SunCoke Energy Q1 2025 Earnings Report

SunCoke Energy EPS Results

• Actual EPS: $0.20
• Consensus EPS: $0.17
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.23

SunCoke Energy Revenue Results

• Actual Revenue: $436.00 million
• Expected Revenue: $371.60 million
• Beat/Miss: Beat by +$64.40 million
• YoY Revenue Growth: -10.70%

SunCoke Energy Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 11:00AM ET

SunCoke Energy (NYSE:SXC) operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates cokemaking facilities in the United States and Brazil. The company was founded in 1960 and is headquartered in Lisle, Illinois.

SunCoke Energy Q1 2025 Earnings Call Transcript

Key Takeaways

• SunCoke delivered Q1 consolidated adjusted EBITDA of $59.8 million and reaffirmed its full-year guidance of $210 million to $225 million.
• The domestic coke segment posted Q1 adjusted EBITDA of $49.9 million on 898,000 tons sold, pressured by the Granite City contract extension and weak spot markets, and reaffirmed 2025 guidance of $185 million to $192 million while extending the Granite City supply agreement through 9/30/2025 (plus a three-month option).
• Logistics generated Q1 adjusted EBITDA of $13.7 million—up from $13.0 million—driven by higher transloading volumes at CMT (2.4 million tons), with total throughput of 5.7 million tons and reaffirmed full-year logistics guidance of $45 million to $50 million; the KRT barge unloading expansion remains on time and on budget.
• SunCoke ended Q1 with $543.7 million in liquidity (including $193.7 million in cash and a $350 million revolver), a gross leverage ratio of 1.89x, unchanged operating cash-flow guidance, and declared a $0.12 per share quarterly dividend.
• First-quarter capital expenditures were $4.9 million, well below the $65 million annual plan, as management defers non-critical projects while prioritizing the GPI project and pursuing disciplined, value-accretive growth opportunities.

Presentation

[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 Agrawal, VP of Finance & Treasurer at 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.

[Shantanu Agrawal, VP of Finance & Treasurer at SunCoke Energy]

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 & CEO at 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 Agrawal, VP of Finance & Treasurer at SunCoke Energy]

And

[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 Agrawal, VP of Finance & Treasurer at 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.

[Shantanu Agrawal, VP of Finance & Treasurer at SunCoke Energy]

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 & CEO at 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.

[Katherine Gates, President & CEO at SunCoke Energy]

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.

[Katherine Gates, President & CEO at SunCoke Energy]

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.

[Katherine Gates, President & CEO at SunCoke Energy]

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, SVP & CFO at 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.

[Mark Marinko, SVP & CFO at SunCoke Energy]

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.

[Mark Marinko, SVP & CFO at SunCoke Energy]

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.

[Mark Marinko, SVP & CFO at SunCoke Energy]

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.

[Mark Marinko, SVP & CFO at SunCoke Energy]

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 & CEO at 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.

[Katherine Gates, President & CEO at SunCoke Energy]

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.

[Katherine Gates, President & CEO at SunCoke Energy]

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.

[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, Senior Research Analyst at 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 Agrawal, VP of Finance & Treasurer at SunCoke Energy]

Hey, Nick. Good morning. This is Shantanu. I'm assuming you're talking about the domestic coke EBITDA, right? Correct.

[Shantanu Agrawal, VP of Finance & Treasurer at SunCoke Energy]

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.

[Shantanu Agrawal, VP of Finance & Treasurer at SunCoke Energy]

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, Senior Research Analyst at 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 & CEO at 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.

[Katherine Gates, President & CEO at SunCoke Energy]

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, Senior Research Analyst at 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 & CEO at 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, Senior Research Analyst at 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, SVP & CFO at 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.

[Mark Marinko, SVP & CFO at SunCoke Energy]

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, Senior Research Analyst at B.Riley Securities]

Got it. Guys, thanks for all the color. I'll jump back in the queue, but continue best of luck.

[Katherine Gates, President & CEO at SunCoke Energy]

Thank you.

[Operator]

Thank you. The next question comes from Nathan Martin with Benchmark Company. Please go ahead.

[Nathan Martin, Equity Research Analyst at The Benchmark Company LLC]

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 & CEO at 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.

[Katherine Gates, President & CEO at SunCoke Energy]

We'll continuously evaluate those investment decisions, but we really at this point are just being very, very cautious.

[Nathan Martin, Equity Research Analyst at The Benchmark Company LLC]

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 & CEO at 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.

[Katherine Gates, President & CEO at SunCoke Energy]

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, Equity Research Analyst at The Benchmark Company LLC]

Okay. So it could possibly include some things like deferred maintenance and things like that as well, I'm assuming?

[Katherine Gates, President & CEO at SunCoke Energy]

That's correct.

[Nathan Martin, Equity Research Analyst at The Benchmark Company LLC]

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.

[Nathan Martin, Equity Research Analyst at The Benchmark Company LLC]

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 & CEO at 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.

[Katherine Gates, President & CEO at SunCoke Energy]

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.

[Katherine Gates, President & CEO at SunCoke Energy]

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, Equity Research Analyst at The Benchmark Company LLC]

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 Agrawal, VP of Finance & Treasurer at 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, Equity Research Analyst at The Benchmark Company LLC]

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 Agrawal, VP of Finance & Treasurer at 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, Equity Research Analyst at The Benchmark Company LLC]

Okay, great. I'll leave it there. Appreciate the time and best of luck. Thank you.

[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 & CEO at 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.

[Operator]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Shantanu Agrawal, VP of Finance & Treasurer
• Katherine Gates, President & CEO
• Mark Marinko, SVP & CFO

Analysts

• Nick Giles, Senior Research Analyst at B.Riley Securities
• Nathan Martin, Equity Research Analyst at The Benchmark Company LLC