Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the SunCoke Energy second quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Shantanu Agrawal, Vice President, Investor Relations, you may begin your conference.
Thanks, Rob. Good morning, and thank you for joining us this morning to discuss SunCoke Energy's second quarter 2022 results. With me today are Mike Rippey, President and Chief Executive Officer, and Mark Marinko, Senior Vice President and Chief Financial Officer. Following management's prepared remarks, we'll open the call for Q&A. This conference call is being webcast live on the investor relations section of our website, and a replay will be available later today. If we don't get to your questions on the call today, please feel free to reach out to our investor relations team. Before I turn things over to Mike, let me remind you that the various remarks we make on today's call regarding future expectations constitute forward-looking statements. The cautionary language regarding forward-looking statements in our SEC filings apply to the remarks we make today.
These documents are available on our website as are reconciliations to non-GAAP financial measures discussed on today's call. With that, I'll now turn things over to Mike.
Thanks, Shantanu. Good morning, and thank you all for joining us today. Today, we announce SunCoke Energy's second quarter results, and before I turn it over to Mark, who will review the results in detail, I want to discuss a few highlights. I want to start by thanking all of our SunCoke employees for their commitment and contributions to our shared goals of working safely and efficiently to deliver high-quality products and services to our customers. Our export and foundry coke initiatives continue to perform well, and we are seeing the positive impact in our financial results. In the logistics segment, we continue to see increased volumes at our domestic terminals, while CMT benefited from the easing of coal supply and rail delivery issues. For the second quarter of 2022, we delivered consolidated adjusted EBITDA of $71.3 million.
Combined with the first quarter's results, this has been a record first half for SunCoke. During the second quarter, we also announced the signing of a non-binding letter of intent with US Steel that sets out the principal terms and conditions upon which SunCoke will acquire US Steel's Granite City blast furnaces and build a two million-ton-per-year granulated pig iron facility with a 10-year initial term. This proposed project would significantly enhance SunCoke's current footprint, allowing us to become a diversified supplier of coke and metallics for the steel industry. Today, we also announced that our board of directors approved a 33% increase in our quarterly dividend from $0.06 to $0.08 per share, effective September 1st, 2022, the next quarterly payment date. This meaningful increase demonstrates the board's and senior leadership's confidence in our continued progress and the stability of our underlying core businesses.
Recognizing both record first half performance and softening in export coke market conditions for the second half of the year, we are increasing our full year adjusted EBITDA guidance to $270 million-$285 million from our original guidance of $240 million-$255 million. With that, I will turn it over to Mark to review our second quarter earnings in detail. Mark?
Thanks, Mike. I'm turning to slide four. The second quarter net income attributable to SunCoke was $0.21 per share, up $0.32 versus the prior year period, primarily driven by the absence of a $0.27 per share impact of debt extinguishment related charges in connection with the refinancing in the second quarter of 2021. Adjusted EBITDA for the second quarter 2022 came in at $71.3 million, up $3.3 million versus second quarter 2021. The increase was primarily driven by higher margins on export sales and the API2 coal price adjustment benefit at CMT, partially offset by lower coke sales volume due to product mix and timing of outages. Turning to slide five to discuss our liquidity position for Q2.
As you can see from the chart, we ended the second quarter with a cash balance of approximately $63 million. Cash flow from operating activities generated close to $44 million. We spent approximately $21 million on CapEx during the quarter, and our debt decreased by almost $31 million. We also paid over $5 million in dividends at the rate of $0.06 per share during the quarter. In total, we ended the quarter with a strong liquidity position of approximately $313 million. As Mike mentioned, we announced a 33% increase in our quarterly dividend, which is consistent with our capital allocation strategy of continued strengthening of the balance sheet along with rewarding our long-term shareholders.
Now turning to slide six to discuss our domestic coke business performance and revised full-year outlook. Second quarter adjusted EBITDA was $64.3 million, and we sold just over 1 million tons of coke. The $2.9 million increase in adjusted EBITDA as compared to the same prior year period was mainly driven by higher margin on export coke sales, partially offset by lower coke sales and production volume. The period-over-period coke production and sales was negatively impacted by the timing of planned outages at our coke plants, as well as due to the change in mix between foundry and blast furnace coke production. As a reminder, foundry tons do not replace blast furnace tons on a ton-for-ton basis. For example, due to differences in the production process, a single ton of foundry coke replaces approximately two tons of blast furnace coke.
Given our record first half performance, but also recognizing the softening export coke market conditions, we are increasing the domestic coke adjusted EBITDA guidance to $247 million-$255 million from original guidance of $229 million-$235 million. Coke sales volume guidance remains unchanged at approximately 4.1 million tons. Turning to slide seven to discuss our logistics business. The logistics business generated $12.5 million of adjusted EBITDA during the second quarter of 2022, as compared to $11.4 million in the prior year period. The increase in adjusted EBITDA was primarily due to the API2 coal price adjustment benefit at CMT. While our domestic terminals handled higher volumes this quarter as compared to the same quarter last year, margin was negatively impacted by higher fuel costs.
The segment handled 5.8 million tons of throughput volumes during the quarter, as compared to 5.1 million tons during the prior year period. CMT handled similar volume as compared to same prior year period. The coal supply and rail delivery issues which impacted CMT over the last couple of quarters seem to be easing off, and that is visible via the uptick in volume as compared to Q4 2021 and Q1 2022. Our domestic terminals handled approximately 700,000 tons more than the same prior year period, driven by increased demand of handling services from new customers. Given our strong first half 2022 results and an optimistic outlook for the balance of the year, we are increasing our logistics full year adjusted EBITDA guidance range to $48 million-$52 million.
Turning to slide eight, which summarizes our revised 2022 guidance. We now expect consolidated adjusted EBITDA to be between $270 million and $285 million as compared to our original guidance of $240 million-$255 million. This incorporates updated profitability expectations from export sales in the coke segment and the continuation of the API2 coal price adjustment benefit at CMT in the logistics segment through the second half of the year. Our capital expenditures guidance is unchanged at approximately $80 million. Our free cash flow guidance now stands at $120 million-$135 million as compared to original guidance of $110 million-$125 million.
We now expect higher than originally anticipated working capital draw due to an increase in coal inventory values and a change in coal payment terms. With that, I will turn it back over to Mike.
Thanks, Mark. Wrapping up on slide nine, as always, safety and operational performance is top of mind for our organization. Our efforts will continue to focus on safely executing against our operating and capital plans. We are pleased to see continued growth and demand for services and new customers at our logistics terminals. Based on current projections, we expect a solid second half for our logistics facilities. As I mentioned in the beginning of this call, we are extremely pleased with the success in the foundry and export coke markets. While foundry is a stable market with limited commodity price risk, similar to our contractual blast furnace coke sales, the export coke market is much more volatile.
We realize the benefit of lower coal cost on export sales during the first half of the year, but now expect a softening of export markets in the second half, which is factored into our revised guidance. Importantly, sales into these markets allow our coke plants to run optimally at full capacity. We continued to make progress on our capital allocation strategy during the quarter. From a growth perspective, we continued to work towards an agreement with US Steel on the Granite City GPI manufacturing opportunity. Additionally, our board of directors declared a meaningful increase in our quarterly dividend. Finally, on the debt front, we expect our deleveraging initiative to continue as we look to further bring down our revolver balance.
As we have done in the past, we continue to evaluate the capital needs of our business, our capital structure, and the commitment to reward shareholders on a continuous basis, and we'll make capital allocation decisions accordingly. Finally, based on the reliability and performance of our operating segments while factoring in export market conditions in the second half, we look to achieve a revised adjusted EBITDA guidance of $270 million-$285 million for 2022. With that, let's go ahead and open the call for Q&A.
At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Your first question comes from the line of Lucas Pipes from B. Riley Securities. Your line is open.
Thank you very much, operator, and good morning, everyone. Good job on the quarter and raising the guidance. Mike and team, I first wanted to ask about the Granite City deal and specifically how should we think about the commodity risks you might take, right? Historically, SunCoke passed through costs locked in a margin. Is that the sort of structure we would be looking to at Granite City as well? Thank you.
Lucas, thanks. You ask an excellent question as always. I hope you can appreciate this, and I'm sure there's other questions regarding the investment we're anticipating at Granite City, but it's premature at this point while we're still evaluating the opportunity to comment beyond what we've already publicly done. I think it should go without saying that we're very excited about the opportunity. We believe this supply chain of bringing US Steel's iron ore pellets down, combined with our coke, which we currently manufacture at Granite City, converted into a GPI and then utilized in the EAF segment is an extremely strong supply chain. That's really what our company looks to do, is to profitably insert ourselves into these supply chains.
I think it probably goes without saying, we see this as a win-win for both ourselves and US Steel. A win for our company is a win for our shareholders. As we've said now for many years, we're very selective and disciplined in our approach, and we expect that, if we were to consummate this transaction, that it will be a profitable growth opportunity for many years to come for our shareholders. Again, I appreciate perhaps a little frustration, but this is all we can say at this time, Lucas.
No, that's how things go. I understand. You mentioned that there are still a few things to iron out, like you just said, like, if we close this transaction. What are some of the major items that are still kind of up for negotiation or that need to be settled before this transaction could close?
Well, there's an agreement in principle between ourselves and US Steel. There's things that we still need to learn about the overall viability of the project. One could imagine that the capital cost would, of course, be one of those things. It's in the process of the public announcement that we've both made that we can better determine what capital commitment will be to complete the investments necessary to produce this product. We're now actively in the process of our public statement, looking to ascertain in full what's required to make this a truly beneficial undertaking.
Okay. That's helpful. Thank you, Mike. Really quickly, my second theme is coke sales mix in 2023 between domestic blast furnace coke, export coke, foundry coke, blast furnace coke, and then foundry coke domestically. What's roughly the split of the market? Should we anticipate any major changes to your sales book in 2023? Thank you very much.
That's a great question, Lucas, and we're starting now to look into 2023 opportunities. There's not really any change between our contractual business, the more traditional coke business that we've been involved, and between the export and foundry. No change on the contractual side, no meaningful change. What we're exploring is the continued opportunity to grow our foundry business, and we've had good success to date. We expect those opportunities to continue for our company. Our customers are very appreciative of the quality of our product, reliability of supply, and the value we bring them. As we start to look into 2023, one could imagine continued growth in the foundry market. That would come at the expense of some export sales.
That's-
Your next question comes from the line of Nathan Martin from The Benchmark Company. Your line is open.
Hey, good morning, everyone. Thanks for taking my questions. Lucas kind of hit on the Granite City opportunity, so I'll leave that alone for now. Maybe if I think about a couple modeling questions. If I'm looking at the domestic coke business, you know, your adjusted EBITDA per ton was, like, $79 in the first quarter, $64 in the second quarter. Obviously, you did raise your full year guidance to $60-$62 per ton, but that would seem to imply a pretty decent fall off in the second half. First, am I thinking about that correctly? You know, if so, what's behind the expected decline or could that range maybe still be a little bit conservative? I'd appreciate any thoughts. Thanks.
No, it's an excellent question, Nathan. Clearly in the first quarter we benefited as we indicated in our first quarter call, by the presence of lower coal costs going into what was a rising export market. That was a nice tailwind in the first quarter. In the second quarter we didn't experience that benefit of the reduced coal prices. What we see now as we go into the back half of the year is some softening in export coal market opportunities. The change in the second half is reflective of the deceleration and the availability of price in the export market. That's a good question. I hope that's a helpful answer.
Got it, Mike. I appreciate that. I was figuring it was probably mainly due to your earlier comments on the softening of export markets. Okay, maybe next, shifting gears to CMT, specifically on the coal side of things. Looks like you're now expecting around six million tons for the full year, which as I recall is at the lower end of your initial guidance. You mentioned in your prepared remarks that the coal supply and logistics have both started to ease or improve and obviously we know export thermal coal prices remain extremely elevated. Just hoping to get, you know, maybe a little more color there why shipments maybe, you know, aren't quite as high as I would've expected them to play out. Thanks.
Well, you're right. We had some catching up to do in the second quarter because there were disruptions in supply in the first, so that was a nice catch-up quarter. Now we're seeing perhaps more normal run rate in the back half. The capacity is there in the facility. If the demand is there and supply is there, we'll take full advantage of it. You're a hundred percent correct in acknowledging that global thermal demands remain quite high and the pricing is favorable to us with regard to the additional price we pick up over certain levels of international pricing API2.
Mike, just real quick on that last part with the API2 kicker, any comments on, you know, is that a tiered structure? Do you benefit even more with some of these record prices we've seen or any color you could provide there would be great.
Yeah, we don't provide insight into that contract beyond what we've already said, which is, you know, above certain levels there is that price kicker you mentioned.
I appreciate that. Had to ask because I'm sure you understand.
Yeah, yeah. It's just I'm glad you did ask. It proves you're paying attention. Yeah, I hope you can appreciate our answer.
I do. Thank you. I'll leave it there, guys. Again, appreciate the time and best of luck in the second half.
Thanks. Appreciate it.
Your next question comes from the line of Karl Blunden from Goldman Sachs. Your line is open.
Hi, Mike, Mark. Thanks for the time. Congrats on the strong results and guidance raise. You know, I appreciate that a lot is still being explored for Granite City, and you mentioned that. I wonder if you could go into some of the timing considerations. You know, assuming you proceed, is there a sense of when you might have needs to fund the project and then the sources of capital you might consider based on, you know, volatility we've seen in the market recently?
That's a good question, Karl. We said in the past, and I think it remains the case, after we've completed our discussion and reached agreement, we expect a construction period of about 2 years prior to start up. That's kind of the timeline for you. With regard to capital needs, we would expect to fund this project out of our cash flows from operations and perhaps some borrowing under our revolvers.
That's helpful. As we assess the CapEx needs for the rest of the business in 2023, 2024, is there some kind of directional thoughts you can provide relative to how you've been running in 2022?
Yeah, I think this year's a fairly representative year where we're talking about $80 million. Of course, we're working hard now to manage the negative effects of inflation, not only on CapEx, but also on our operating expenses. You know, kind of a quantum of work. You'd think in that same range of $80 million. As we come out with guidance in 2023, we'll factor in not only specific projects, but also inflationary impacts that we might experience beyond what we currently have.
Helpful. Thanks for the time.
Yep. Thanks, Karl.
There are no further questions at this time. Mr. Mike Rippey, I turn the call back over to you for some closing remarks.
Okay. Well, once again, thank you all for joining us on the call this morning and your continued interest in SunCoke. Look forward to talking with you in the future. Thanks again. Have a great day.
This concludes today's conference call. Thank you for your participation. You may now disconnect.