Suncoke Energy ((SXC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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SunCoke Energy’s recent earnings call painted a mixed picture for the company. While there was optimism surrounding the strategic acquisition of Phoenix Global and a robust liquidity position, concerns were raised due to decreased earnings and ongoing challenges with contract renewals with a major customer.
Acquisition of Phoenix Global
SunCoke Energy announced its acquisition of Phoenix Global for $325 million, which is expected to be immediately accretive. This strategic move is anticipated to extend SunCoke’s reach to new industrial customers and markets, positioning the company for future growth.
Strong Liquidity Position
The company ended the second quarter with a strong liquidity position of $536.2 million. This includes a cash balance of $186.2 million and a fully undrawn revolver of $350 million, providing SunCoke with significant financial flexibility.
Reaffirmation of Guidance
Despite the challenges faced, SunCoke reaffirmed its full-year consolidated adjusted EBITDA guidance range of $210 million to $225 million. This demonstrates the company’s confidence in its ability to navigate the current economic landscape.
Completion of Barge Unloading Capital Expansion Project at KRT
SunCoke completed its barge unloading capital expansion project at KRT, which is now operational. This project is expected to generate benefits starting in the third quarter, contributing positively to the company’s logistics capabilities.
Decrease in Net Income
SunCoke reported a net income of $0.02 per share in Q2 2025, a decrease of $0.23 compared to the previous year. This decline was attributed to lower contract coke sales and reduced economics from the Granite City contract extension.
Decline in Consolidated Adjusted EBITDA
The company’s consolidated adjusted EBITDA for Q2 2025 was $43.6 million, down from $63.5 million in the prior year. The decrease was driven by lower contract coke sales and reduced transloading volumes at CMT.
Lower Volumes in Logistics Segment
The Logistics segment experienced lower volumes at CMT due to market conditions, which impacted its overall performance.
Challenges with Major Customer Contract Renewal
SunCoke is actively engaged in discussions with Cliffs regarding contract renewal. Cliffs has indicated a potential shift to internal coke production, posing a challenge for SunCoke’s future contract negotiations.
Forward-Looking Guidance
Looking ahead, SunCoke reaffirmed its full-year consolidated adjusted EBITDA guidance range of $210 million to $225 million. The acquisition of Phoenix Global is expected to bring annual synergies of $5 million to $10 million. Despite incurring transaction costs related to the acquisition, SunCoke maintained its free cash flow guidance of $103 million to $118 million and declared a $0.12 per share dividend, payable on September 2, 2025.
In summary, SunCoke Energy’s earnings call highlighted a strategic acquisition and strong liquidity, but also underscored challenges such as decreased earnings and contract renewal issues. The company remains optimistic about its guidance and future prospects, driven by strategic initiatives and operational improvements.