- Consolidated Adjusted EBITDA: $272.8 million for full year 2024, exceeding guidance range.
- Free Cash Flow: $96 million, surpassing guidance range.
- Net Income: $1.12 per share for full year 2024, up $0.44 from 2023.
- Dividend: Increased from $0.10 to $0.12 per share, totaling approximately $38 million returned to shareholders.
- Gross Leverage Ratio: 1.83 times on a last 12-month adjusted EBITDA basis.
- Operating Cash Flow: $168.8 million in 2024.
- Capital Expenditures: $72.9 million, below guidance range.
- Cash Balance: $189.6 million at year-end 2024.
- 2025 Guidance - Consolidated Adjusted EBITDA: Expected between $210 million and $225 million.
- 2025 Guidance - Free Cash Flow: Expected between $100 million and $115 million.
- 2025 Guidance - Capital Expenditures: Expected to be approximately $65 million.
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Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SunCoke Energy Inc (NYSE:SXC) achieved a record-setting safety performance with a total recordable incident rate of 0.50.
- The company delivered consolidated adjusted EBITDA of $272.8 million, exceeding the high end of their guidance range.
- SunCoke Energy Inc (NYSE:SXC) generated $96 million of free cash flow, surpassing their guidance range.
- The logistics segment showed strong performance with increased barge business and a new three-year take-or-pay coal handling agreement.
- The company returned approximately $38 million to shareholders through dividends, which were increased from $0.10 to $0.12 per share.
Negative Points
- SunCoke Energy Inc (NYSE:SXC) expects a decrease in consolidated adjusted EBITDA for 2025, with guidance between $210 million and $225 million.
- The Domestic Coke segment is anticipated to face lower margins due to contract extensions and challenging spot market conditions.
- The absence of a one-time gain from the elimination of black lung liabilities will negatively impact adjusted EBITDA by $9.5 million in 2025.
- The ongoing delays in the US Steel Nippon transaction have resulted in setbacks for the GPI project agreement.
- The company faces challenges in renewing the expiring contract at Haverhill, leading to potential lower margins from spot market sales.
Q & A Highlights
Q: In the event of a nonrenewal at Haverhill, how should we think about utilization at that asset in the outer years and your willingness to be incrementally exposed to spot? A: Katherine Gates, President and CEO, explained that while the Haverhill contract has not been renewed, SunCoke is in constant dialogue with customers. The current market is challenging, but they believe it is cyclical. SunCoke has adapted by developing foundry coke and selling spot blast coke, and they will continue to adapt to market conditions.
Q: How should we think about potential debt paydown and what could this mean for increased shareholder returns? A: Shantanu Agrawal, VP of Finance and Treasurer, stated there are no plans for debt buybacks as the $500 million of senior bonds are at an attractive rate. Katherine Gates added that capital allocation focuses on rewarding long-term shareholders through profitable growth opportunities, such as the GPI project, and they will continue to evaluate dividends or buybacks.
Q: When does the bulk of your contracting occur, and do met coal prices impact your procurement approach? A: Shantanu Agrawal noted that long-term take-or-pay contracts are finalized between September and November, and coal prices do not affect profitability due to pass-through contracts. For foundry and spot coke sales, market conditions are considered, and coal buys are aligned with coke sales.
Q: Can you explain the bridge from $58 a ton in 2024 to $47 a ton in 2025 guidance for Domestic Coke adjusted EBITDA? A: Shantanu Agrawal attributed the decrease mainly to lower economics at Granite City and the contract expiry at Haverhill, which will move to the spot market. Operations are expected to improve in 2025, but these factors drive the drop in EBITDA.
Q: What was the reason for changing the API2 price adjustment to an FOB New Orleans index at CMT, and how can we track this index? A: Mark Marinko, CFO, explained the change was requested by the customer to better reflect the markets they operate in. Shantanu Agrawal added that the index is published by Platts daily, and while no price benefit is currently assumed in guidance, any future benefit would be similar to the API2 index.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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