SXC Q2 2024: 20% dividend hike on record logistics volumes
- Domestic Coke Business Risk: Planned outages and seasonal production challenges in the second half, as mentioned in Q&A, create uncertainty over consistent sales and EBITDA performance.
- Logistics Volume Variability: Management noted that while Q2 volumes were strong, especially at domestic terminals, these gains may not replicate in the second half since volumes are normalizing, which could pressure future EBITDA.
- Customer Acquisition and Market Uncertainty: The discussion around the largest customer’s acquisition and potential displacement from traditional markets introduces risks concerning customer retention and competitive dynamics in the North American coke market.
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Customer Impact
Q: Impact of Stelco acquisition on coke sales?
A: Management noted that the Stelco acquisition does not change the overall coke balance; any potential displacement is seen as an opportunity to pursue new customers while maintaining full operations ( ). -
Logistics Volumes
Q: Benefit from Baltimore outage and CMT normalization?
A: They explained that while the Baltimore incident provided a slight short-term benefit, overall domestic terminal volumes improved sequentially, with CMT expected to normalize around 2 million tons per quarter ( ). -
Dividend & GPI
Q: Does dividend increase reflect future growth?
A: The dividend hike, now in its third consecutive year, underscores strong fundamentals and the ongoing focus on the GPI project with U.S. Steel, with no change in their growth priorities ( ). -
New Terminal Business
Q: What drove domestic terminal volume growth?
A: New business at domestic terminals has driven volumes to their best first-half performance in five years, highlighting robust market demand and effective customer acquisition ( ). -
Coke Outages
Q: How will planned outages affect domestic coke EBITDA?
A: Management expects the outages to be in line with typical seasonality, ensuring that domestic coke sales and EBITDA per ton remain consistent and within established guidance ( ).
Research analysts covering SunCoke Energy.