SunCoke Energy Inc (SXC) Q1 2024 Earnings Call Transcript Highlights: Robust Performance Amid ...

• Consolidated Adjusted EBITDA: $67.9 million for Q1 2024.

• Liquidity Position: $470.1 million at the end of Q1 2024.

• Gross Leverage: Approximately 1.86 times trailing 12-month adjusted EBITDA.

• Net Income per Share: $0.23 for Q1 2024, up $0.04 from the previous year.

• Domestic Coke Adjusted EBITDA: $61.4 million for Q1 2024.

• Coke Sales Volumes: 996,000 tons for Q1 2024.

• Logistics Business Adjusted EBITDA: $13 million for Q1 2024.

• Throughput Volumes: Approximately 5.5 million tons handled during Q1 2024.

• Cash Balance: $120.1 million at the end of Q1 2024.

• Operating Cash Flow: Generated $10 million in Q1 2024.

• Dividends: Paid $9 million at $0.1 per share in Q1 2024.

• Capital Expenditures: $15.5 million spent in Q1 2024.

• Full Year Adjusted EBITDA Guidance: $240 to $255 million.

• Warning! GuruFocus has detected 5 Warning Sign with SXC.

Release Date: May 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SunCoke Energy Inc (NYSE:SXC) reported strong operational performance with domestic coke plants running at full capacity.

• The company achieved higher volumes at domestic logistics terminals, handling 5.5 million tons during the quarter.

• SunCoke Energy Inc (NYSE:SXC) reported a consolidated adjusted EBITDA of $67.9 million for the first quarter.

• The company maintained a strong liquidity position, ending the quarter with $470.1 million.

• All spot blast and foundry coke sales have been finalized for the full year, positioning SunCoke Energy Inc (NYSE:SXC) well to meet its full-year adjusted EBITDA guidance.

Negative Points

• Lower throughput volumes at CMT contributed to a slight decrease in logistics business adjusted EBITDA compared to the previous year.

• The company experienced a negative impact from the timing of working capital changes, although this is expected to reverse over the year.

• SunCoke Energy Inc (NYSE:SXC) faces uncertainties in contract renewals and market conditions that could affect future performance.

• The logistics segment's performance is subject to volatility, as seen in past quarters.

• There are ongoing challenges and complexities involved with the GPI project, including detailed engineering and negotiations with US Steel.

Q & A Highlights

Q: Can you comment on the long-term outlook for the utilization rates, especially considering the Middletown contract and the shift towards DRI technology? A: Katherine Gates, President, Director - The announcement regarding Cliffs' Middletown Works has no impact on our current contract, which runs through the end of 2032. As for the next decade, we believe our investments in the newest cokemaking assets position us well to serve blast furnaces long-term.

Q: With upcoming contract renewals, do you expect a shift in coke sales towards the spot market? A: Katherine Gates, President, Director - We are continuously in dialogue with our customers regarding contracts but cannot comment on specific discussions. Our focus remains on maintaining strong relationships and fulfilling contract terms.

Q: Could you update us on the Granite City GPI project and your discussions with US Steel? A: Katherine Gates, President, Director - We are currently engaged in detailed engineering for this first-of-its-kind project and continue our collaboration with US Steel. Specific details on project completion or further developments are ongoing.

Q: What are the expected capital commitments for the Granite City GPI project? A: Shantanu Agrawal, Vice President - Finance, Treasurer - The project is anticipated to require an investment equivalent to two years of our free cash flows plus some additional borrowing. Exact numbers have not been disclosed, but this gives an order of magnitude.

Q: How did the Baltimore port incident impact your logistics segment, and what are the expectations moving forward? A: Shantanu Agrawal, Vice President - Finance, Treasurer - The incident led to increased shipments and contributed to strong performance in Q1. However, we do not anticipate significant ongoing benefits as the situation at the port stabilizes.

Q: Can you provide insights into the North American blast furnace coke market size and SunCoke's market share? A: Shantanu Agrawal, Vice President - Finance, Treasurer - The market size is approximately 8.5 to 10 million tons, with SunCoke holding about 30-35% of the market through contracted volumes. We are well-positioned to compete effectively and maintain profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.