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SunCoke Energy Inc. (SXC) reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.20, compared to the forecasted $0.17. Despite this positive earnings surprise, the company’s stock dropped by 8.72% in pre-market trading. Revenue for the quarter stood at $436 million, highlighting a robust operational performance amid challenging market conditions. According to InvestingPro analysis, SunCoke maintains a "GREAT" financial health score of 3.26, and the stock appears undervalued based on its Fair Value metrics. The company’s strong fundamentals are evidenced by its healthy current ratio of 2.31, indicating solid liquidity management.
Key Takeaways
- SunCoke Energy’s Q1 2025 EPS of $0.20 exceeded the forecast of $0.17.
- Despite beating expectations, the stock fell by 8.72% pre-market.
- Revenue reached $436 million, showcasing operational strength.
- Extended key supply agreements and strong logistics performance.
- The steel industry’s outlook remains uncertain, affecting market sentiment.
Company Performance
SunCoke Energy demonstrated resilience in Q1 2025, achieving a net income of $0.20 per share. This figure represents a $0.03 decrease from the same period last year. The company reported a consolidated adjusted EBITDA of $59.8 million, down from $67.9 million the previous year, reflecting ongoing industry challenges. InvestingPro data reveals the company’s impressive dividend growth of 20% over the last twelve months, with a current yield of 4.9%. The company trades at an attractive P/E ratio of 7.96, suggesting potential value for investors. Want deeper insights? InvestingPro offers 5 more key tips about SXC’s financial position.
Financial Highlights
- Revenue: $436 million
- Earnings per share: $0.20, down $0.03 YoY
- Consolidated adjusted EBITDA: $59.8 million, down from $67.9 million YoY
- Dividend: $0.12 per share, payable on June 2, 2025
Earnings vs. Forecast
SunCoke’s EPS of $0.20 surpassed the forecast of $0.17, marking a positive deviation of approximately 17.6%. This performance underscores the company’s ability to navigate a volatile market, although it represents a slight dip compared to previous quarters.
Market Reaction
Despite the earnings beat, SunCoke’s stock price fell by 8.72% in pre-market trading, closing at $9.8 from a previous close of $10.655. This decline contrasts with the broader market trend and reflects investor concerns over the steel industry’s uncertain outlook and weak spot coke market conditions.
Outlook & Guidance
SunCoke reaffirmed its full-year consolidated adjusted EBITDA guidance, projecting between $210 million and $225 million. The company remains committed to its dividend payments throughout 2025 and plans to continue its disciplined capital allocation strategy.
Executive Commentary
CEO Katherine Gates emphasized the company’s strategic positioning, stating, "We are well positioned to navigate the challenging market conditions and create value for shareholders." Gates also highlighted SunCoke’s focus on evaluating capital needs and growth opportunities, noting, "We continuously evaluate the capital needs of the business, our capital structure, and the need to reward our shareholders." This commitment is reflected in the company’s strong free cash flow yield of 12% and return on equity of 15%. For comprehensive analysis of SXC and 1,400+ other stocks, access detailed Pro Research Reports available exclusively on InvestingPro.
Risks and Challenges
- Volatile steel industry outlook may impact demand.
- Weak spot coke market conditions could pressure margins.
- Potential adjustments in major contracts, such as with Cliffs.
- Market conditions leading to reduced capital expenditures.
- Environmental and safety regulations remain stringent.
Q&A
During the earnings call, analysts inquired about potential contract adjustments with Cliffs and the company’s strategic approach to capital expenditures. Management explained that the inventory build-up is a normal seasonal occurrence and reassured stakeholders of their cautious capital management and long-term growth evaluation.
Full transcript - SunCoke Energy Inc (SXC) Q1 2025:
Conference Operator: Good day, and welcome to the SunCoke Energy Q1 twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event has been recorded. I would like to turn the conference over to Mr.
Shantanu Agarwal, Vice President, Finance and Treasurer. Please go ahead.
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Good morning and thank you for joining us this morning to discuss SunCoke Energy’s first quarter twenty twenty five results. With me today are Katherine Gates, 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 and 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 do not get your questions on the call today, please feel free to reach out to our Investor Relations team.
Before I turn things over to Catherine, 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 websites as are reconciliations to non GAAP financial measures discussed on today’s call. With that, I’ll now turn things over to Katherine.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thanks, Shantanu. Good morning, and thank you for joining us on today’s call. This morning, we announced SunCoke Energy’s first quarter results. I want to share a few highlights before turning it over to Mark to discuss the results in detail. We delivered strong results for the quarter, and I want to thank all of our employees for their contributions to our results.
Our logistics business continued to perform well.
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: And
Conference Operator: Good day and welcome to the SunCoke Energy Q1 twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Mr. Shantanu Agarwal, Vice President, Finance and Treasurer.
Please go ahead.
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Good morning, and thank you for joining us this morning to discuss SunCoke Energy’s first quarter twenty twenty five results. With me today are Kathryn Gates, 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 and 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 do not get your questions on the call today, please feel free to reach out to our Investor Relations team.
Before I turn things over to Kathryn, 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 Katherine.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thanks, Shantanu. Good morning, and thank you for joining us on today’s call. This morning, we announced SunCoke Energy’s first quarter results. I want to share a few highlights before turning it over to Mark to discuss the results in detail. We delivered strong results for the quarter, and I want to thank all of our employees for their contributions to our results.
Our logistics business continued to perform well. And as expected, our domestic coke business was impacted by the Granite City contract extension economics as well as the weak spot coke market. Together, we delivered consolidated adjusted EBITDA of $59,800,000 during the quarter. As we discussed on our prior call, the spot glass coke pricing environment continues to be highly challenged, but there is demand for our coke and we have essentially all spot blast and foundry coke sales finalized for the full year. Earlier today, we also announced a $0.12 per share dividend payable to shareholders on 06/02/2025.
From a balance sheet perspective, we ended the first quarter with a strong liquidity position of $543,700,000 Our gross leverage was approximately 1.89 times on a trailing twelve month adjusted EBITDA basis at the end of the quarter. Looking ahead, we have extended our Granite City coke supply agreement with U. S. Steel through 09/30/2025, with the option for U. S.
Steel to extend for an additional three months. We continuously monitor the challenging market conditions, but do not see a significant impact to our operations at this time. As a result, we are reaffirming our full year consolidated adjusted EBITDA guidance range of $210,000,000 to $225,000,000 With that, I will turn it over to Mark to review our first quarter earnings in detail. Mark?
Mark Marinko, Senior Vice President and Chief Financial Officer, SunCoke Energy: Thanks, Katherine. Turning to Slide four. Net income attributable to SunCoke was $0.20 per share in the first quarter of twenty twenty five, down $03 versus the prior year period. Consolidated adjusted EBITDA for the first quarter of twenty twenty five was $59,800,000 compared to $67,900,000 in the prior year period. The decrease in adjusted EBITDA was primarily driven by lower economics on the Granite City contract extension and lower spot blast coke sales volumes in the coke segment, partially offset by lower legacy Black Lung expenses and employee related costs in the corporate and other and higher transloading volumes at CMT in logistics segment.
Moving to slide five to discuss our domestic coke business performance in detail. First quarter domestic coke adjusted EBITDA was $49,900,000 and coke sales volumes were 898,000 tons. The decrease in adjusted EBITDA as compared to the prior year period was primarily driven by the lower economics and volumes at Granite City from the contract extension. Domestic Coke’s results were additionally impacted by lower spot blast coke sales volumes due to timing and challenging market conditions. While the steel industry outlook remains uncertain and volatile, our coke production and sales plans remain on track.
Our 2025 domestic coke guidance contemplated the lower sales during the first quarter and we are reaffirming our domestic coke adjusted EBITDA guidance range of 185,000,000 to $192,000,000 As a reminder, our guidance includes the assumption that our Granite City coke making agreement will be extended for an additional three months through the end of twenty twenty five. Now moving on to Slide six to discuss our logistics business. Our logistics business generated $13,700,000 of adjusted EBITDA in the first quarter of twenty twenty five as compared to $13,000,000 in the first quarter of twenty twenty four. The increase in adjusted EBITDA was primarily driven by higher transloading volumes at CMT, partially offset by the absence of an index price adjustment benefit in Q1 twenty twenty five. Our terminals handled combined throughput volumes of 5,700,000 tons during the first quarter of twenty twenty five as compared to 5,500,000 tons during the same prior year period.
CMT handled 2,400,000 tons during the first quarter of twenty twenty five as compared to 1,800,000 in the prior year period. Our previously announced barge unloading capital expansion project at KRT is currently on time and on budget. We are pleased with the strong performance from our logistics business in the first quarter. As is the case with our domestic coke business, the market is volatile and things can change very quickly. However, we do not currently expect a significant impact to our operations through the remainder of the year and reaffirm our full year Logistics adjusted EBITDA guidance range of $45,000,000 to $50,000,000 Now turning to Slide seven to discuss our liquidity position for Q1.
SunCoke ended the quarter with a cash balance of $193,700,000 and a fully undrawn revolver of $350,000,000 Net cash provided by operating activities was $25,800,000 The first quarter was impacted by a buildup of coal inventory, but we expect this to reverse during the year and our full year operating cash flow guidance is unchanged. We spent 4,900,000 on CapEx and paid $10,900,000 in dividends at the rate of $0.12 per share this quarter. In total, we ended the quarter with a strong liquidity position of $543,700,000 With that, I will turn it back over to Kathryn.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thanks, Mark. Wrapping up on Slide eight. As always, safety is our first priority, and we are dedicated to maintaining our strong safety and environmental performance. Robust safety and environmental standards set SunCoke apart and are the foundation for our reliable delivery of high quality coke and logistics services. We remain focused on safely executing against our operating and capital plans and maintaining the strength of our core businesses as we navigate difficult market conditions.
At the same time, as we are providing high quality coke and logistics services, we are continually pursuing opportunities to grow our business and broaden our customer base. As always, we take a balanced yet opportunistic approach to capital allocation. The GPI project continues to be a top priority for us. The strong fundamentals of the project remain unchanged despite our frustration with the ongoing government delays. We continuously evaluate the capital needs of the business, our capital structure and the need to reward our shareholders and we’ll make capital allocation decisions accordingly.
Finally, we are reaffirming our full year consolidated adjusted EBITDA guidance range of $210,000,000 to $225,000,000 With that, let’s go ahead and open up the call for Q and A.
Conference Operator: Thank you. We will now begin the question and answer session. The first question comes from Nick Giles with B. Riley Securities. Please go ahead.
Nick Giles, Analyst, B. Riley Securities: Hey, good morning everyone. Thanks for taking my questions. My first one is your annual guidance does imply an uplift in quarterly adjusted EBITDA from here. So I was wondering if you could speak to cadence, specifically as it relates to any assumptions in the second half as some contracts move around and there’s more spot exposure. I would have assumed that EBITDA should be somewhat stronger in the first half.
So just wanting to get your take there.
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Hey, Nick. Good morning. This is Shantanu. I’m assuming you’re talking about the domestic coke EBITDA, right? Correct.
Yes. Yes. So that is true, right? Like kind of so what’s happening here is, as you know that our Cliffs contract at Harrah Hill 2 is supposed to expire in June 2025. But we are working with them to kind of have that shipment kind of laid out more or less evenly for the rest of the year or throughout the year.
So you will see some of those kind of margins from those shipments come in the second half of the year. And that’s what’s kind of causing our you’re seeing a lower EBITDA in the first quarter, where you saw lower domestic sales lower domestic and blast sales, but we expect to pick that up in the second half of the year.
Nick Giles, Analyst, B. Riley Securities: Got it. That’s very helpful, Shantanu. I appreciate that. My next one was really just curious to hear an updated view on capital allocation priorities. Really, question is, while the GPI project remains on the drawing board, what other long term growth opportunities could you be considering?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Great question. As we’ve said and talked about last quarter, we continue to look for profitable growth opportunities beyond the GPI project. We’ve remained very, very disciplined in looking for those long term or for those growth opportunities. Really, they would have to be profitable and take into account the environment that we sit in today in order to reward our long term shareholders. At the same time, we have we’ve said that we are going we expect to continue our dividend in 2025.
And we think that, that is another very good way to deploy our capital to reward our long term shareholders. And with the dividend, we’ve been able to continue that while still preserving cash to be able to do the Granite City project. So the dividend fully takes into account the ability to do the Granite City project as well.
Nick Giles, Analyst, B. Riley Securities: Got it. Thanks for that, Catherine. I guess, as we think about other potential projects, should we think about something that’s similar to the GPI project in nature? Would it be something more on the logistics side? Any flavor of what other opportunities could be?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Well, I think when I say that we’re very disciplined, we know that we need to look for growth opportunities in areas where we can add value and where we already have experience. So while I can’t get into any specifics, think you can think about it in terms of areas where we already have a level of expertise and we think that we can bring value to any potential growth opportunity just as we see ourselves being able to bring that value to the GPI project.
Nick Giles, Analyst, B. Riley Securities: Fair enough. My last question was just curious what drove the inventory build on the coal side. Was this driven by weaker than expected spot demand or was this more attributable to shipment timing for instance?
Mark Marinko, Senior Vice President and Chief Financial Officer, SunCoke Energy: Yes. No, this is Mark. Yes, it’s really just at the beginning of the year, you get a new coal blend and we were just building the inventories for the year. It didn’t have anything more than that. It’s that you will see some seasonality of that happening at this time of year in the first quarter or late Q4.
So it’s fairly normal. But we like I said, we expect that to reverse and we’re reaffirming our cash flow guidance.
Nick Giles, Analyst, B. Riley Securities: Got it. Guys, thanks for all the color. I’ll jump back in the queue, but continue best of
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: luck. Thank you.
Conference Operator: Thank you. The next question comes from Nathan Martin with Benchmark Company. Please go ahead.
Nathan Martin, Analyst, Benchmark Company: Thanks, operator. Good morning, everyone. I wanted to start with CapEx. I noticed you guys only spent $5,000,000 it looked like in the first quarter, again maintaining your full year guidance of $65,000,000 Catherine, I know I asked you last quarter about a possible cadence of spend and I think you said it would be pretty steady. So just curious what might have changed there?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Yes. No, great question. And really, given some of the uncertainties that we obviously are all seeing, as we look out ahead, we’re just being very judicious with our spending. At this point in time, we are likely to not spend the $65,000,000 that we had planned for at the end of the year. And again, that’s really just about being judicious in light of this environment and making appropriate deferrals.
We’ll continuously evaluate those investment decisions, but we really at this point are just being very, very cautious.
Nathan Martin, Analyst, Benchmark Company: Can I get some color around maybe what you’re looking I think you still had about $5,000,000 left for the growth there at KRT. I’m assuming that’s going to be finished up, but any additional thoughts there?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Yes. And that’s correct. I mean the KRT project is it’s on track, it’s on budget. So yes, we will be spending that capital here in the next couple of months as that project is completed. Beyond that, what I would say is that we make appropriate deferrals for projects that are, let’s say, longer term or not an immediate top priority at some of our plants.
As we’ve always said, we are investing in our plants as the long term reliable supplier of coke and logistics services. So we continue to invest and ensure that our assets are there and ready to be the top performing assets over the longer term. But at the same time, as you know, we invest a lot of CapEx in these businesses and that gives us some flexibility for things that are not immediate priority to be deferred when we’re sitting in an environment like the one we are today.
Nathan Martin, Analyst, Benchmark Company: Okay. So it could possibly include some things like deferred maintenance and things like that as well, I’m assuming?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: That’s correct.
Nathan Martin, Analyst, Benchmark Company: Okay. Perfect. I appreciate that information. It might also be helpful to get some additional thoughts on the health of the foundry and export coke markets. I mean, you guys called out essentially sold out now there, but you also highlighted once again the extreme challenges there.
I mean, how could you I guess, how long could the weakness persist? And what do you think tightens the market back up eventually?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Well, sort of taking the last part of that question first. I mean, I think it’s just we’re very closely sort of monitoring the environment. I think it’s very hard to know. And I think you’ve heard from others, it’s very hard to know exactly what the market is going to look like out ahead. I think we though saw that the pricing environment and certainly the work that Cliffs is doing this year was such that we expected to not be contracting with Cliffs for more Coke beyond the contracts that we have with them for this year.
And we also expected that the price environment for this year was not going to get stronger. That’s why we made the decisions to sell early in the year and are essentially sold out. So I think what I can say is the price environment for the Coke, we feel good about having made those decisions to sell at the beginning of the year at the price we did, not the price we wanted certainly. But I think that, that was a sound decision giving what we’re seeing this year. Really beyond that, very hard to say what the price environment looks like.
And with respect to our work with Cliff, we’re continuously in dialogue with them regarding our contract at Haverhill. So that those discussions move ahead even as we sit here in this otherwise kind of challenging environment.
Nathan Martin, Analyst, Benchmark Company: Okay. Got it. I guess I would say even against that backdrop, your EBITDA per ton in the Domestic Coke segment was $55 was well above the $48 high end of your full year guidance. So any thoughts there?
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Nate, I mean, that, kind of you saw that like kind of in Q1 last year, we had some spot blast coke sales, which we had very minimal of that this year. So that impacted on a profitability margin basis. That kind of drove our EBITDA per ton for coke higher. But if you look at full year, I think we’re going to go back to kind of what our guidance range is. So there’s a little bit of timing factor that is getting played in, and you’re going to see the impact of those lower margin blast coke sales come into the later half of the year.
Nathan Martin, Analyst, Benchmark Company: Okay. Got it. And Shantanu, just kind of going back to your answer to an earlier question. The production from Haverhill, Two Hundred Thousand tons in the quarter, well below your normal rates behind the full year guidance, which is a little over 1,000,000 tons. Was that kind of a timing thing too?
Did I understand that correctly? Maybe
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: just confirm. Yes. That was planned like kind of when we went out with the guidance in early this year, given what Catherine mentioned about challenges in the spot coke market and what we are seeing out ahead, what the pricing and the demand environment looks like, that was planned that we will have a lower production in Q1 for Haverhill. And that’s kind of built into our 4,000,000 tons approximately sales number for our domestic coke.
Nathan Martin, Analyst, Benchmark Company: Okay, great. I’ll leave it there. Appreciate the time and best of luck. Thank you.
Conference Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Catherine Gates, Chief Executive Officer and President for any closing remarks.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thank you all again for joining us this morning and for your continued interest in SunCope. We’re well positioned to navigate the challenging market conditions and create value for shareholders. Let’s continue to work safely today and every day.
Conference Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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