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Introduction & Market Context
SunCoke Energy, Inc. (NYSE:SXC) released its first quarter 2025 earnings presentation on April 30, showing year-over-year declines in key financial metrics while maintaining its full-year guidance. The metallurgical coke producer’s shares dropped 6.22% in premarket trading to $9.19, suggesting investors may be concerned about the company’s performance despite management’s reassurances.
The company faces challenges in its core coke business, particularly with the Granite City facility contract extension at lower economics, while its logistics segment showed modest improvement. Despite these headwinds, SunCoke maintains a strong liquidity position and continues to return capital to shareholders through dividends.
Quarterly Performance Highlights
SunCoke reported Q1 2025 earnings per share of $0.20, down $0.03 from the prior year quarter. Consolidated Adjusted EBITDA came in at $59.8 million, an $8.1 million decrease from Q1 2024’s $67.9 million. The company declared a quarterly cash dividend of $0.12 per share, payable on June 2, 2025.
As shown in the following financial performance summary, the year-over-year decline was primarily driven by weaker performance in the coke segment, partially offset by improvements in logistics and lower corporate expenses:
The company’s domestic coke sales volumes decreased by 98,000 tons year-over-year to 898,000 tons in Q1 2025. Meanwhile, logistics volumes increased by 271,000 tons to 5,724,000 tons, demonstrating the divergent performance between segments.
Segment Analysis
SunCoke’s domestic coke business, which represents the company’s core operations, faced significant headwinds in the quarter. Adjusted EBITDA for this segment fell to $49.9 million from $61.4 million in Q1 2024, primarily due to lower economics on the extended Granite City contract with U.S. Steel and reduced spot blast coke sales volumes.
The following chart illustrates the domestic coke business performance:
In contrast, the logistics segment showed modest improvement, with Adjusted EBITDA increasing to $13.7 million from $13.0 million in the prior year quarter. This growth was primarily driven by higher volumes at the Convent Marine Terminal (CMT), although the absence of an index price adjustment benefit that occurred in Q1 2024 partially offset these gains.
The logistics performance is detailed in the following chart:
The company also highlighted that its KRT barge unloading expansion project remains on time and on budget, indicating continued investment in logistics infrastructure despite market challenges.
Financial Position and Liquidity
Despite the earnings decline, SunCoke maintained a strong financial position at the end of Q1 2025. The company reported total liquidity of $543.7 million, consisting of $193.7 million in cash and $350 million in revolver availability. Gross leverage stood at 1.89x trailing 12-month Adjusted EBITDA, while net leverage was a modest 1.15x.
The following chart details the company’s Q1 2025 liquidity position and cash flow:
Cash increased slightly from $189.6 million at the end of Q4 2024 to $193.7 million at the end of Q1 2025. Operating activities generated $25.8 million in cash, which more than offset capital expenditures of $4.9 million and dividend payments of $10.9 million.
Forward Guidance and Strategic Initiatives
Despite the challenging first quarter, SunCoke reaffirmed its full-year 2025 guidance, projecting Consolidated Adjusted EBITDA between $210 million and $225 million and Free Cash Flow between $100 million and $115 million.
The detailed 2025 guidance is presented in the following chart:
For its domestic coke operations, the company expects Adjusted EBITDA of $185-$192 million and sales of approximately 4.0 million tons. The logistics segment is projected to contribute $45-$50 million in Adjusted EBITDA.
SunCoke also outlined its key strategic initiatives for 2025, focusing on safety, operational excellence, customer base strengthening, capital allocation, and financial objectives:
The company has extended its Granite City cokemaking contract with U.S. Steel through September 30, 2025, providing some stability despite the lower economics. Management also noted that essentially all spot blast and foundry coke sales have been finalized for the full year, reducing uncertainty for the remainder of 2025.
Reconciliation of Non-GAAP Measures
To provide clarity on its financial reporting, SunCoke included detailed reconciliations of its non-GAAP measures. The following chart shows how the company derives its Adjusted EBITDA guidance from projected net income:
The company expects net income between $52 million and $69 million for 2025, with depreciation and amortization adding $117-$121 million, interest expense contributing $24-$26 million, and income tax expense of $11-$15 million to reach the projected Adjusted EBITDA of $210-$225 million.
While SunCoke faces challenges in its core coke business, particularly with the Granite City contract, management remains confident in achieving its full-year targets through operational excellence, customer base diversification, and continued strong performance in its logistics segment. Investors will be watching closely to see if the company can reverse the first quarter’s downward trend in the coming periods.
Full presentation:
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