward, net of federal income tax effects — 0.3

State net operating loss carryforward, net of federal income tax effects (3)

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(2) Foreign tax credit carryforward expires in 2027 through 2031.

(3) Federal net operating loss does not expire.

(3) State net operating loss carryforward, net of federal income tax effects expires in 2032 through 2043 .

(5) Primarily related to net operating loss carryforwards and an $ 11.3 million allowance against the foreign tax credit carryforward.

(4) Primarily related to state net operating loss carryforwards.

The Company's consolidated federal income tax returns have been examined by the IRS for all years through the year ended December 31, 2014.

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The state impact of any amended federal returns remains subject to examination by various states for a period of up to one year after formal notification of such amendments to the states.

There were no uncertain tax positions at December 31, 2021 and 2020, and there were no associated interest or penalties recognized for the years ended December 31, 2021, 2020 or 2019.

The Company does not expect that any unrecognized tax benefits pertaining to income tax matters will be required in the next twelve months.

Uncertain Tax Positions

During the year, the company recorded $ 0.3 million of expense related to uncertain prior year tax positions and the balance of unrecognized tax benefits at December 31, 2022 remains at approximately $ 0.3 million that, if recognized, will reduce the effective tax rate on income from continuing operations.

There were no uncertain tax positions recorded at December 31, 2021 and 2020, and there were no associated interest or penalties recognized for the years ended December 31, 2022, 2021 or 2020.

The Company expects that nominal unrecognized tax benefits pertaining to income tax matters will be required in the next twelve months.

The Company’s inventory consists of metallurgical coal, which is the principal raw material for the Company’s cokemaking operations, coke, which is the finished good sold by the Company to its customers, and materials, supplies and other.

These components of inventories were as follows:

These components of inventories, net of lower of cost or net realizable value adjustments of $ 2.6 million, were as follows:

(Dollars in millions)

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We have historical experience of renewing and extending similar arrangements at our other facilities and intend to continue to renew our permits as they come up for renewal for the foreseeable future.

permits were renewed regularly prior to our acquisition of CMT.

These permits have an average remaining renewal term of approximately 3.2 years.

The permits were renewed regularly prior to our acquisition of CMT.

These permits have an average remaining renewal term of approximate ly 5.4 y ears.

Total amortization expense for intangible assets subject to amortization was $ 2.0 million, $ 2.0 million and $ 2.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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Thereafter 21.5

2019 Impairment of Goodwill and Long-Lived Assets

Prior to 2020, a significant portion of our logistics business was from long-term, take-or-pay contracts with Murray American Coal, Inc.

("Murray") and Foresight Energy LLC ("Foresight"), which were adversely impacted by declining coal export prices and domestic demand in 2019.

Murray filed for Chapter 11 bankruptcy on October 29, 2019.

Foresight engaged outside counsel and financial advisors to assess restructuring options during 2019 and subsequently filed for Chapter 11 bankruptcy on March 10, 2020.

Both Murray and Foresight's contracts with CMT were subsequently rejected by the bankruptcy courts.

The Company concluded the impact of the events discussed above could more likely than not reduce the fair value of the Logistics reporting unit below its carrying value, requiring SunCoke to perform its annual goodwill test as of September 30, 2019.

The fair value of the Logistics reporting unit, which was determined based on a discounted cash flow analysis, did not exceed the carrying value of the reporting unit.

Key assumptions in our goodwill impairment test included reduced forecasted volumes and reduced rates from Foresight, no further business from Murray, incremental merchant business and a discount rate of 12 percent, representing the estimated weighted average cost of capital for this business line.

As a result, the Company recorded a $ 73.5 million non-cash, pre-tax impairment charge to the Logistics segment on the Consolidated Statements of Operations during 2019, which represented a full impairment of the Logistics goodwill balance.

As a result of our logistics customers' events, CMT's long-lived assets, including customer contracts, customer relationships, permits and properties, plant and equipment, were also assessed for impairment as of September 30, 2019.

The Company re-evaluated its projections for throughput volumes, pricing and customer performance against the existing long-term, take-or-pay contracts.

The resulting undiscounted cash flows were lower than the carrying value of the asset group.

Therefore, the Company assessed the fair value of the asset group to measure the amount of impairment.

The fair value of the CMT long-lived assets was determined to be $ 112.1 million based on discounted cash flows, asset replacement cost and adjustments for capacity utilization, which are considered Level 3 inputs in the fair value hierarchy as defined in Note 18.

Key assumptions in our discounted cash flows included reduced forecasted volumes and reduced rates from Foresight, no further business from Murray, incremental merchant business and a discount rate of 11 percent, representing the estimated weighted average cost of capital for this asset group.

As a result, during 2019, the Company recorded a total non-cash, pre-tax long-lived asset impairment charge of $ 173.9 million included in long-lived asset and goodwill impairment on the Consolidated Statements of Operations, all of which was attributable to the Logistics segment.

The charge included an impairment of CMT's long-lived intangible assets of $ 113.3 million and of CMT's property, plant and equipment of $ 60.6 million.

Asset Retirement Obligations

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$ 13.8 $ 12.3

(1) Included in cost of products sold and operating expenses on the Consolidated Statements of Operations.

(2) Revisions of estimated cash flows in 2020 were primarily due to the identification of more cost efficient demolition methods as well as the timing of projected spending on certain obligations.

(3) The current portion of asset retirement obligation liabilities, which totaled $ 0.7 million and zero at December 31, 2021 and December 31, 2020, respectively, is classified in accrued liabilities on the Consolidated Balance Sheets.

(1) Included in cost of products sold and operating expenses on the Consolidated Statements of Income.

(2) The current portion of asset retirement obligation liabilities, which totaled $ 0.4 million and $ 0.7 million at December 31, 2022 and December 31, 2021, respectively, is classified in accrued liabilities on the Consolidated Balance Sheets.

Retirement Benefits Plans

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Interest cost 0.6 0.5

Actuarial (gains) losses ( 1.3 ) 2.0

Actuarial gains ( 4.0 ) ( 1.3 )

Benefits paid ( 2.2 ) ( 2.3 )

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(1) The current portion of retirement benefit liabilities, which totaled $ 2.4 million and $ 2.6 million at December 31, 2022 and 2021, respectively, is classified in accrued liabilities on the Consolidated Balance Sheets.

The following table sets forth the cumulative amounts not yet recognized in net income (loss):

The following table sets forth the cumulative amounts not yet recognized in net income:

Years Ended December 31,

(Dollars in millions)

Cumulative amounts not yet recognized in net income (loss):

Cumulative amounts not yet recognized in net income:

Actuarial losses $ 5.2 $ 10.0

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Discount rate 5.25 % 2.50 %

The health care cost trend assumption used at both December 31, 2021 and 2020 to compute the accumulated postretirement benefit obligation for the postretirement benefit plans was 6.25 percent, which is assumed to decline gradually to 5.00 percent in 2026 and to remain at that level thereafter.

The health care cost trend assumption used at December 31, 2022 to compute the accumulated postretirement benefit obligation for the postretirement benefit plans was 7.00 percent, which is assumed to decline gradually to 5.00 percent in 2031 and to remain at that level thereafter.

The health care cost trend assumption used at December 31, 2021 to compute the accumulated postretirement benefit obligation for the postretirement benefit plan was 6.00 percent, which is assumed to decline gradually to 5.00 percent in 2026 and to remain at that level thereafter.

Defined Contribution Plans

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4.875 percent senior notes, due 2029 ("2029 Senior Notes")

7.500 percent senior notes, due 2025 ("2025 Senior Notes")

$ 500.0 $ 500.0

$ 350.0 revolving credit facility, due 2026 ("Revolving Facility")

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Total borrowings $ 543.8 $ 627.0

Original issue discount — ( 3.3 )

Debt issuance costs ( 11.6 ) ( 13.4 )

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Total long-term debt and financing obligation $ 528.9 $ 610.4

Issuance of 2029 Senior Notes

On June 22, 2021, the Company issued $ 500.0 million aggregate principal amount of senior secured notes with an interest rate of 4.875 percent due in June 2029.

The Company received proceeds of $ 500.0 million from the issuance and incurred debt issuance costs related to this transaction of $ 10.4 million, which are included in long-term debt and financing obligation, net of amortization, on the Consolidated Balance Sheets as of December 31, 2021.

2029 Senior Notes

The 2029 Senior Notes are the senior secured obligations of the Company.

Interest on the 2029 Senior Notes is payable semi-annually in cash in arrears on

June 30 and December 30 of each year, commencing on December 30, 2021.

Interest on the 2029 Senior Notes is payable semi-annually in cash in arrears on June 30 and December 30 of each year.

The Company may redeem some or all of the 2029 Senior Notes at its option, in whole or part, at the dates and amounts set forth in the applicable indenture.

The applicable indenture for the 2029 Senior Notes contains covenants that, among other things, limit the Company's ability and, in certain circumstances, the ability of certain of the Company’s subsidiaries to (i) borrow money, (ii) create liens on assets, (iii) pay dividends or make other distributions on or repurchase or redeem the Company's capital stock, (iv) prepay, redeem or repurchase certain debt, (v) make loans and investments, (vi) sell assets, (vii) incur liens, (viii) enter into transactions with affiliates, (ix) enter into agreements restricting the ability of subsidiaries to pay dividends and (x) consolidate, merge or sell all or substantially all of the Company's assets.

Purchase and Redemption of 2025 Senior Notes

During the second quarter of 2021, pursuant to the applicable indenture with The Bank of New York Mellon Corporation as trustee ("Trustee"), the Trustee delivered redemption notices to holders of the 2025 Senior Notes, which were the senior unsecured obligations of Finance Corp., a wholly owned subsidiary of the Company.

The principal amount of the 2025 Senior Notes redeemed was $ 587.3 million, which represented all of the outstanding principal of the 2025 Senior Notes at 100 percent.

On June 22, 2021, the proceeds required for redemption, including the applicable premium and accrued interest totaling $ 612.1 million, were irrevocably deposited with the Trustee, at which time the 2025 Senior Notes were fully satisfied and discharged, and held by the Trustee until the date of redemption, July 8, 2021.

As a result, during the year ended December 31, 2021, the Company recorded a loss on extinguishment of debt on the Consolidated Statement of Operations of $ 31.1 million, which consisted of the premium paid of $ 22.0 million and the write-off of unamortized debt issuance costs of $ 6.1 million and the remaining original issue discount of $ 3.0 million.

Revolving Facility

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The obligations under the credit agreement are guaranteed by certain of the Company’s subsidiaries and secured by liens on substantially all of the Company’s and the guarantors’ assets pursuant to a guarantee and collateral agreement.

On June 22, 2021, in conjunction with the issuance of the 2029 Senior Notes, the Company amended and extended the maturity of its Revolving Facility from August 2024 to June 2026 and reduced its capacity by $ 50.0 million to $ 350.0 million, resulting in additional debt issuance costs of $ 1.6 million, which are included in long-term debt and financing obligation, net of amortization, on the Consolidated Balance Sheets as of December 31, 2021.

Additionally, the Company recorded a loss on extinguishment of debt on the Consolidated Statement of Operations of $ 0.8 million, representing the write-off of unamortized debt issuance costs, during the twelve months ended December 31, 2021.

As of December 31, 2021, the Revolving Facility had letters of credit outstanding of $ 6.2 million and $ 115.0 million outstanding balance, leaving $ 228.8 million available.

As of December 31, 2022, the Revolving Facility had an outstanding balance of $ 35.0 million, leaving $ 315.0 million available.

Additionally, the Company has certain letters of credit totaling $ 22.9 million, which do not reduce the Revolving Facility's available balance.

Commitment fees are based on the unused portion of the Revolving Facility at a rate of 0.20 percent.

Borrowings under the Revolving Facility bear interest, at SunCoke’s option, at either (i) a rate per annum equal to either the adjusted Eurodollar Rate, which currently is the London Interbank Offered Rate (“LIBOR”) plus 2.0 percent or (ii) an alternate base rate (“ABR”) plus 1.0 percent.

The spread is subject to change based on SunCoke's consolidated leverage ratio, as defined in the credit agreement.

As of December 31, 2022, loans under the Revolving Facility bore interest at a variable per annum rate based upon, at SunCoke's option, either an adjusted base rate ("ABR") or an adjusted London Interbank Offered Rate ("LIBOR"), in each case plus an applicable margin.

Subsequent to December 31, 2022, we amended the Revolving Facility to transition from a variable interest rate based on LIBOR to a variable interest rate based on the secured overnight financing rate ("SOFR").

After giving effect to that amendment, loans under the Revolving Facility bear interest, at SunCoke's option, at a rate per annum equal to either (i) an adjusted term SOFR rate (defined as SOFR for a specified term plus a credit spread adjustment of 10 basis points, subject to a zero percent floor) plus 1.75 percent or (ii) an ABR plus 0.75 percent.

The applicable margin is subject to change based on SunCoke's consolidated leverage ratio, as defined in the credit agreement.

The weighted-average interest rate for borrowings outstanding under the Revolving Facility was 3.3 percent during 2022.

The Company does not expect the transition from LIBOR to SOFR to have a material impact on its consolidated financial statements and disclosures.

Financing Obligation

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The consent decree included a civil penalty paid in December 2014, and a commitment to undertake capital projects to improve reliability and enhance environmental performance.

The Haverhill project was completed in 2016, but completion of the Granite City project was delayed to June 2019, with SunCoke agreeing to pay an immaterial amount associated with the delay.

Although all projects regarding the consent decree have been completed, the consent decree remains in effect and is being overseen for compliance.

Between 2010 and 2016, SunCoke Energy also received certain NOVs, Findings of Violations (“FOVs”), and information requests from the EPA, alleging violations of air operating permit conditions related to our Indiana Harbor cokemaking facility.

To reach a settlement of these NOVs and FOVs, we met regularly with the EPA, the Indiana Department of Environmental Management and Cokenergy, LLC., an independent power producer that processes hot flue gas from our Indiana Harbor facility to reduce the sulfur and particulate content and produce steam and electricity.

A consent decree among the parties was entered by the federal district court in the Northern District of Indiana during the fourth quarter of 2018.

The settlement included a civil penalty paid in the fourth quarter of 2018, and implementation of certain capital projects, completed during the fourth quarter of 2019, to improve reliability and environmental performance of the coke ovens at the facility.

The Company is a party to certain other pending and threatened claims, including matters related to commercial disputes, employment claims, personal injury claims, common law tort claims, and environmental claims.

To reach a settlement of these NOVs and FOVs, a consent decree with the EPA and the Indiana Department of Environmental Management was entered by the federal district court in the Northern District of Indiana during the fourth quarter of 2018.

After Indiana Harbor completed all consent decree requirements, the federal district court terminated the consent decree in January, 2023.

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 million.

Management of the Company believes that any liability which may arise from these claims would likely 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 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.

The Company has obligations related to coal workers’ pneumoconiosis, or black lung, to provide 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.

The Patient Protection and Affordable Care Act (“PPACA”), which was implemented in 2010 and amended previous legislation related to coal workers’ black lung obligations, 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 actuarial models utilizing our population of former coal miners, historical payout patterns of both the Company and the industry, actuarial mortality rates, 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 may be impacted by future changes in the statutory mechanisms, modifications by court decisions and changes in filing patterns by claimants and their advisors, the impact of which cannot be estimated.

The following table summarizes discount rates utilized, active claims and the total black lung liabilities:

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(2) The current portion of the black lung liability was $ 5.9 million and $ 5.4 million at December 31, 2022 and 2021, respectively, and was included in accrued liabilities on the Consolidated Balance Sheets.

The following table summarizes annual black lung payments and expense:

The following table summarizes annual black lung payments and (benefit) expense:

Years Ended December 31,

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Payments $ 5.0 $ 4.4 $ 6.0

(Benefit) expense (1)

$ ( 0.2 ) $ 3.1 $ 15.4

(1) Expenses incurred in excess of annual accretion of the black lung liability in 2020 and 2019 primarily reflect the impact of changes in discount rates as well as increases in expected future claims as a result of higher refiling and approval rate assumptions.

(1) Black lung (benefit) expense incurred in excess of annual accretion of the black lung liability reflects the impact of changes in discount rates, current filing and approval rate assumptions and/or other changes in our actuarial assumptions.

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.

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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.

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 any legacy black lung obligations incurred prior to February 1, 2013.

The Company provided the requested information in the fourth quarter of 2019.

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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.

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.

The Company leases land, office space, equipment, railcars and locomotives.

Arrangements are assessed at inception to determine if a lease exists and, with the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term.

Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments.

Additionally, the Company elected the practical expedient to account for lease and non-lease components of an arrangement, such as assets and services, as a single lease component for all asset classes on existing leases upon the adoption of ASC 842.

Additionally, on January 19, 2023, the Department of

Labor issued a new proposed rule that would require self-insured companies to post collateral in the amount of 120 percent of the company's total expected lifetime black lung obligations as determined by the DCMWC.

While this new proposed rule is not effective, if finalized, it could potentially reduce the Company's liquidity.

We will submit comments on this proposed rule and continue to monitor any impact to the Company.

The Company's operating leases consist primarily of leases for land, office space, equipment, railcars and locomotives.

Certain of our long-term leases include one or more options to renew or to terminate, with renewal terms that can extend the lease term from one month to 50 years.

The impact of lease renewals or terminations are included in the expected lease term to the extent the Company is reasonably certain to exercise the renewal or termination.

The Company's finance leases are immaterial to our consolidated financial statements.

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At December 31, 2021 $ ( 6.9 ) $ ( 9.8 ) $ ( 16.7 )

Other comprehensive income (loss) before reclassifications / adjustments 0.3 ( 0.9 ) ( 0.6 )

Other comprehensive income before reclassifications / adjustments 0.4 0.2 0.6

Retirement benefit plans funded status adjustment 3.1 — 3.1

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The tax benefit associated with the Company's benefit plans as of December 31, 2022 and 2021 was $ 1.0 million and $ 2.0 million, respectively.

The (decrease) increase in net income due to reclassification adjustments from accumulated other comprehensive income were as follows (1) :

The increase in net income due to reclassification adjustments from accumulated other comprehensive income were as follows (1) :

Years Ended December 31,

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(1) Amounts in parentheses indicate debits to net income.

(2) These accumulated other comprehensive (income) loss components are included in the computation of postretirement benefit plan expense (benefit) and included in interest expense, net on the Consolidated Statements of Operations.

(2) These accumulated other comprehensive loss components are included in the computation of postretirement benefit plan expense and included in interest expense, net on the Consolidated Statements of Income.

Share-Based Compensation

Equity Classified Awards .

The SunCoke Energy, Inc.

Long-Term Performance Enhancement Plan (“SunCoke LTPEP”) provides for the grant of equity-based awards including stock options and share units, or restricted stock, to the Company’s directors, officers, and other employees, advisors, and consultants who are selected by the plan committee for participation in the SunCoke LTPEP.

All awards vest immediately upon a change in control and a qualifying termination of employment as defined by the SunCoke LTPEP.

The plan authorizes the issuance of (i) 1,600,000 shares of SunCoke Energy common stock issuable upon the adjustment of Sunoco, Inc.

equity awards in connection with the Separation and Distribution Agreement between Sunoco, Inc.

and SunCoke and (ii) up to 7,500,000 shares, which reflects the 6,000,000 shares initially authorized under the Plan and an additional 1,500,000 shares to be issued under the Plan pursuant to an amendment effective February 14, 2018, of SunCoke Energy, Inc.

common stock pursuant to new awards under the SunCoke LTPEP.

The Company measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award.

The performance metrics of equity awards are remeasured on a quarterly basis for updates to the probability of achievement.

The market metrics of equity awards are not remeasured.

The total cost is recognized over the requisite service period.

Award forfeitures are accounted for as they occur.

On May 12, 2022, the Company adopted the SunCoke Energy, Inc.

Omnibus Long-Term Incentive Plan (the

"Omnibus Plan").

The Omnibus Plan provides for the grant of equity-based awards including stock options and share units, or

restricted stock, to the Company’s Board of Directors and certain employees selected for participation in the plan.

number of shares of common stock authorized for issuance under the Omnibus Plan consists of (i) 2,700,000 new shares, (ii) 2,434,445 shares of common stock reserved for issuance primarily under the previous SunCoke Energy, Inc.

Long-Term Performance Enhancement Plan ("SunCoke LTPEP"), which all equity based awards were issued under prior to the effective date of May 12, 2022, and (iii) any shares of common stock subject to awards granted under the SunCoke LTPEP that were outstanding on the effective date and that, on or after such date, are not issued or delivered to a participant.

As of the effective date, new awards will no longer be granted under the SunCoke LTPEP.

Awards previously granted under the SunCoke LTPEP, and described in further detail below, were not modified or impacted by the adoption of the Omnibus Plan.

Stock Options

There were no stock options granted by the Company during the years ended December 31, 2021 and 2020, respectively.

The Company granted the following stock options during the year ended December 31, 2019, with an exercise price equal to the closing price of our common stock on the date of grant:

Weighted Average Per Share

Number of Shares Exercise Price Weighted Average Grant Date Fair Value

Traditional stock options:

2019 grant 267,897 $ 9.87 $ 4.09

The stock options vest in three equal annual installments beginning one year from the date of grant.

The stock options expire ten years from the date of grant.

Stock options granted by the Company vest in three equal annual installments beginning one year from the date of grant, and expire ten years from the date of grant.

The Company calculates the value of each employee stock option, estimated on the date of grant, using the Black-Scholes option pricing model.

The weighted-average fair value of employee stock options granted during the year ended December 31, 2019 was based on using the following weighted-average assumptions:

Year Ended December 31,

Risk free interest rate 2 %

Expected term 6 years

Volatility 53 %

Dividend yield 2 %

The risk-free interest rate assumption is based on the U.S.

Treasury yield curve at the date of grant for periods which approximate the expected life of the option.

The expected term of the employee options represent the average contractual term adjusted by the average vesting period of each option tranche.

We based our expected volatility on our historical volatility over our entire available trading history.

The dividend yield assumption is based on the Company’s expectation of dividend payouts at the time of grant.

There were no stock options granted by the Company during the years ended December 31, 2022, 2021 and 2020.

The following table summarizes information with respect to common stock option awards outstanding as of December 31, 2022 and stock option activity during the fiscal year then ended:

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Exercised ( 60,618 ) $ 6.03

Forfeited ( 12,836 ) $ 9.87

Expired ( 506,677 ) $ 14.23

Outstanding at December 31, 2021 2,087,505 $ 14.59 3.2 $ 0.1

Exercisable at December 31, 2021 1,999,381 $ 14.80 2.8 $ 0.1

Expected to vest at December 31, 2021 88,124 $ 9.87 7.1 $ —

Outstanding and Exercisable at December 31, 2022 1,520,210 $ 15.06 2.7 0.2

Intrinsic value for stock options is defined as the difference between the current market value of our common stock and the exercise price of the stock options.

Total intrinsic value of stock options exercised in 2021 was $ 0.3 million.

In 2020 the amount was immaterial and there were no stock options exercised during 2019.

Restricted Stock Units

The Company granted the following restricted stock units ("RSUs") during the years ended December 31, 2021, 2020 and 2019:

Total intrinsic value of stock options exercised in 2022 and 2021 was $ 0.2 million and $ 0.3 million, respectively.

In 2020 the amount was immaterial .

Restricted Stock Units Settled in Shares

The Company issues restricted stock units ("RSUs") to be settled in shares of the Company's common stock to certain employees and members of the Board of Directors.

The Company granted the following RSUs during the years ended December 31, 2022, 2021 and 2020:

Number of RSUs Weighted Average Grant-Date Fair Value per Unit Grant Date Fair Value

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2020 grants 304,332 $ 6.04 $ 1.8

The RSUs vest in three annual installments beginning one year from the date of grant.

The RSUs granted to employees vest and become payable in three annual installments beginning one year from the date of grant.

RSUs granted to the Company's Board of Directors vest upon grant, but are paid upon termination of board service.

The following table summarizes information with respect to RSUs outstanding as of December 31, 2022 and RSU activity during the fiscal year then ended:

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Vested ( 243,640 ) $ 6.96

Forfeited ( 143,819 ) $ 6.83

Nonvested at December 31, 2022 670,978 $ 7.08

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The Company granted the following PSUs during the years ended December 31, 2022, 2021 and 2020:

Number of PSUs Fair Value per Unit Grant Date Fair Value

Number of PSUs Weighted Average Grant Date Fair Value per Unit Grant Date Fair Value

(Dollars in millions)

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The PSU grants were split 50 /50 between the Company's three-year cumulative Adjusted EBITDA performance measure and the Company's three-year average pre-tax return on capital ("ROIC") performance measure for its coke and logistics businesses and unallocated corporate expenses.

The number of PSUs ultimately awarded will be determined by the Adjusted EBITDA and ROIC performance 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 75 percent and 125 percent of the 2021 and 2020 awards, and between 25 percent and 125 percent of the 2019 award) of the Company's final performance measure results.

The award may vest between zero and 250 percent of the original units granted.

Benchmark Iron & Steel Index ("TSR Modifier").

The TSR Modifier can impact the payout (between 80 percent and 120 percent of the 2022 awards, and between 75 percent and 125 percent of the 2021 and 2020 awards) of the Company's final performance measure results.

The 2022, 2021 and 2020 awards may vest between 25 percent and 250 percent of the original units granted.

The fair value of the PSUs granted 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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Vested ( 182,028 ) $ 10.79

Forfeited ( 96,289 ) $ 8.42

Nonvested at December 31, 2022 498,746 $ 7.21

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The Cash RSU liability at December 31, 2022 was adjusted based on the closing price of our common stock on December 31, 2022 of $ 8.63 per share.

The Cash RSU liability is adjusted based on the closing price of our common stock at the end of each quarterly period and was $ 1.9 million at December 31, 2021 and was $ 1.1 million December 31, 2020.

The Cash RSU liability was $ 2.4 million at December 31, 2022 and was $ 1.9 million at December 31, 2021.

Cash Incentive Award

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All awards vest immediately upon a change in control and a qualifying termination of employment as defined by the SunCoke LTCIP.

As of May 12, 2022, performance-based, cash settled awards will be granted under the new Omnibus Plan.

The awards previously granted under the SunCoke LTCIP were not modified or impacted by the adoption of the Omnibus Plan.

The cash incentive award liability will continue to be included in accrued liabilities and other deferred credits and liabilities on the Consolidated Balance Sheets under the Omnibus Plan.

The Company issued a grant date fair value award of $ 2.0 million, $ 2.1 million and $ 2.0 million during the years ended December 31, 2022, 2021 and 2020, respectively, for which the service periods end on December 31, 2024, 2023 and 2022, respectively, and the awards will vests during the first quarter of 2025, 2024 and 2023, respectively.

The service period for certain retiree eligible participants is accelerated.

The 2019 award is 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 performance measure for its coke and logistics businesses and unallocated corporate expense, consistent with the PSU awards.

The 2021 and 2020 awards are also split 50 /50 between the Adjusted EBITDA and ROIC metrics, consistent with the PSU awards, but is not impacted by the TSR modifier.

The 2022, 2021 and 2020 awards are split 50 /50 between the Adjusted EBITDA and ROIC metrics, consistent with the PSU awards, but is not impacted by the TSR modifier.

See above for details.

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Summary of Share-Based Compensation Expense

Below is a summary of the compensation expense, unrecognized compensation costs, the period for which the unrecognized compensation cost is expected to be recognized over and the estimated forfeiture rate for each award:

Below is a summary of the compensation expense, unrecognized compensation costs, the period for which the unrecognized compensation cost is expected to be recognized over for each award:

Years Ended December 31,

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Total liability awards $ 7.2 $ 5.1 $ 1.4 $ 5.5 $ 3.9 $ 1.0

(1) Compensation expense is recognized by the Company in selling, general and administrative expenses on the Consolidated Statements of Operations.

(1) Compensation expense is recognized by the Company in selling, general and administrative expenses on the Consolidated Statements of Income.

The Company issued $ 0.3 million, $ 0.3 million, and $ 0.1 million of share-based compensation to the Company's Board of Directors during the years ended December 31, 2022, 2021 and 2020, respectively.

Earnings Per Share

Basic earnings per share (“EPS”) has been computed by dividing net income (loss) available to SunCoke Energy, Inc.

Basic earnings per share (“EPS”) has been computed by dividing net income available to SunCoke Energy, Inc.

by the weighted average number of shares outstanding during the period.

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These inputs are classified as Level 1 within the valuation hierarchy.

CMT Contingent Consideration

In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that required us to make future payments through 2022 to The Cline Group based on future volume over a specified threshold, price and contract renewals.

Prior to the termination of the related contract in 2020, the fair value of the contingent consideration was estimated based on a probability-weighted analysis using significant inputs that are not observable in the market, or Level 3 inputs.

Due to the change in market and customer conditions in 2019, further described in Note 8, we decreased our forecasted projections, which were classified as Level 3 inputs.

The decrease in forecasted projections, as well as a payment made in 2019, resulted in a reduction of the contingent consideration liability, primarily included in other deferred credits and liabilities on the Consolidated Balance Sheets, to zero at December 31, 2019.

Changes in fair value were recorded to costs of products sold and operating expenses on the Consolidated Statements of Operations during 2019.

Certain Financial Assets and Liabilities not Measured at Fair Value

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Revenue from Contracts with Customers

Our coke sales are largely made pursuant to long-term, take-or-pay agreements with Cliffs Steel and U.S.

Steel, who are two of the largest blast furnace steelmakers in North America.

Additionally, SunCoke entered into a five year take-or-pay agreement with Algoma Steel beginning in 2022, with average sales of approximately 150 thousand tons of blast furnace coke per year, further diversifying our customer base.

Our blast furnace coke sales are largely made pursuant to long-term, take-or-pay agreements.

These agreements require us to produce and deliver the contracted volumes of coke and require our customers to purchase such volumes of coke up to a specified tonnage or pay the contract price for any tonnage they elect not to take.

As of December 31, 2021, our coke sales agreements have approximately 14.7 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 .

As of December 31, 2022, our coke sales agreements have approximately 10.9 million tons of unsatisfied or partially unsatisfied performance obligations, which are expected to be delivered over a weighted average remaining contract term of approximately five years .

Our coke sales prices include an operating cost component, a coal cost component and a return of capital component.

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Revenues 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.

Foundry and Export Coke

We also sell blast furnace coke into the export coke market, utilizing capacity in excess of that reserved for our long-term, take-or-pay agreements.

Export coke sales are generally made on a spot basis at the current market price and do not contain the same provisions as our long-term, take-or-pay agreements.

While the revenues in our Domestic Coke segment are primarily tied to blast furnace coke sales made under long-term, take-or-pay agreements, we also produce and sell foundry coke out of our Jewell cokemaking facility.

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.

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.

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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.

Estimated take-or-pay revenue of approximately $ 24.3 million from all of our multi-year logistics contracts is expected to be recognized over the next two years for unsatisfied or partially unsatisfied performance obligations as of December 31, 2021.

Our energy sales are made pursuant to either steam or energy supply and purchase agreements or is sold into the regional power market.

Logistics services provided to our domestic cokemaking facilities are provided under contracts with terms equivalent to those of arm's-length transactions.

Estimated take-or-pay revenue of approximately $ 51.4 million from all of our multi-year logistics contracts is expected to be recognized over the next four years for unsatisfied or partially unsatisfied performance obligations as of December 31, 2022.

Our Middletown facility and the second phase of our Haverhill facility, or Haverhill II, have cogeneration plants that generate

electricity, which is either sold into the regional power market or to customers pursuant to energy sales agreements.

Our Granite City facility and the first phase of our Haverhill facility, or Haverhill I, have steam generation facilities, which produce steam for sale to customers pursuant to steam supply and purchase agreements.

The energy provided under these arrangements results in transfer of control over time.

Revenues are recognized over time as energy is delivered to our customers, in an amount based on the terms of each arrangement.

Energy generated at our remaining facilities is either used internally or provided, at minimal cost, to energy suppliers.

Operating and Licensing Fees

Operating and licensing fees are made pursuant to long-term contracts with ArcelorMittal Brazil, where we operate a Brazilian cokemaking facility.

The licensing fees are based upon the level of production required by our customer as well as a fixed annual fee.

The licensing fees are based upon the level of production required by our customer.

Operating fees include the full pass-through of the operating costs of the Brazilian facility as well as a per ton fee based on the level of production required by our customer.

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Each of these facilities produces coke, and all facilities except Jewell recover waste heat, which is converted to steam or electricity through a similar production process.

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 the second quarter of 2023.

Logistics operations are comprised of CMT, KRT, Lake Terminal, which provides services to our Indiana Harbor cokemaking facility, and DRT, which provides services to our Jewell cokemaking facility.

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Total capital expenditures $ 75.5 $ 98.6 $ 73.9

(1) Corporate and Other includes the activity from our legacy coal mining business, which incurred Adjusted EBITDA losses of $ 1.9 million, $ 13.2 million, and $ 11.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Additionally, Corporate and Other includes foundry related research and development costs of $ 3.9 million during 2020.

(1) Corporate and Other includes foundry related research and development costs of $ 3.9 million during 2020.

The following table sets forth the Company’s segment assets:

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Corporate and Other 22.8 23.9

Segment assets, excluding income tax receivable 1,615.4 1,607.9

Tax receivable — 5.5

Total assets $ 1,654.6 $ 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, gains or losses on extinguishment of debt, changes to our contingent consideration liability related to our acquisition of CMT and/or transaction costs incurred as part of the Simplification Transaction.

EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income under GAAP and may not be comparable to other similarly titled measures in other businesses.

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.

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Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Below is the reconciliation of Adjusted EBITDA to net income (loss), which is its most directly comparable financial measure calculated and presented in accordance with GAAP:

Reconciliation of Non-GAAP Financial Measures

Below is the reconciliation of Adjusted EBITDA to net income, which is its most directly comparable financial measure calculated and presented in accordance with GAAP:

Years Ended December 31,

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(Dollars in millions)

Net income (loss) attributable to SunCoke Energy, Inc.

Net income attributable to SunCoke Energy, Inc.

$ 100.7 $ 43.4 $ 3.7

Net income attributable to noncontrolling interests 4.2 5.4 5.1

Net income (loss) $ 48.8 $ 8.8 $ ( 148.4 )

Long-lived asset and goodwill impairment — — 247.4

Net income $ 104.9 $ 48.8 $ 8.8

Depreciation and amortization expense 142.5 133.9 133.7

133.9 133.7 143.8

Interest expense, net 32.0 42.5 56.3

Loss (gain) on extinguishment of debt, net — 31.9 ( 5.7 )

Income tax expense (benefit) 18.3 10.3 ( 54.7 )

Contingent consideration adjustments (1)

Income tax expense 16.8 18.3 10.3

Restructuring costs (1)

Simplification Transaction costs (3)

Transaction costs (2)

Adjusted EBITDA $ 297.7 $ 275.4 $ 205.9

$ 275.4 $ 205.9 $ 247.9

Adjusted EBITDA attributable to noncontrolling interests (3)

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$ 289.3 $ 266.1 $ 196.8

(1) In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that requires the Company to make future payments to the seller based on future volume over a specified threshold, price and contract

Adjustments to the fair value of the contingent consideration were primarily the result of modifications to the volume forecast.

This liability was written to zero during the third quarter of 2019, and the related contract was terminated in 2020.

(1) Charges related to a company-wide restructuring and cost-reduction initiative.

(3) Costs expensed primarily by the Partnership associated with the Simplification Transaction.

(4) Reflects noncontrolling interests in Indiana Harbor and the portion of the Partnership owned by public unitholders prior to the Simplification Transaction.

(2) Costs incurred as part of the granulated pig iron project with U.S.

(3) Reflects noncontrolling interests in Indiana Harbor.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data