Welcome to the SXC earnings call. My name is John, and I'll be your operator for today's call. [Operator Instructions] Please note that the conference is being recorded. Now I'll turn the call over to Lisa Ciota.

Thank you, John, and good morning, everyone. Thank you for joining us on the SunCoke Energy Fourth Quarter 2014 Earnings and 2015 Guidance Call. With me are Fritz Henderson, our Chairman and Chief Executive Officer; and Fay West, our Senior Vice President and Chief Financial Officer. Following our remarks today, we will open the call for questions from you. This conference call is being webcast live on the Investor Relations section of our website at suncoke.com, and there will be a replay available on our website. If we don't get to your questions today, please feel free to call us on the Investor Relations phone line (630) 824-1907. Now before I turn the call over to Fritz, I want to remind everyone that the various remarks we make about future expectations constitute forward-looking statements, and that the cautionary language regarding forward-looking statements in our SEC filings apply to our remarks today. These documents are available on our website, as are reconciliations to any non-GAAP measures we discuss on the call today. Now I'd like to turn the call over to Fritz Henderson.

Good morning. Thanks for joining us this morning. We have a lot to cover today between discussing both the fourth quarter earnings as well as our fiscal 2015 targets. A number of things going on in the business, so Fay and I will go back and forth as we go through this presentation, but some areas -- we usually get through the presentation relatively quickly. We will have plenty of time for Q&A at end of this call, but there are some areas we're going to slow down a little bit today to make sure we cover in detail how we've handled certain things particularly around coal and a couple of other things in our business. So a little bit of change today from how we've handled prior calls. But let me start with Chart 2, which is 2014 overview. Operating performance-wise, as we look at the year, and particularly, we look at the fourth quarter, I would say, we sustained a solid year from an operating safety and environmental perspective in coke, logistics and coal. We recovered through the year from what was a very weak first quarter that was impacted by weather. You'll see when we look at adjusted EBITDA where we landed, but I would say it was a year where we were recovering from the first quarter throughout the year. The one area where we fell short of our objectives was in the Indiana Harbor refurbishment turnaround. We did complete the project, but the turnaround itself is still a work in process. And while we did deliver improved results relative to the prior year, we fell short of our guidance, and it's taken longer than we expected, and I'll come back to that later in the presentation. We did complete the construction of the Haverhill II…

Thanks, Fritz. Just to anchor the presentation material, I would remind you that in the third quarter, we classified our coal business as discontinued operations, and we have restated prior periods to conform to this presentation. Also, certain liabilities and assets that were previously included in the Coal segments are not part of the coal disposal group and have been characterized as legacy costs. These assets and liabilities consist primarily of the existing coal prep plant assets, asset reclamation liabilities, black lung liabilities, pension, OPEB and workers' comp. Given that these legacy items are not directly related to our ongoing operations and in some cases will be settled or demolished in 2015, we have excluded them from adjusted EBITDA from continuing operation. So adjusted EBITDA from continuing operations, which is a non-GAAP financial metric, excludes the impact of impairment charges, legacy costs and discontinued operations. The GAAP measures of net income and net income from discontinued operations do include the impact of impairment charges, legacy costs and exit costs. Adjusted EBITDA from continuing operations for the quarter was $70 million. This is a $7.2 million improvement over the prior year quarter. This increase was based on stronger Domestic Coke performance and lower corporate costs. On a full year basis, adjusted EBITDA from continuing ops was $237.8 million, an improvement of $16 million from the prior year. This is mainly due to the increased contribution from Indiana Harbor, and the full year contribution of coal logistics. I will take you through the detailed adjusted EBITDA bridges on the next 2 slides. We recorded a net loss from continuing operations attributable to SXC of $25.3 million for the fourth quarter, and a loss of $20.1 million for the full year. Both the quarter and year the reflect the impact of the impairment…

Thanks, Fay. Turn to Page 15 on 2015 priorities. Three important ones carry over from 2014. From an operating perspective, the objective is to sustain a high level of operating safety and environmental performance in our coke plants, and return Indiana Harbor to its name plate run rate. And as we look at Indiana Harbor, the plant will run at the 1.22 million, but behind schedule, but our focus from an operating perspective is on the improvement in the execution of the Indiana Harbor turnaround and bringing it to where it should run. Second is executing the coal rationalization plan and then optimizing Jewell Coke on a standalone basis. And we'll spend some time as we go through the '15 targets explaining the impact on both discontinued operations, in other words what remaining mining activities are going on, on the properties that we own as well as what's happening at the Jewell Coke plant. And then finally, from a -- from the gas sharing environmental project perspective, completing the construction by late in the year of the gas sharing project at Haverhill I. We did that, completed the construction of the first part of that project at Haverhill II in 2014. So from an operating perspective, those are the priorities. From a growth perspective, its pursue MLP-qualifying, industrial-facing processing and handling M&A opportunities. Growth is the third major priority for us in 2015. A lot of activity has been -- a lot of activity in '14, that activity is only intensified in 2015, and the focus is really around activities that are: one, qualifying in nature; two, that -- as we look at it, ideally, provide a platform for future growth. I was asked earlier on a call from -- an SXCP call whether or not whether we might consider…

Okay. On Slide 16, looking forward to our 2015 Domestic Coke business. We expect adjusted EBITDA to be in the $240 million to $255 million range as compared to 2014 adjusted EBITDA of $248 million. Adjusted EBITDA per ton is expected to be in the range of $55 to $60 per ton, and we expect to increase production from 4.3 million tons to -- we expect to increase production to 4.3 million tons, which is up from 4.2 million in 2014. Our 2015 guidance does reflect the year-over-year improvement at Indiana Harbor, but we anticipated that we will be below our $40 million targeted run rate, and the next slide in the presentation covers Indiana Harbor in more detail. We anticipate that when IHO returns to run rate, we will be back within the $60 to $65 range for adjusted EBITDA per ton. With regards to Jewell, we anticipate that as part of the coal rationalization plan, Jewell Coke will incur approximately $7.5 million in incremental costs necessary to operate as a standalone facility. Essentially, these costs, which were previously borne by Jewell Coal can be bucketed into 3 categories. The first category is incremental employee costs. You can think of this as back office personnel, such as finance and HR that were previously shared with the coal mining operation, but will now be part of Jewell Coke. This is approximately $1 million. The second category is related to blending and handling services. Consistent with our other coke-making operations, Jewell Coke will incur blending and handling services. We estimate that this will be approximately $3.5 million. And the last category, it's related to coal moisture. When other plants receives purchased coal, the market assumption is that moisture is approximately 7.5%. Jewell Coke was previously purchasing coal from Jewell Coal at…

Thanks, Fay. To wrap it up, on Page 22, I'll talk about value creation for shareholders. As we think about growth, the importance of growth can't be underestimated. Our business itself, our coke business itself is designed, when run well, to be stable and generate stable, sustainable cash flows, as modest levels of CapEx. Therefore, the growth needs to come through either organic or inorganic platforms. Organic, as we think about long-term project development, these would be projects that if initiated in 2015 would not be generating EBITDA until late '18, early '19 but nonetheless, they are very valuable, whether it's pursuing the construction of a new coke plant in Kentucky or pursuing a partnership with a selected partner in DRI. So we do continue to do work on organic growth. On inorganic or M&A, the focus is, as I said before, on industrial facing, processing and handling assets. And this is where we'll spend a considerable amount of time in early 2015. And then finally, the third leg of the stool, if you will, in terms of the value creation is capital allocation and capital optimization. And as we think about the business and going into '15, both with the fundamentals of our business as well as the balance sheet that we have coming into the year, we think we've preserved significant flexibility to both fund growth as well as evaluate dividend increases as GP, LP cash flows grow. As we initiated our first dividend last year, we talked about it relative to GP, LP cash flows and as they grow, we maintained $75 million of authorization under our share repurchase program, and we implemented this morning $20 million towards that $75 million via ASR. We do expect to grow our cash distributions at SXCP by 8% to 10%…

[Operator Instructions] And we have a question from Brett Levy from Jefferies.

You gave some pretty specific guidance for 2015, early in the year, et cetera. Is -- I mean, is there a met coal pricing input number that goes into that? Is there a sort of a contracted -- I guess, I'm trying to figure out the inputs and output assumptions that go into the guidance you put out and whether or not that has some variability around it.

All right. You're talking about '15, right, Brett?

Yes, I am.

You said early in the year. We're in January. So I'll just...

Yes, yes. No, 2015. But I mean you gave very specific guidance and I think there's a lot of variables in there, but tell me how much is and is not variable?

All right. So the assumption we use for our Haverhill I price is about $90, number one. Number two, it's not very variable because when you look at that -- when Fay talked about the $20 million declining to $12.5 million over time, by and large, what that is, is the transportation costs associated with bringing coal to the coke plant because the price in our Jewell Coke agreement is the Haverhill I price FOB mine. So what we're doing, our job is to manage that number down to the best of our abilities over time, and we become much less sensitive to coal prices than we were -- when we were much more significant in the mining business. Now if prices were to rise, which we're not banking on them, but if they were to rise, we think actually that would probably allow us to make even further progress because our mines would be more marketable, but net-net, the assumption we're using is $90, and we're not very variable to that assumption because, in fact, we do receive a market price for our coal, it's the Haverhill I price, and what we have to do is manage down transportation costs.

Got it. And then, can you talk a little bit about, kind of, organic growth whether it's in the U.S. or internationally? I mean, I think you positioned yourself well to kind of take the next step, and I just want to get a sense as to sort of what you're thinking about either organic, build it or buy it and then, sort of what geographies are kind of on the list and off the list?

Geographies, U.S. We would do a project in Canada but really, that's not likely. Our focus is on the U.S. We're not focusing outside of the U.S. And so that's the first part of your question. And then I would say, our organic projects, to the extent we were to do them, would be: one, either a new -- this new coke plant that we've been working on for Kentucky -- in Kentucky, excuse me; or alternatively a new DRI plant, which would also be in the U.S. All -- both of those would generate qualifying income, both of those would be constructed at the parent and then dropped down at the conclusion of the construction period. On inorganic, M&A, again the focus is on the U.S., on businesses that would generate qualifying income. They don't have to be 100% qualifying income but they got to -- they need to be the lion's share qualifying income because we think that over time, our right strategy is to take SXC to more of a pure-play GP.

And our next question is from Nathan Littlewood from Crédit Suisse. Nathan Littlewood - Crédit Suisse AG, Research Division: I just had a couple of questions for you on the U.S. coke market broadly. There've obviously been a couple of plants retired recently. One of your big customers was talking recently about a fairly lengthy shutdown at Granite City. I'm just wondering if you could give us a bit of an update on how you're seeing the supply-demand balance for domestic coke over the next few years.

So supply, when you talked about -- you mentioned was the Granite City announcement by U.S. Steel. They've made a number of announcements about what's happening across their assets, and I'm not going to speak for my customers. But I'll just -- for the benefit of everybody on the call, what they -- several weeks ago, they announced they were going to permanently close their Granite City coke plant. An aged byproduct coke plant. Historically, at the Granite City site, we would supply approximately -- since we have been in production, we supply approximately 70% of their requirements and their own internal coke plant would supply approximately 30% of their requirement. We also provide about 80% of their super-heated steam for their turbine as part of our production. They announced they're going to close that plant permanently. What they announced yesterday was at the Granite City location, they were making a significant investment actually to replace and put in a new casting line -- caster that they had purchased from RG Steel, and so they were going to be taking down one of their existing casters and basically accelerating the -- an outage they had planned on one of their 2 blast furnaces at the location. So there's a -- they're a lot of things going on at that site. With respect to the coke capacity, though, what they're doing is they're taking, permanently, capacity out of about 300,000 tons. It's about where they've been running 300,000 to 350,000. Last year, they announced significant -- some significant rationalization at Gary. They announced that they were closing their carbonics plant. You've seen ArcelorMittal in the past has actually taken on a part of Dofasco's production. And so what we've seen is we've seen a continued decline in the supply balance from the byproduct batteries. Obviously, the uncertain part is the demand part. Because, in fact, we're talking about is demand for coke for us to build a new coke plant. The discussion with our customer is about 2018, '19, '20 and beyond because we wouldn't be in production until that point anyway. So my crystal ball there is a little less clear, but in terms of coke supply, it is moving down with these batteries being rationalized. Nathan Littlewood - Crédit Suisse AG, Research Division: Sure. Okay. Under a scenario where the Granite City outage U.S. Steel was talking about a few months, I think, but under a scenario where, let's say, there's some sort of mishap, it ends up taking a little bit longer or maybe it ends up taking them 6 months, for argument sake, and they decide. All right, that's not such a bad thing because the market is pretty tough right now anyway, what sort of risk does that present to you in terms of this year's earnings and volumes?

So let's start with the fundamentals, the contract, right? Our contract is -- our name plate capacity at Granite City is about 650,000, contract max is 680,000. We've historically operated, right around 680,000 and the way our contract works is, if we produce the contract max, they're responsible for taking the coke. We've run that plant actually a little bit above 700,000 in the past in 1 year. We've been able to do 24-hour coke, we've been able to do a number of things with that plant. So that's kind of the way the contract works. Second is they are making an investment in that location actually to put this caster in. And what they've talked about is, the objective is to make the Granite City site even more flexible. And as I look at their decision to make that investment there -- last year they did a major reline of one of the 2 blast furnaces, and what they're doing is accelerating the outage of the second blast furnace, what they said yesterday was they would bring that up depending upon market demand, makes sense to me. As we think about -- I can't speak for my customer. But I can say that if they left that second blast furnace offline for a reasonable period of time, we think they're going to run that first blast furnace very hard and we're their source of coke for that location. So we've not had any indication from our customers of a desire to reduce our production from that plant, nor do we expect to, actually. I wouldn't -- we have worked with customers in the past when they've had outages. AK Steel, for example, they had some production disruptions. We diverted coke elsewhere as a result of that. We've reduced our…

Okay. So Nathan, I'm not going to comment for my customers. So the kind of the lead into your question, I'm just -- I'm not going to get into. Let me just talk -- let me answer your question. Our next renewal is 2020. So we have several contracts with ArcelorMittal which come due in 2020, then we have the next one in 2023, so we -- at the outer edge of the 5-year period that you outlined, we have 2 contracts with ArcelorMittal that would come due for renewal.

[Operator Instructions] Our next question is from Lucas Pipes from Brean Capital.

I just wanted to follow-up on the coal side really quickly. I think you may have alluded to it earlier on the call, but in terms of these legacy costs, what is -- what's the going forward, kind of, past 2015 potential headwind on that item?

So legacy costs for 2015 are anticipated to be roughly $15 million. What's included in there though is $13.5 million related to the pension termination, which is a noncash charge, so you can see the balance of that activity is nominal. What's really driving -- I mean, you got puts and takes across the various liabilities, but the charge that we saw in 2014 related to black lung. We don't anticipate seeing that same level of charge in 2015.

Okay, great. So it's not that, that's very helpful. And then maybe to continue on the coal side, you've gone through this optimization plan here in terms of finding a contractor in such, do you view that process as completed now? Are there further considerations at this stage? How would you...

I think I know what you're getting at. In the end, we're going to -- we will continue to be flexible with respect to the sale of coal assets. One of the advantages of the approach we're taking is -- there are -- there's continued mining activities at the location albeit with contractors as opposed to company-run mines, which frankly provides us more flexibility to sell, and we will continue to be open to that. We're not counting on it, but we continue to be open to that. Also, if it turns out that we are able to buy longer-term -- beyond 2015 significantly cheaper, we're flexible, right? We can basically -- we can stop contract mining and we can buy. So this allows us to both mine at the location and this is principally mid-vol actually. High-vol and low-vol, there are good sources of high-quality coals relatively nearby with low logistics costs. So that -- the flexibility means that if we just don't like the cost and/or the transportation cost associated with mid-vol, we can mine. On the other hand, to the extent that we see improved offers, we can buy. So this number, the $12.5 million number that Fay talked about on a run-rate basis is a number we're going to spend time trying to manage down over time. What the strategy that we have is a flexible one because it provides us the flexibility to either buy or mine. And moreover, the last piece of the puzzle is to develop, and we're working on this as we speak, develop lower cost sources of washing our coals, and we're testing it with 2 different companies today. These are miners, right? They have capacity. We will wash coal with them as opposed to wash it ourself and then demolish our own prep plant, not have the cost of running that, not have to invest in it, not have to staff it -- and it's a prep plant as Fay talked about it. I mean, we think by doing this, we'll actually improve our yields over time even on the coal that's mined locally. So we think that also improves our flexibility. What I would say is net-net, this is -- we're going to spend time going forward trying to manage that number down. But by virtue of pursuing the plan we are on, we have flexibility to do that. Okay. Lisa advises me that there are no more questions. Just in terms of wrapping up, thanks very much for your time this morning, for dialing in, for your interest and for your -- not only your time but also your interest in investing in SunCoke, in the SXC shares. We covered a lot this morning. Lisa and the team will be available to answer your questions. And with respect to 2015, we're hungry for the year, actually, to achieve our objective, so really appreciate your time. Thanks.

Thank you, ladies and gentlemen. That concludes today's call. Thank you for participating. You may now disconnect.