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SunCoke Energy reported its Q2 2025 earnings, revealing a significant earnings per share (EPS) miss against forecasts. The company posted an EPS of $0.02, falling short of the expected $0.18, an 88.89% surprise to the downside. Despite a revenue beat of $434.1 million, surpassing the forecast of $348.05 million by 24.72%, the market responded negatively. SunCoke’s stock fell 3.26% in regular trading and an additional 6.28% in pre-market trading, reflecting investor concerns over the earnings miss. According to InvestingPro analysis, the company appears undervalued, with a P/E ratio of 7.33 and an attractive dividend yield of 5.8%. InvestingPro has identified 10 additional investment tips for SunCoke Energy, available to subscribers.
Key Takeaways
- SunCoke’s EPS of $0.02 fell significantly short of the $0.18 forecast.
- Revenue exceeded expectations, reaching $434.1 million.
- Stock dropped by 3.26% in regular trading and 6.28% in pre-market.
- The acquisition of Phoenix Global for $325 million was highlighted.
- Market conditions remain challenging, but improvement is expected in late 2025.
Company Performance
SunCoke Energy’s performance in Q2 2025 was mixed, with the company achieving higher-than-expected revenue but falling short on EPS. The decline in net income was attributed to several factors, including lower contract coke sales and reduced volumes from the Granite City contract. Despite these challenges, the acquisition of Phoenix Global is expected to enhance SunCoke’s market position, particularly in the electric arc furnace sector.
Financial Highlights
- Revenue: $434.1 million, up from the forecasted $348.05 million.
- Earnings per share: $0.02, down from the forecasted $0.18 and $0.25 in the prior year.
- Consolidated Adjusted EBITDA: $43.6 million.
- Domestic Coke Business Adjusted EBITDA: $40.5 million.
- Logistics Business Adjusted EBITDA: $7.7 million.
Earnings vs. Forecast
SunCoke’s EPS of $0.02 was a notable miss compared to the $0.18 forecast, marking an 88.89% negative surprise. This result contrasts with a more stable performance in previous quarters, where the company typically met or slightly exceeded expectations. The revenue beat of 24.72% was overshadowed by the EPS shortfall.
Market Reaction
SunCoke’s stock reacted negatively to the earnings report, with a 3.26% decline during regular trading hours and an additional 6.28% drop in pre-market trading. This movement pushed the stock closer to its 52-week low of $7.455, reflecting investor disappointment with the EPS results despite strong revenue performance. InvestingPro analysis suggests this selloff may present an opportunity, as the stock trades below its Fair Value. Discover detailed valuation metrics and 10 key investment tips with an InvestingPro subscription, including comprehensive analysis in the Pro Research Report.
Outlook & Guidance
SunCoke reaffirmed its full-year consolidated Adjusted EBITDA guidance of $210-$225 million, projecting improvements in both logistics and domestic coke operations in the latter half of 2025. For deeper insights into SunCoke’s financial health and growth potential, InvestingPro subscribers can access exclusive analysis, including the comprehensive Pro Research Report covering 1,400+ top stocks with expert analysis and actionable intelligence. The company expects to achieve 2-2.1 million tons of coke sales in the second half, with a targeted Adjusted EBITDA per ton of $46-$48.
Executive Commentary
CEO Katherine Gates emphasized the strategic fit of the Phoenix Global acquisition, stating, "Phoenix is an excellent strategic fit with the core elements of our business." She also expressed optimism about market conditions, noting, "We see improvement in both logistics and domestic coke in the second half of the year."
Risks and Challenges
- Continued pressure from lower contract coke sales and reduced volumes.
- Potential impact of Cliffs’ internal coke production on market dynamics.
- Challenges in logistics volumes, particularly at CMT.
- Macroeconomic pressures affecting the steel market.
Q&A
During the earnings call, analysts inquired about the potential impact of Cliffs’ internal coke production and the company’s strategies for exploring alternative markets. SunCoke’s management addressed these concerns by highlighting ongoing discussions and efforts to diversify its customer base, including targeting foundry and seaborne markets.
Full transcript - SunCoke Energy Inc (SXC) Q2 2025:
Conference Operator: Good day, and welcome to SunCoke Energy Second Quarter 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 is being recorded. I would now like to turn the conference over to Shantanu Agarwal, Vice President, Finance and Treasurer.
Please go ahead.
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Thank you. Good morning, and thank you for joining us this morning to discuss SunCoke Energy’s second 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. This conference call is being webcast live on the Investor Relations section of our website, and a replay will be available later today. Following management’s prepared remarks, we’ll open the call for Q and A.
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 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 second quarter results. I want to share a few highlights before turning it over to Mark to discuss the results in detail. We delivered Q2 twenty twenty five consolidated adjusted EBITDA of $43,600,000 driven by the timing and mix of contract and spot coke sales as well as lower volumes at CMT.
During the quarter, we announced the acquisition of Phoenix Global for $325,000,000 We are happy to share that we received the necessary regulatory approvals faster than anticipated and now expect to close on August 1. Additionally, we amended and extended our revolving credit facility originally due June 2026 during the month of July. The covenants are similar to the previous agreement and it is now maturing in July 2030. Earlier today, we also announced a $0.12 per share dividend payable to shareholders on 09/02/2025. From a balance sheet perspective, we ended the second quarter with a strong liquidity position of $536,200,000 I’d like to take this opportunity to review the fundamentals of the Phoenix acquisition.
Let’s turn to Slide four. Phoenix Global is a leading provider of mission critical services to major steel producing companies. SunCoke will purchase 100% of the common units of Phoenix for $325,000,000 on a cash free, debt free basis, representing an acquisition multiple of approximately 5.4 times on a 03/31/2025 last twelve months adjusted EBITDA of $61,000,000 This transaction is expected to be immediately accretive for Suncoast. We will fund the purchase through a combination of cash on hand and borrowing on our amended and extended revolver, which is fully undrawn with $325,000,000 of borrowing capacity. We expect to recognize between approximately 5,000,000 and $10,000,000 in annual synergies from this transaction.
After closing, we will plan to host investor conferences where we will share updated guidance for SunCoke, including Phoenix. Turning to Slide five to revisit the transaction benefits to SunCoke. Phoenix is an excellent strategic fit with the core elements of our business, namely customers, capabilities and contracts. With the addition of these operations, SunCoke’s reach will now extend to new industrial customers, including electric arc furnace operators that produce carbon steel and stainless steel. Phoenix’s global footprint will add to our existing Brazil footprint as well as select international markets.
Phoenix’s operations provide high value, site based services that are mission critical to operational efficiency and reliability for steel mills. SunCoke has a reputation as a critical partner in the steel value chain and as a reliable provider of high quality industrial services through our logistics business. Similar to SunCoke, Phoenix’s contracts are long term in nature with contractually guaranteed fixed revenue and pass through components. Additionally, under its current contracts, Phoenix does not take ownership of major consumables, reducing exposure to commodity price volatility. Phoenix offers a well capitalized asset portfolio, having invested approximately $75,000,000 since June 2023 on new equipment or the refurbishment of existing equipment.
New customers and new markets provide multiple paths for future organic growth. By leveraging SunCoke’s strong financial position and operational excellence, we will build upon Phoenix’s success to better serve customers. Following the closing of the transaction, we expect Phoenix’s operations will be combined with our Logistics segment to form a new Industrial Services segment. We are pleased to have a strong operator within SunCoke to lead the new operations in addition to our engineering and technical teams. He will be joined by certain Phoenix employees whose knowledge and experience will be beneficial to the successful integration.
We are excited to welcome Phoenix’s team members to the SunCoke family as we build on the strong foundation set by the business in recent years. With that, I’ll turn it over to Mark to review our second quarter earnings in detail. Mark?
Mark Marinko, Senior Vice President and Chief Financial Officer, SunCoke Energy: Thanks, Katherine. Turning to Slide six. Net income attributable to SunCoke was $02 per share in the 2025, down $0.23 versus the prior year period. The decrease was primarily driven by the timing and mix of lower contract coke sales coupled with lower economics from the Granite City contract extension in the domestic coke segment. Additionally, CMT volumes in the logistics segment were lower due to market conditions.
Finally, transaction costs of $5,200,000 related to the acquisition of Phoenix Global also impacted earnings per share. Consolidated adjusted EBITDA for the 2025 was $43,600,000 compared to $63,500,000 in the prior year period. The decrease in adjusted EBITDA was primarily driven by the timing and mix of lower contract coke sales and unfavorable economics on the Granite City contract extension in the coke segment and lower transloading volumes at C and T and the Logistics segment, partially offset by lower legacy Black Lung expenses in Corporate and Other. Moving to Slide seven to discuss our domestic Coke business performance in detail. Second quarter domestic coke adjusted EBITDA was $40,500,000 and coke sales volumes were 943,000 tons.
The decrease in adjusted EBITDA as compared to the prior year period was primarily driven by the change in mix of contract and spot coke sales at Haverhill. Additionally, spot coke sales margins are significantly lower than the contract coke sales margins due to the current challenging market conditions. Lower economics and volumes at Granite City from the contract extension also impacted domestic coke results. We believe the second quarter to be the trough of 2025 and with higher contract coke sales expected in the second half of the year, we are reaffirming our domestic coke adjusted EBITDA guidance range of $185,000,000 to $192,000,000 Now moving on to slide eight to discuss our logistics business. Our logistics business generated $7,700,000 of adjusted EBITDA in the 2025 And our terminals handled combined throughput volumes of 4,800,000 tons.
The decrease in adjusted EBITDA was primarily driven by lower transloading volumes at CMT due to tepid market conditions. Our previously announced barge unloading capital expansion project at KRT has been completed and is operating. We expect to see benefits from the new take or pay coal handling agreement starting in the third quarter and reaffirm our full year logistics adjusted EBITDA guidance range of $45,000,000 to $50,000,000 Now turning to slide nine to discuss our liquidity position for Q2. SunCoke ended the second quarter with a cash balance of $186,200,000 and a fully undrawn revolver of $350,000,000 Net cash provided by operating activities was $17,500,000 and was impacted by income tax and interest payments as well as 5,200,000 in transaction costs. We spent $12,600,000 on CapEx and paid $10,200,000 in dividends at the rate of $0.12 per share this quarter.
In total, we ended the quarter with a strong liquidity position of 536,200,000 Our free cash flow guidance has changed. As a result of the transaction costs related to the Phoenix acquisition, extension of the revolving credit facility and the new tax bill that was recently passed. We did not previously include transaction issuance costs in our free cash flow guidance, but we now expect to incur between 12,000,000 and $14,000,000 related to these transactions during the year. Additionally, as a result of changes in tax laws, we are now expecting our cash taxes to be between $5,000,000 and $9,000,000 We have also lowered our CapEx guidance to approximately $60,000,000 during the year. We now expect our free cash flow guidance to be between $103,000,000 and $118,000,000 Our operating cash flow guidance is unchanged.
With that, I will turn it back over to Catherine.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thanks, Mark. Wrapping up on Slide 10. The acquisition of Pfenex is a result of SunCoke’s disciplined pursuit of profitable growth to reward long term shareholders. SunCoke is well known for our best in class safety, advanced technology, operational discipline and strong financial position. We remain focused on safely executing against our operating and capital plan and maintaining the strength of our core businesses while working to integrate Phoenix’s operations.
Phoenix is a service provider of choice for steelmakers and we look forward to continuously engaging with their customers to find new opportunities to expand the scope of services provided as well as enter into new contracts at other sites. As always, we take a balanced yet opportunistic approach to capital allocation. 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 see improvement in both logistics and domestic coke in the second half of the year and 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: We will now begin the question and answer session. The first question comes from Nick Giles with B. Riley Securities. Please go ahead.
Henry Hurl, Analyst, B. Riley Securities: Thank you, operator, and good morning, everyone. This is Henry Hurl on for Nick Giles. So to start off, you reaffirmed your annual guidance and my math implies roughly 22% increase in quarterly EBITDA for the remainder of the year to reach the low end of your guidance at $210,000,000 So my question is, can you walk us through the drivers of the improvement from here? And what are your assumptions around past Coke sales volumes?
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Sure, Henry. Thanks for the question. So as we talked about, if you look at our Q1 domestic coke EBITDA per ton, it was $55 And our Q2 domestic coke adjusted EBITDA per ton is around $42 a ton, right? And if you take the average of those two, we are right in the range of $46 to $48 That is kind of our annual guidance. So in Q3 and Q4 or the second half of the year, we expect to kind of get back to our average full year EBITDA per ton range, where the mix it was all about the mix.
That’s why we are talking about the mix between contract and spot sales, right? In the Q1, we were very heavy on the contract side. In Q2, we were very heavy on the spot side. So in Q3 and Q4, this will kind of become normalized and we’ll have roughly 2,000,000 to 2,100,000 tons of coke sales in the second half, getting us closer to the 4,000,000 tons guidance of the total coke sales with the average sales average adjusted EBITDA margin of $46 to $48 a ton. So that’s kind of on the coke side.
On the logistics side, we saw surprisingly lower volumes in May and June at CMT, and we are already seeing those volumes get picked up in July. There were a couple of shipments in June that did not the timing of the ship kind of shifted to July. So we’re going to pick that up in Q3. So we’ll go back to our normal run rate EBITDA at for logistics as a whole in the second half, and that’s how we are getting to our full year adjusted EBITDA guidance range of two ten million to two twenty five
Henry Hurl, Analyst, B. Riley Securities: Understood. And then could you also talk about the macro drivers of Phoenix Global? So I understand you have a large share of fixed and contracted revenues in place, but hoping to get more color on what moves the needle in the long term.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Sure. So I think the short answer to your question is that we’ll have a lot more to say on Phoenix when we go out and do our Investor Days and roadshow following the close. As I said, we’re going to be closing on August 1, and then we’ll be working through opening balance sheet, taxes, some other valuation work. So we’re going through that process now. I think what I can say in terms of drivers going forward is that we’re very excited about having the EAF exposure, which really diversifies our customer base.
And as I said on our call when we signed, I think it’s very, very critical to us that we use this as a platform for organic growth. So when we think about drivers, we see opportunities with our technical and our engineering teams to look to the customers and expand the suite of services that we’re providing at sites where we’re already operating as well as looking to new sites to bring on new business. What we said when we signed is that Phoenix had a last twelve months trailing adjusted EBITDA of about $61,000,000 And what I can say today is that, that business despite some of the cyclicality and some of the challenges in the steel sector right now that is still not an unreasonable number to put out there as you think ahead to Phoenix. So we feel good about the business today in the foundation and then our opportunity to expand it, bringing our operational excellence and our engineering and technical expertise.
Henry Hurl, Analyst, B. Riley Securities: Thanks. I appreciate the color there. And then one more for me. Could you also talk about the recent conversations with your largest customer? And if there is any potential for renewal of the Haverhill contract or any other color on how to think about your contracts that are rolling off this year and the split between contracted versus blast coke?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Yes, absolutely. Frankly, we were extremely surprised by the comments on the Cliffs earnings call, given that we are in active discussions with Cliff on contract renewal. As we said back in January, we knew that Cliff did not need more coke in 2025. And that’s why we announced in January that we were essentially sold out, even though the pricing in the spot market is not what we wanted it to be, but we sold out and we sold into the spot market knowing that Cliffs would not need more coke from us in 2025. So that is unchanged.
But at the same time, we were continuing contract discussions with Cliffs, and we are continuing those discussions with them today. In terms of specific detail on volumes, etcetera, as you know, we don’t talk about the specifics of our contract negotiations with our customers. So I can’t really say more than that other than that we are in active discussions with them.
Henry Hurl, Analyst, B. Riley Securities: Okay. Thanks for that. And to you and your team, continue best of luck.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thank you.
Conference Operator: The next question comes from Nathan Martin with Benchmark Company. Please go ahead.
Nathan Martin, Analyst, Benchmark Company: Thanks, operator. Good morning, everyone. Maybe just following up on that last line of questioning. Think you said surprised maybe by some of the comments Cliff made. They indicated they’ve got plenty internal coke production post the Stelco acquisition that don’t need any third party coke kind of going forward.
If that’s the case, like how do you guys go about finding another long term contract for that production in Haverhill? Is it a case where Haverstelco was selling to previously, could it be a potential option? Or could the shift to Cliffs using more internal Coke lead to a balance disruption in the market that needs to be addressed with supply of curtailments?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Sure. I mean, I think just the starting point is we’re obviously we continue to be in active discussions with Cliffs. But we have also and you’ve seen this over time, we’ve looked for ways to profitably sell our coke when we are not selling on a long term contract basis. So whether that is selling foundry and selling more foundry going forward, that’s certainly a very profitable avenue for us, and we’ve continued to grow our market share in the foundry market. We would also look to profitably sell our blast coke to other customers.
So while we obviously can’t get into any sort of discussions on that front, we’ve been able to profitably sell our blast coke even at these depressed prices selling into North America. We would continue to look to sell into the seaborne market if that was profitable. So that will continue to be our focus just as it has been in the past years.
Nathan Martin, Analyst, Benchmark Company: I appreciate that, Catherine. Any thoughts like does this potentially upset supply demand balance here in North America or not necessarily if they continue or start using more internal coke?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Well, I think, as we’ve said before, there is a volume of coke that is needed for the volume of steel that’s being produced. So if, for example, Lyft is now using more of the Stelco coke that was being used by another customer, as you pointed out before, would be a customer that we would pursue going forward. So from an overall kind of supply demand balance, we would understand that as being there today, and we would try to take advantage of that if things were moving.
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Nate, I would want to add a little bit. This is Shantanu. I mean, like if they’re running at full capacity, I think the question is more on the cliff side. If there is a capacity rationalization permanently on their side, one of the blast furnaces, that definitely disrupts the supply demand balance of coke, right? Then the structure looks very different.
In the long run, if one of the blast furnaces, which had been running for a longer time goes down, then yes, it definitely disturbs the supplydemand balance of coke within Canada and The U. S. And that makes it a little bit challenging for us from the contract perspective, right? But if the assumption is that they continue running the blast furnaces, which they have been running and their demand stays the same, as Catherine mentioned, there is demand for that coke to go there.
Nathan Martin, Analyst, Benchmark Company: Got it. Shantanu, I appreciate that. Maybe shifting to the logistics business, again, called out the weakness at CMT. Was that mainly coal or was that any other products there first? And then how do you view kind of export coal demand over the next few quarters?
Are you guys assuming any benefit at all from price adjustment given where the indices are today?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Well, in terms of products, we move products other than coal through CMT, including iron ore and including pet coke. So there is a mix of products there, but the vast majority of the volumes there are coal for export. We have seen higher domestic pricing and higher demand as we kind of look at the market today. And so that higher demand domestically can impact volumes being shipped internationally just based on that pricing. But at the same time, as Shantanu mentioned earlier, we look at the volumes that we’re shipping in July and we look at what we have in our plan for the balance of the year.
And we’re reaffirming our logistics guidance based on what we see going forward. We are comfortable with that. In terms of any sort of price adjustment mechanism, we have not had a price adjustment thus far under the new contract and we didn’t contemplate that in our guidance for 2025.
Nathan Martin, Analyst, Benchmark Company: Got it. That’s helpful, Kathryn. And then just back to the guidance for a second. I know you reiterated your full year adjusted EBITDA guidance for the segment, but I don’t think I saw any update to the volume guidance. So should we assume you still feel good about handling, I think it was around 22,900,000 tons for the full year?
And if so, is that increase in tonnage here in the second half versus the first half mainly expected to come from the KRT expansion?
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: That’s right. Yes.
Nathan Martin, Analyst, Benchmark Company: Okay, perfect. Maybe just one final one. Again, congratulations on successfully amending and extending your revolver. Obviously, did come down a little bit to $325,000,000 from $350,000,000 I know you previously said, I think you expected to borrow about $230,000,000 on the revolver for Phoenix. That lower capacity, does that impact your plans at all there for financing?
And then does it still leave enough room to continue pursuing, the GPI project?
Shantanu Agarwal, Vice President, Finance and Treasurer, SunCoke Energy: Nate, I mean, actually our borrowing amount for the acquisition is lower. It’s closer to 200,000,000 to $210,000,000 on the revolver, being more having more cash available on the balance sheet. So we are using that. And then that leaves us more than enough capacity to do kind of work through the working capital changes. As you know, we have been undrawn on the revolver for like at least a couple of years.
So that leaves us enough capacity for our working capital day to day work. On the GPI side, now that we have done the Phoenix acquisition, if we do the GPI project, that will kind of lead us into a separate borrowing, and it will be some sort of term loan or a note or something like that. So that will be a separate financing deal when we get into the GPI project.
Nathan Martin, Analyst, Benchmark Company: Makes sense, Shantanu. And I guess I should just go ahead and ask, are there any updates on that GPI project? Any additional thoughts on discussions you guys are having with Nippon at this point?
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: So we are in active discussions with U. S. Steel. I guess at this point, we would say U. S.
Steel because it is truly U. S. Steel would nip on, but we are in active discussions, but I don’t have anything to share at this point.
Nathan Martin, Analyst, Benchmark Company: Got it. I’ll leave it there. I appreciate the time, Catherine and Shantanu, and best of luck in the second half.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thank you. Thank you.
Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Catherine Gibbs for any closing remarks. Please go ahead.
Katherine Gates, President and Chief Executive Officer, SunCoke Energy: Thank you all again for joining us this morning and for your continued interest in SunCoke. We look forward to announcing the completion of the Pfenex Global acquisition. Let’s continue to work safely today and every day.
Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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