What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-02-24 · 140 added, 143 removed, 912 unchanged (24% of the section changed)

59 unchanged sentences

Evaluation of the Company’s estimated black lung benefit liability

As discussed in Note 12 to the consolidated financial statements, the Company has obligations related to coal workers’ pneumoconiosis, or black lung, benefits to certain former coal miners and their dependents.

As discussed in Notes 2 and 12 to the consolidated financial statements, the Company has obligations related to coal workers’ pneumoconiosis, or black lung, benefits to certain former coal miners and their dependents.

As of December 31, 2023, the Company’s black lung benefit liabili ty was $58.2 million.

26 unchanged sentences

Interest expense, net 27.3 32.0 42.5

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

Loss on extinguishment of debt — — 31.9

Income before income tax expense 97.8 121.7 67.1

19 unchanged sentences

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 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)

Reclassifications of actuarial loss amortization and prior service benefit to earnings (net of related tax benefit of $ 0.1 million for all years)

Retirement benefit plans funded status adjustment (net of related tax benefit (expense) of $ 0.2 million, $( 0.9 ) million and $( 0.3 ) million, respectively)

( 0.4 ) 3.1 1.0

12 unchanged sentences

Receivables, net

Income tax receivable

Other current assets

29 unchanged sentences

Accumulated other comprehensive loss ( 12.8 ) ( 13.0 )

Retained earnings (deficit) 53.5 ( 23.4 )

Retained earnings 80.2 53.5

Total SunCoke Energy, Inc.

15 unchanged sentences

Share-based compensation expense 5.1 6.7 6.1

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

Loss on extinguishment of debt — — 31.9

Changes in working capital pertaining to operating activities:

3 unchanged sentences

Accrued liabilities ( 10.2 ) 8.4 0.8

Income taxes ( 1.4 ) — 5.5

Other 1.3 ( 2.8 ) ( 0.3 )

9 unchanged sentences

Repayment of revolving facility ( 326.0 ) ( 676.0 ) ( 663.4 )

Proceeds from financing obligation — — 10.0

Repayment of financing obligation ( 8.8 ) ( 3.2 ) ( 2.9 )

1 unchanged sentence

Dividends paid ( 30.7 ) ( 23.6 ) ( 20.1 )

Shares repurchased — — ( 7.0 )

Cash distributions to noncontrolling interests ( 11.8 ) ( 4.4 ) —

1 unchanged sentence

Net cash used in financing activities ( 89.7 ) ( 112.5 ) ( 118.4 )

Net increase (decrease) in cash and cash equivalents 26.2 15.4 ( 48.7 )

Net increase in cash and cash equivalents 50.1 26.2 15.4

Cash and cash equivalents at beginning of year 90.0 63.8 48.4

1 unchanged sentence

Supplemental Disclosure of Cash Flow Information

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

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

$ 25.7 $ 28.5 $ 40.0

Income taxes paid, net of refunds of $ 0.5 million, $ 2.9 million and $ 3.0 million, respectively

Income taxes paid, net of refunds of zero , $ 0.5 million and $ 2.9 million, respectively

$ 17.7 $ 14.5 $ 2.9

5 unchanged sentences

Comprehensive Loss Retained

Deficit Total SunCoke

Earnings Total SunCoke

Equity Non- controlling

4 unchanged sentences

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) — — — — — 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)

— — — — — 0.3 — 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 )

1 unchanged sentence

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

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

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

9 unchanged sentences

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

14 unchanged sentences

— — — — — 0.1 — 0.1 — 0.1

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

Retirement benefit plans funded status adjustment (net of related tax benefit of $ 0.2 million)

— — — — — ( 0.4 ) — ( 0.4 ) — ( 0.4 )

14 unchanged sentences

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 also sell coke produced utilizing capacity in excess of that reserved for our long-term, take-or-pay agreements to customers in both the export and North American domestic coke markets 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.

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Coke and energy plant, machinery and equipment are generally depreciated over 20 to 30 years.

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 Income.

Logistics plant, machinery and equipment are

generally depreciated over 15 to 30 years.

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.

5 unchanged sentences

Normal repairs and maintenance costs are expensed as incurred.

The amounts of accrued capital expenditures for the years ended December 31, 2023, 2022 and 2021 were $ 8.7 million, $ 15.6 million and $ 9.6 million, respectively.

See Note 6 and the Consolidated Statements of Cash Flows.

Intangible Assets

13 unchanged sentences

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.

The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recognizes uncertain tax positions in its financial statements when minimum recognition threshold and measurement attributes are met in accordance with current accounting guidance.

9 unchanged sentences

The fair value of a liability for an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.

The associated asset retirement costs are capitalized as part of the carrying amount of the asset and depreciated over its remaining estimated useful life.

The associated asset retirement costs are capitalized as part of the carrying

amount of the asset and depreciated over its remaining estimated useful life.

When the assumptions used to estimate a recorded asset retirement obligation change, a revision is recorded to both the asset retirement obligation and the asset retirement cost capitalized to the extent remaining useful life exists.

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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.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” ASU 2023-07 requires disclosure of incremental segment information on an interim and annual basis.

This ASU is effective for fiscal years, beginning after December 15, 2023 as well as interim periods beginning after December 31, 2024 and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of the guidance on the related disclosures.

The Company plans to adopt the guidance for the fiscal year ending December 31, 2024.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvement to Income Tax Disclosures.” ASU 2023-09 requires additional disclosures aimed at enhancing the transparency and decision usefulness of income tax disclosures.

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis.

Company does not expect this ASU to have a material impact on the Company's disclosures.

The Company plans to adopt the guidance for the fiscal year ending December 31, 2025.

Labor Concentrations

2 unchanged sentences

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 were renewed in 2022 and will expire on April 30, 2025, June 30, 2025, and September 1, 2026, respectively.

Labor agreements at Kanawha River Terminal (“KRT”), SunCoke Lake Terminal (“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, 2023,we have 280 employees at the cokemaking facility in Vitória, Brazil, all of whom are represented by a union under a labor agreement .

6 unchanged sentences

The tables below show sales to the Company's significant customers:

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

(Dollars in millions)

Cliffs Steel (1)

$ 1,182.8 60.0 % $ 994.6 68.3 %

$ 284.8 14.4 % $ 210.0 14.4 %

Years Ended December 31,

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

(Dollars in millions)

Cliffs Steel / AM USA (1)(3)

2023 2022 2021

Cliffs Steel / AK Steel (1)(3)

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)

Cliffs Steel (1)

$ 1,349.4 65.4 % $ 1,182.8 60.0 % $ 994.6 68.3 %

2 unchanged sentences

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

(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 due under long-term, take-or-pay contracts.

14 unchanged sentences

(Dollars in millions)

Current tax expense (benefit):

Current tax expense:

federal $ 7.9 $ 4.3 $ 0.8

1 unchanged sentence

Foreign 3.1 4.8 4.5

Total current tax expense (benefit) 14.5 9.0 ( 1.8 )

Total current tax expense

15.7 14.5 9.0

Deferred tax expense (benefit):

17 unchanged sentences

3.1 3.1 % 4.8 4.0 % — — %

Impact of CARES Act (4)

— — % — — % ( 1.5 ) ( 7.9 ) %

R&D tax credit (4)

7 unchanged sentences

(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) State tax rates in 2023 remained in line with the prior year.

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.

The enactment of the CARES Act allows the Company to carry back net operating losses generated in 2019 to each of the five years preceding 2019.

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.

(3) During 2023, the Company established an $ 8.4 million valuation allowance, which was a portion of an $ 11.3 million valuation allowance that was released during 2022 on deferred tax assets attributable to existing foreign tax credit carryforwards.

The release of the valuation allowance during 2022 was a result of new regulations published in 2022 by the U.S.

Treasury (2022 Foreign Tax Credit (“FTC”) final regulations) that made foreign taxes paid in future years to certain countries, including Brazil, no longer creditable in the U.S.

After tax planning in 2022, the Company expected to be able to utilize its existing foreign tax credits carried forward from prior years.

During 2023, Brazil enacted new legislation that aligned the Brazil transfer pricing law with the 2022 OECD Guidelines.

As a result, the Company has determined that Brazil taxes paid or accrued in 2024 and forward will become creditable under the 2022 final FTC regulations.

Due to the change in the Brazilian tax law, the FTCs that are projected to be created will cause $ 8.4 million of the foreign tax credit carryforward from prior years to not be utilized, resulting in the establishment of the valuation allowance during 2023.

Also, during 2023, the IRS issued

Notice 2023-55 and 2023-80 that generally allow taxpayers to defer the application of the of the 2022 FTC final regulations until further guidance is issued.

Foreign income taxes paid in 2023 reflected the absence of the generation of foreign tax credits for taxes paid in Brazil due to the Company’s election not to defer the application of the 2022 FTC final regulations allowed under the notices.

(4) SunCoke conducted an analysis with respect to the Company’s research and development activities, which resulted in a current tax benefit of $ 0.7 million and a deferred tax benefit of $ 4.0 million during 2023 and 2022, respectively.

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

20 unchanged sentences

(3) State net operating loss carryforward, net of federal income tax effects expires in 2033 through 2044.

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

(4) Primarily related to state net operating loss carryforwards and valuation allowance attributable to existing foreign tax credit 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.

SunCoke is currently open to examination by the IRS for tax years ended December 31, 2019 and forward.

Due to the federal tax credit carryforward going back to 2015, SunCoke is currently open to examination by the IRS for tax years ended December 31, 2015 and forward.

State and foreign income tax returns are generally subject to examination for a period of three to five years after the filing of the respective returns.

1 unchanged sentence

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.

During 2023 and 2022, the company recorded expense related to uncertain current and prior year tax positions of $ 0.1 million and $ 0.3 million, respectively.

At December 31, 2023 and 2022, the balances of unrecognized tax benefits at were $ 0.4 million and $ 0.3 million, respectively, 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 there were no associated interest or penalties recognized for the years ended December 31, 2023, 2022 or 2021.

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

These components of inventories, net of lower of cost or net realizable value adjustments of $ 2.0 million and $ 2.6 million at December 31, 2023 and 2022, respectively, were as follows:

(Dollars in millions)

32 unchanged sentences

Total amortization expense for intangible assets subject to amortization was $ 2.1 million, $ 2.0 million and $ 2.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Based on the carrying value of finite-lived intangible assets as of December 31, 2022, we estimate amortization expense for each of the next five years as follows:

Based on the carrying value of finite-lived intangible assets as of December 31, 2023, we estimate amortization expense for each of the next five years and the aggregate amount thereafter as follows:

(Dollars in millions)

7 unchanged sentences

Years ended December 31,

(Dollars in millions)

Asset retirement obligation at beginning of year $ 13.8 $ 12.3

5 unchanged sentences

(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.

(2) The current portion of asset retirement obligation liabilities, which had no balance and totaled $ 0.4 million at December 31, 2023, and December 31, 2022, respectively, is classified in accrued liabilities on the Consolidated Balance Sheets.

Retirement Benefits Plans

24 unchanged sentences

Retirement benefit plan funded status

Actuarial gains (losses) 4.0 1.3 ( 2.0 )

Actuarial (losses) gains ( 0.6 ) 4.0 1.3

$ ( 0.4 ) $ 4.5 $ 1.7

4 unchanged sentences

Interest cost 0.9 0.6

Actuarial gains ( 4.0 ) ( 1.3 )

Actuarial losses (gains) 0.6 ( 4.0 )

Benefits paid ( 2.2 ) ( 2.2 )

11 unchanged sentences

(Dollars in millions)

Year ending December 31:

2029 through 2033 $ 6.8

6 unchanged sentences

The Company has defined contribution plans which provide retirement benefits for certain of its employees.

The Company’s contributions, which are principally based on the Company’s pretax income and the aggregate compensation levels of participating employees and are charged against income as incurred, amounted to $ 7.9 million, $ 6.9 million and $ 6.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company’s contributions, which are charged against income as incurred, amounted to $ 7.9 million, $ 7.9 million and $ 6.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Accrued Liabilities

24 unchanged sentences

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.

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 borrow money, create liens on assets, pay dividends or make other distributions on or repurchase or redeem the Company's capital stock, prepay, redeem or repurchase certain debt, make loans and investments, sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting the ability of subsidiaries to pay dividends and consolidate, merge or sell all or substantially all of the Company's assets.

Revolving Facility

1 unchanged sentence

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.

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

As of December 31, 2023, the Revolving Facility had no outstanding balance leaving $ 350.0 million available.

Additionally, the Company has certain letters of credit totaling $ 21.7 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 0.175 percent.

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.

Borrowings under the Revolving Facility bear interest, at SunCoke's option, at a variable rate per annum equal to either (i) an adjusted term secured overnight financing rate (“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 1.50 percent or (ii) an alternate base rate plus 0.50 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 6.5 percent during 2023.

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

The Company has a sale-leaseback arrangement related to certain coke and logistics equipment.

The arrangement has an initial period of 48 months beginning December 2020, and an early buyout option after 36 months to purchase the equipment at a fixed rate.

The arrangement is accounted for as a financing transaction, resulting in a financing obligation on the Consolidated Balance Sheets.

In December 2020, the Company entered into a sale-leaseback arrangement related to certain coke and logistics equipment, which was accounted for as a financing transaction, resulting in a financing obligation on the Consolidated Balance Sheets.

The arrangement had an initial period of 48 months, and an early buyout option after 36 months to purchase the equipment at a fixed rate, which the Company exercised in December 2023.

Under the terms of the Revolving Facility, the Company is subject to a maximum consolidated leverage ratio of 4.50 :1.00 and a minimum consolidated interest coverage ratio of 2.50 :1.00.

The Company's debt agreements contains other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions including our ability to pay a dividend or repurchase our stock.

The Company's debt agreements contain other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions including our ability to pay a dividend or repurchase our stock.

If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Revolving Facility could be declared immediately due and payable.

2 unchanged sentences

We do not anticipate violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing.

As of December 31, 2022, the combined aggregate amount of maturities for long-term borrowings for each of the next five years is as follows:

As of December 31, 2023, the combined aggregate amount of maturities for long-term borrowings for each of the next five years and thereafter is as follows:

(Dollars in millions)

17 unchanged sentences

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 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.

The Patient Protection and Affordable Care Act, 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.

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, expected claim filing patterns, expected claimant success rates, 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 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.

Our independent actuarial consultants calculate the present value of the black lung liability annually in the fourth quarter, unless there are changes in facts and circumstances that could materially alter the amount of the liability.

(Dollars in millions)

Discount rate (1)

Active claims 311 332

Total black lung liability (dollars in millions) (2)

Total black lung liability, discounted (2)

$ 58.2 $ 58.1

Total black lung liability, undiscounted $ 96.0 $ 88.4

(1) The discount rate is determined based on a portfolio of high-quality corporate bonds with maturities that are consistent with the estimated duration of our black lung obligations.

1 unchanged sentence

(2) The current portion of the black lung liability was $ 5.0 million and $ 5.9 million at December 31, 2023 and 2022, respectively, and was included in accrued liabilities on the Consolidated Balance Sheets.

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

Expected payments for each of the five succeeding years and the aggregate amount thereafter as of December 31, 2023:

(Dollars in millions)

2029-Thereafter 74.9

The following table reconciles the expected aggregate undiscounted amount to amounts recognized in the Consolidated Balance Sheets:

(Dollars in millions)

Black lung liability, undiscounted $ 96.0 $ 88.4

Impact of discounting ( 37.8 ) ( 30.3 )

Black lung liability, discounted $ 58.2 $ 58.1

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

Years Ended December 31,

2 unchanged sentences

Payments $ 5.4 $ 5.0 $ 4.4

(Benefit) expense (1)

Expense (benefit) (1)

$ 5.5 $ ( 0.2 ) $ 3.1

(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.

(1) Black lung expense (benefit) 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.

9 unchanged sentences

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.

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.

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.

We submitted comments on this proposed rule and will 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.

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The components of lease expense were as follows:

Year ended December 31, 2022 Year ended December 31, 2021

Years ended December 31,

(Dollars in millions)

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Supplemental balance sheet information related to leases was as follows:

Financial Statement Classification December 31, 2022 December 31, 2021

Years ended December 31,

Financial Statement Classification 2023 2022

(Dollars in millions)

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The weighted average remaining lease term and weighted average discount rate were as follows:

December 31, 2022 December 31, 2021

Years ended December 31,

Weighted average remaining lease term of operating leases 7.1 years 5.9 years

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Supplemental cash flow information related to leases was as follows:

Year Ended December 31, 2022 Year Ended December 31, 2021

Years ended December 31,

(Dollars in millions)

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(Dollars in millions)

Year ending December 31:

2029-Thereafter 3.1

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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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At December 31, 2023 $ ( 3.7 ) $ ( 9.1 ) $ ( 12.8 )

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 tax benefit associated with the Company's benefit plans as of December 31, 2023 and 2022 was $ 1.0 million in both respective periods.

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

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“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.

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.

The total 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.

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Expired ( 298,667 ) $ 16.52

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

Outstanding and Exercisable December 31, 2023 1,199,656 $ 14.89 2.3 0.5

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 2022 and 2021 was $ 0.2 million and $ 0.3 million, respectively.

In 2020 the amount was immaterial .

Total intrinsic value of stock options exercised in 2023, 2022 and 2021 was $ 0.1 million, $ 0.2 million, and $ 0.3 million, respectively.

Restricted Stock Units Settled in Shares

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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.

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

The following table summarizes information with respect to RSUs outstanding as of December 31, 2023 and RSU activity during the fiscal year then ended:

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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 TSR Modifier can impact the payout (between 80 percent and 120 percent of the 2023 and 2022 awards, and between 75 percent and 125 percent of the 2021 awards) of the Company's final performance measure results.

The 2023 and 2022 awards may vest between 25 percent and 200 percent of the original units granted and the 2021 awards may vest between zero and 250 percent.

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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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 cash incentive award liability is included in accrued liabilities and other deferred credits and liabilities on the Consolidated Balance Sheets.

The Company issued a grant date fair value award of $ 2.2 million, $ 2.0 million and $ 2.1 million during the years ended December 31, 2023, 2022 and 2021, respectively, for which the service periods end on December 31, 2025, 2024 and 2023, respectively, and the awards will vests during the first quarter of 2026, 2025 and 2024, respectively.

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Stock options 1.2 1.6 2.5

Restricted stock units — — 0.2

Performance stock units — — 0.3

Total 1.2 1.6 2.5

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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, 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 .

As of December 31, 2023, our coke sales agreements have approximately 22.0 million tons of unsatisfied or partially unsatisfied performance obligations, which are expected to be delivered over a weighted average remaining contract term of approximately ten years .

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

Operating costs under three of our coke sales agreements are fixed subject to an annual adjustment based on an inflation index.

Under our other four coke sales agreements, operating costs are passed through to the respective customers subject to an annually negotiated budget, in some cases subject to a cap annually adjusted for inflation, and we share any difference in costs from the budgeted amounts with our customers.

Operating costs under four of our coke sales agreements are fixed subject to an annual adjustment based on an inflation index.

Under our other three coke sales agreements, operating costs are passed through to the respective customers subject to an annually negotiated budget, in some cases subject to a cap annually adjusted for inflation, and we share any difference in costs from the budgeted amounts with our customers.

Our coke sales agreements contain pass-through provisions for coal and coal procurement costs, subject to meeting contractual coal-to-coke yields.

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Conversely, to the extent our actual coal-to-coke yields are higher than the contractual standard, we realize gains.

The reimbursement of pass-through operating and coal costs from these coke sales agreements are considered to be variable consideration components included in the cokemaking sales price.

The reimbursement of pass-through operating and coal costs from these coke sales agreements are considered to

be variable consideration components included in the cokemaking sales price.

The return of capital component for each ton of coke sold to the customer is determined at the time the coke sales agreement is signed and is effective for the term of each sales agreement.

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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.

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.

We also sell non-contracted blast furnace coke tons into the North American spot coke and export coke markets, utilizing capacity in excess of that reserved for our long-term, take-or-pay agreements.

These non-contracted blast coke sales are generally sold on a spot basis at the current market price, and do not contain the same provisions as our long-term, take-or-pay agreements discussed above.

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.

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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.

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.

Estimated take-or-pay revenue of approximately $ 27.4 million from all of our multi-year logistics contracts is expected to be recognized over the next three years for unsatisfied or partially unsatisfied performance obligations as of December 31, 2023.

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.

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 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.

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Sales and other operating revenue $ 2,063.2 $ 1,972.5 $ 1,456.0

Disaggregated sales and other operating revenue by customer is discussed in Note 3.

See Note 3 Customer Concentrations for further detail on operating revenue.

Business Segment Information

The Company reports its business through three segments:

The Company reports its business through three reportable segments:

Domestic Coke, Brazil Coke and Logistics.

The Domestic Coke segment includes the Jewell, Indiana Harbor, Haverhill, Granite City and Middletown cokemaking facilities.

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

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

The Brazil Coke segment includes the licensing and operating fees payable to us under long-term contracts with ArcelorMittal Brazil, under which we operate a cokemaking facility located in Vitória, Brazil through January 2028.

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.

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

Handling and mixing results are presented in the Logistics segment.

The Company elected to combine Dismal River Terminal (“DRT”) operations into the Jewell cokemaking operations in the Domestic Coke segment beginning January 1, 2023.

The DRT results were included in the Logistics segment in 2022 and are not recast.

Corporate expenses that can be identified with a segment have been included in determining segment results.

The remainder is included in Corporate and Other, which also includes activity from our legacy coal mining business.

Segment assets are those assets utilized within a specific segment and exclude taxes.

The following table includes Adjusted EBITDA, as defined below, which is the measure of segment profit or loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:

The remainder is included in Corporate and Other, which is not a reporting segment, but which also includes activity from our legacy coal mining business.

Segment assets are those assets utilized within a specific segment.

The following table includes Adjusted EBITDA reportable segments, as defined below, which is a measure of segment profit or loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:

Years Ended December 31,

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Total sales and other operating revenue $ 2,063.2 $ 1,972.5 $ 1,456.0

Adjusted EBITDA:

Adjusted EBITDA reportable segments:

Domestic Coke $ 247.8 $ 263.4 $ 243.4

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Logistics 44.3 49.7 43.5

Corporate and Other (1)

( 29.9 ) ( 28.7 ) ( 41.9 )

Total Adjusted EBITDA $ 297.7 $ 275.4 $ 205.9

Total Adjusted EBITDA reportable segments $ 301.2 $ 327.6 $ 304.1

Depreciation and amortization expense:

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Logistics 12.8 14.5 13.3

Total reportable segments $ 142.5 $ 141.5 $ 132.7

Corporate and Other 0.3 1.0 1.2

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Logistics 5.1 4.5 14.7

Total reportable segments $ 108.7 $ 74.9 $ 98.1

Corporate and Other 0.5 0.6 0.5

Total capital expenditures $ 109.2 $ 75.5 $ 98.6

(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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Logistics (1)

Total reportable segments $ 1,575.8 $ 1,631.8

Corporate and Other 84.6 22.8

Total assets $ 1,660.4 $ 1,654.6

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, and/or transaction costs ("Adjusted EBITDA").

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

Management believes Adjusted EBITDA is an important measure in assessing operating performance.

Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance.

EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income, or any other measure of financial performance presented in accordance with GAAP.

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

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:

(1) Logistics segment assets included $ 21.7 million of DRT assets as of December 31, 2022, which are included in the Domestic Coke segment in 2023.

The Company evaluates the performance of its segments based on segment Adjusted EBITDA reportable segments, which is defined as earnings before interest, taxes, depreciation and amortization, adjusted for any impairments, restructuring costs, gains or losses on extinguishment of debt, transaction costs, and/or corporate/other expenses (“Adjusted EBITDA reportable segments”).

Management believes Adjusted EBITDA reportable segments is an important measure in assessing operating performance.

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

Reconciliation of Adjusted EBITDA Reportable Segments to Net Income

Below is a reconciliation of Adjusted EBITDA reportable segments 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 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 $ 63.5 $ 104.9 $ 48.8

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Interest expense, net 27.3 32.0 42.5

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

Loss on extinguishment of debt — — 31.9

Income tax expense 34.3 16.8 18.3

Restructuring costs (1)

Transaction costs (1)

Adjusted EBITDA $ 297.7 $ 275.4 $ 205.9

Adjusted EBITDA attributable to noncontrolling interests (3)

Adjusted EBITDA attributable to SunCoke Energy, Inc.

$ 289.3 $ 266.1 $ 196.8

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

Corporate and Other 32.4 29.9 28.7

Adjusted EBITDA reportable segments $ 301.2 $ 327.6 $ 304.1

(1) 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