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SunCoke Energy, Inc. (SXC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 results were weak on profitability: Adjusted EBITDA fell to $43.6M and diluted EPS to $0.02, impacted by mix shift to spot coke and lower Granite City contract economics; liquidity remained strong at $536.2M .
  • Wall Street: SXC materially missed EPS and EBITDA but delivered a strong revenue beat versus consensus; guidance for FY 2025 Adjusted EBITDA was reaffirmed at $210–$225M* .
  • Management expects a stronger 2H: normalization of contract vs. spot coke mix and KRT take-or-pay agreement to lift segment run-rates; Phoenix Global acquisition closed Aug 1 and is expected to be immediately accretive .
  • Guidance tweaks: capex lowered to ~$60M, cash taxes reduced to $5–$9M (new tax act), FCF raised to $103–$118M; dividend maintained at $0.12 (payable Sep 2, 2025) .

What Went Well and What Went Wrong

  • What Went Well

    • “We are excited by the progress… Phoenix Global… expected to close on August 1… immediately accretive” (strategic diversification into EAF customers and international markets) .
    • Liquidity stayed robust: Cash $186.2M, undrawn revolver $350M; total liquidity $536.2M .
    • Corporate and Other expenses fell YoY on lower legacy black lung expenses, supporting consolidated results .

  • What Went Wrong

    • Domestic Coke profitability declined: Adjusted EBITDA dropped to $40.5M (from $57.9M YoY) on mix shift and Granite City extension at lower economics .
    • Logistics softness: CMT volumes were weak due to market conditions; segment Adjusted EBITDA fell to $7.7M vs. $12.2M YoY .
    • Transaction costs related to Phoenix ($5.2M) further hit EPS and EBITDA in the quarter .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$486.0 $436.0 $434.1
Net Income Attributable to SXC ($USD Millions)$23.7 $17.3 $1.9
Diluted EPS ($)$0.28 $0.20 $0.02
Adjusted EBITDA ($USD Millions)$66.1 $59.8 $43.6
EBITDA Margin (%)13.6% (66.1/486.0) 13.7% (59.8/436.0) 10.0% (43.6/434.1)
SegmentQ4 2024 Revenue ($M)Q4 2024 EBITDA ($M)Q1 2025 Revenue ($M)Q1 2025 EBITDA ($M)Q2 2025 Revenue ($M)Q2 2025 EBITDA ($M)
Domestic Coke$456.3 $57.3 $405.8 $49.9 $410.4 $40.5
Logistics$20.8 $11.5 $22.4 $13.7 $15.1 $7.7
Brazil Coke$8.9 $2.5 $7.8 $2.3 $8.6 $2.6
KPIsQ4 2024Q1 2025Q2 2025
Domestic Coke Sales Volumes (Kt)1,032 898 943
Domestic Coke EBITDA per Ton ($/t)$55.52 $55.57 $42.95
Domestic Coke Capacity Utilization (%)100% 91% 95%
Logistics Tons Handled (Kt)5,262 5,724 4,746
Brazil Production (Kt)388 380 371
Q2 2025 Actual vs ConsensusConsensusActual
Revenue ($USD)$348.1M*$434.1M — Beat
EBITDA ($USD)$56.1M*$43.6M — Miss
EPS ($)$0.175*$0.02 — Miss

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Adjusted EBITDA ($M)FY 2025$210–$225 $210–$225 Maintained
Domestic Coke Adjusted EBITDA ($M)FY 2025$185–$192 $185–$192 Maintained
Logistics Adjusted EBITDA ($M)FY 2025$45–$50 $45–$50 Maintained
Domestic Coke Sales (tons)FY 2025~4.0M ~4.0M Maintained
Domestic Coke EBITDA/ton ($/t)FY 2025$46–$48 $46–$48 Maintained
Operating Cash Flow ($M)FY 2025$165–$180 $165–$180 Maintained
Capital Expenditures ($M)FY 2025~$65 ~$60 Lowered
Cash Taxes ($M)FY 2025$17–$21 $5–$9 (tax law change) Lowered
Free Cash Flow ($M)FY 2025$100–$115 $103–$118 Raised
Transaction & Debt Issuance Costs ($M)FY 2025N/A$12–$14 Added
DividendQ3 2025$0.12 declared $0.12 payable Sep 2, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Contract mix (contract vs spot coke)2025 outlook warned of lower margins on higher spot sales . Q1 showed lower spot sales and Granite City extension impacts .Q2 trough: heavy spot sales at Haverhill; margins lower vs contract; normalization expected in 2H .Near-term headwind; improving in 2H.
Granite City contract economicsLower economics flagged in 2025 outlook and Q1 results .Continued drag in Q2; extension at lower economics and volumes .Persistent headwind through contract term.
Logistics/CMT volumesFY24 strength with API2 adjustment; Q1 higher volumes at CMT .Q2 softness due to market conditions; July pickup; KRT take-or-pay benefits from Q3 .Recovery expected in 2H.
Phoenix Global acquisitionDefinitive agreement signed May 28 ; strategic fit telegraphed.Close Aug 1; immediately accretive; $5–$10M synergies; to form new Industrial Services segment .Positive strategic diversification.
Haverhill/Cliffs contractsGranite City extended; broader contract landscape watched .Active renewal discussions; management surprised by Cliffs commentary; foundry coke and seaborne market alternatives .Negotiation risk; offset plans articulated.
Tax/regulatoryDOL exemption cut legacy black lung costs (FY24) .New tax act reduced cash tax guidance to $5–$9M .Cash flow tailwind.
Capital allocation (dividends, financing)Dividend increased in 2024 .$0.12 dividend declared; revolver extended to 2030; Phoenix funding $200–$210M revolver draw expected .Balanced capital return and growth.
GPI project (U.S. Steel/Nippon)Ongoing discussion context .Still active discussions; separate financing if pursued .Optionality maintained.

Management Commentary

  • CEO: “We delivered Q2 2025 consolidated adjusted EBITDA of $43.6 million… announced the acquisition of Phoenix Global for $325 million… now expect to close on August 1st… revolver… maturing in July 2030… dividend payable… liquidity position of $536.2 million” .
  • CFO: “EPS down $0.23 YoY primarily driven by mix and lower Granite City economics… CMT volumes were lower… transaction costs of $5.2M… we expect normalization in 2H… reaffirm logistics EBITDA guidance $45–$50M” .
  • CEO on Phoenix: “EAF exposure diversifies our customer base… platform for organic growth… LTM Adjusted EBITDA about $61M remains reasonable despite sector cyclicality” .
  • CEO on contracts: “We were extremely surprised by the comments on the Cleveland-Cliffs earnings call… we are in active discussions… we’ve profitably sold foundry and blast coke even at depressed prices” .

Q&A Highlights

  • 2H uplift mechanics: Mix normalization to reach $46–$48/t domestic coke EBITDA; 2.0–2.1M tons coke sales in 2H; logistics run-rate normalizes as July shipments picked up .
  • Contract landscape: Active renewal talks with Cliffs; foundry coke expansion and seaborne blast coke sales as alternatives if needed; supply-demand balance depends on blast furnace capacity decisions .
  • Logistics pricing/volumes: Mix includes iron ore and pet coke, but exports mostly coal; domestic pricing strength can reduce export volumes; no price adjustment assumed in 2025 guidance .
  • Financing and GPI: Phoenix revolver draw lowered to ~$200–$210M; ample revolver capacity for working capital; GPI would be separately financed (term loan/note); discussions with U.S. Steel/Nippon ongoing .

Estimates Context

  • Q2 2025 vs consensus: Revenue $434.1M vs $348.1M* — bold beat; Adjusted EBITDA $43.6M vs $56.1M* — bold miss; EPS $0.02 vs $0.175* — bold miss .
  • FY 2025: Consensus EBITDA ~$216.6M* consistent with guidance midpoint; EPS ~$0.57*; management reaffirmation implies estimates may need lower-EBITDA-per-ton in 1H offset by 2H normalization*.
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Expect a stronger 2H driven by contract-heavy mix and KRT take-or-pay volumes; Q2 was likely the trough per management .
  • Profitability drivers: Watch domestic coke EBITDA/ton reverting toward $46–$48/t and CMT volumes recovery; granite contract remains a drag through expiry .
  • Strategic: Phoenix adds EAF customers, site-based services, and international exposure with $5–$10M synergy potential; integration to create Industrial Services segment .
  • Cash flow and balance sheet: Lower capex ($~60M) and cash taxes ($5–$9M) boost FCF to $103–$118M; liquidity strong and revolver extended to 2030 .
  • Contract risk: Ongoing Haverhill/Cliffs negotiations are a key watch item; management has alternative sales channels (foundry, seaborne) .
  • Capital allocation: Dividend maintained at $0.12; Phoenix financed primarily with revolver, leaving capacity for working capital and optional GPI financing .
  • Trading setup: Potential positive catalysts include Phoenix synergy disclosure, 2H volume normalization, and any constructive contract updates; risks include prolonged spot exposure and export coal softness at CMT .