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) is a leading independent producer of metallurgical coke and related products for the steel and foundry industries. The company specializes in manufacturing both blast furnace coke and foundry coke, offering high‐quality, low‐sulfur coal products that serve as essential inputs in steelmaking and metal casting processes. In addition to coke production, SunCoke provides comprehensive engineering, maintenance and environmental solutions tailored to the needs of integrated steel mills and foundries.

The company operates a network of coke production facilities across the United States, including plants in Indiana, Ohio, West Virginia and Louisiana. These strategically located sites enable SunCoke to supply major domestic steel producers as well as export customers in Asia and Europe. In support of its core operations, SunCoke maintains logistics capabilities for railcar loading, vessel dock services and inland barge transport, ensuring timely delivery of its products to end users.

SunCoke traces its origins to established Appalachian coke operations and completed its initial public offering in late 2007, emerging as a standalone company focused on safe, efficient coke manufacture. Over time, SunCoke has expanded its footprint through strategic partnerships and capital investments in emissions control technology, oven rebuilds and process improvements. These projects have reinforced the company’s commitment to operational reliability and environmental stewardship, helping customers meet increasingly stringent air quality standards.

Headquartered in Lisle, Illinois, SunCoke is led by an experienced management team with deep expertise in the coal, steel and energy sectors. The company emphasizes continuous improvement, workforce safety and community engagement as part of its corporate governance framework. By combining technical know-how with a focus on sustainable practices, SunCoke Energy aims to support its customers’ production needs while advancing environmental performance throughout its operations.

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 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event has been recorded. I would like to turn the conference over to Mr. Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead.

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

Good morning, and thank you for joining us this morning to discuss SunCoke Energy's first quarter 2025 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&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 to your questions on the call today, please feel free to reach out to our Investor Relations team. Before I turn things over to Katherine, 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 applies to the remarks we make today.

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

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 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, and

[Operator]

Good day, and welcome to the SunCoke Energy Q1 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. You may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event has been recorded. I would now like to turn the conference over to Mr. Shantanu Agrawal, Vice President, Finance and Treasurer. Please go ahead.

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

Good morning, and thank you for joining us this morning to discuss SunCoke Energy's first quarter 2025 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&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 to your questions on the call today, please feel free to reach out to our Investor Relations team. Before I turn things over to Katherine, 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 applies to the remarks we make today.

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

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 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, 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 $59.8 million during the quarter. As we discussed on our prior call, the spot blast 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.

[Katherine Gates, President and CEO at SunCoke Energy]

Earlier today, we also announced a $0.12 per share dividend payable to shareholders on June 2, 2025. From a balance sheet perspective, we ended the first quarter with a strong liquidity position of $543.7 million. Our gross leverage was approximately 1.89 times on a trailing 12-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 September 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 million-$225 million. With that, I will turn it over to Mark to review our first quarter earnings in detail. Mark.

[Mark Marinko, SVP and 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 2025, down $0.03 versus the prior year period. Consolidated adjusted EBITDA for the first quarter of 2025 was $59.8 million compared to $67.9 million 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 $49.9 million, and Coke sales volumes were 898,000 tons.

[Mark Marinko, SVP and CFO at SunCoke Energy]

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 million-$192 million. 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 2025. Now moving on to slide six to discuss our logistics business.

[Mark Marinko, SVP and CFO at SunCoke Energy]

Our logistics business generated $13.7 million of adjusted EBITDA in the first quarter of 2025, as compared to $13 million in the first quarter of 2024. 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 2025. Our terminals handled combined throughput volumes of 5.7 million tons during the first quarter of 2025, as compared to 5.5 million tons during the same prior year period. CMT handled 2.4 million tons during the first quarter of 2025, as compared to 1.8 million in the prior year period. Our previously announced barge unloading capital expansion project at KRT is currently on time and on budget. We're pleased with the strong performance from our logistics business in the first quarter.

[Mark Marinko, SVP and CFO at SunCoke Energy]

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 million-$50 million. Now turning to slide seven to discuss our liquidity position for Q1. SunCoke ended the quarter with a cash balance of $193.7 million and a fully undrawn revolver of $350 million. Net cash provided by operating activities was $25.8 million. 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 $4.9 million on CapEx and paid $10.9 million in dividends at the rate of $0.12 per share this quarter.

[Mark Marinko, SVP and CFO at SunCoke Energy]

In total, we ended the quarter with a strong liquidity position of $543.7 million. With that, I will turn it back over to Katherine.

[Katherine Gates, President and 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. 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.

[Katherine Gates, President and CEO at SunCoke Energy]

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 million-$225 million. With that, let's go ahead and open up the call for Q&A.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Nick Giles with B. Riley Securities. Please go ahead.

[Nick Giles, 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. 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, just wanting to get your take there.

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

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

[Nick Giles, Analyst at B. Riley Securities]

Correct.

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

Yes. Yeah. That is true, right? Kind of. What is happening here is, as you know, our Cliffs contract at Haverhill II is supposed to expire in June 2025, but we are working with them to kind of have that shipment laid out more or less evenly for the rest of the year or throughout the year. You will see some of those margins from those shipments come in the second half of the year. That is what is causing our, you are 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 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, my 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 CEO at SunCoke Energy]

No, 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 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. With the dividend, we've been able to continue that while still preserving cash to be able to do the Granite City project. The dividend fully takes into account the ability to do the Granite City project as well.

[Nick Giles, Analyst at B. Riley Securities]

Got it. No, thanks for that, Katherine. 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 CEO at SunCoke Energy]

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, I 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 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 and CFO at SunCoke Energy]

Yeah, no, this is Mark. Yeah, 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. You will see some seasonality of that happening at this time of year in the first quarter or late Q4. It's fairly normal. Like I said, we expect that to reverse, and we're reaffirming our cash flow guidance.

[Nick Giles, 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 and CEO at SunCoke Energy]

Thank you.

[Operator]

Thank you. Again, if you have a question, please press star then one. The next question comes from Nathan Martin with Benchmark Company. Please go ahead.

[Nathan Martin, Analyst at Benchmark Company]

Thanks, operator. Good morning, everyone. I wanted to start with CapEx. I noticed you guys only spent $5 million, it looked like, in the first quarter. Again, maintaining your full-year guidance of $65 million. Katherine, I know I asked you last quarter about a possible cadence of spend, and I think you said it would be pretty steady. Just curious what might have changed there.

[Katherine Gates, President and CEO at SunCoke Energy]

Yeah, no, great question. 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 million that we had planned for at the end of the year. 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 at Benchmark Company]

Can I get some color around maybe what you're looking at deferring? I think you still had about $5 million left for the growth there at KRT. I'm assuming that's going to be finished up. Any additional thoughts there?

[Katherine Gates, President and CEO at SunCoke Energy]

Yeah, and that's correct. I mean, the KRT project is on track. It's on budget. 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 are not an immediate top priority at some of our plants. As we've always said, we're investing in our plants as the long-term reliable supplier of Coke and logistics services. We continue to invest and ensure that our assets are there and ready to be the top-performing assets over the longer term.

[Katherine Gates, President and CEO at SunCoke Energy]

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 at Benchmark Company]

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

[Katherine Gates, President and CEO at SunCoke Energy]

That's correct.

[Nathan Martin, Analyst at 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 call that 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 CEO at SunCoke Energy]

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. 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. 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.

[Katherine Gates, President and CEO at SunCoke Energy]

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. I think that that was a sound decision given what we're seeing this year. Really, beyond that, very hard to say what the price environment looks like. With respect to our work with Cliffs, we're continuously in dialogue with them regarding our contract at Haverhill. Those discussions move ahead even as we sit here in this otherwise kind of challenging environment.

[Nathan Martin, Analyst at 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. Any thoughts there?

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

Yeah. Nate, I mean, on that, kind of you saw that kind of in Q1 last year, we had some spot blast Coke sales, which we had very minimal of that this year. That impacted on a profitability margin basis. That kind of drove our EBITDA per ton for Coke higher. If you look at full year, I think we're going to go back to kind of what our guidance range is. There is 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 at Benchmark Company]

Okay. Got it. Shantanu, just kind of going back to your answer to an earlier question, the production from Haverhill, 200,000 tons in the quarter, well below normal rates, behind the full-year guidance, which is a little over 1 million tons. Was that kind of a timing thing too? Did I understand that correctly? Maybe just confirm.

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

Yeah. That was planned kind of when we went out with the guidance in early this year, given what Katherine 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 million tons approximately sales number for our domestic Coke.

[Nathan Martin, Analyst at Benchmark Company]

Okay. Great. I'll leave it there. Appreciate the time and best of luck.

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

Thank you.

[Operator]

Thank you. Anyone who wishes to ask a question, please press star then one. This concludes our question and answer session. I would like to turn the conference back over to Katherine Gates, Chief Executive Officer and President, for any closing remarks.

[Katherine Gates, President and CEO at SunCoke Energy]

Thank you all again for joining us this morning and for your continued interest in SunCoke. 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

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

Analysts

• Nick Giles, Analyst at B. Riley Securities
• Nathan Martin, Analyst at Benchmark Company