SunCoke Energy Raises 2024 EBITDA Forecast

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SunCoke Energy Raises 2024 EBITDA Forecast

SunCoke Energy, Inc. (ticker: SXC) recently held an earnings call where it announced its third-quarter results for 2024 and raised its full-year consolidated adjusted EBITDA estimate to between $260 million and $270 million. The company attributed this positive adjustment primarily to strong logistics performance and a one-time gain resulting from a regulatory waiver related to federal coal miner obligations. Despite challenges in the Domestic Coke segment, the company reported solid results including a net income of $0.36 per share, marking an increase compared to the previous year.

Key Points:

  • SunCoke Energy's third-quarter consolidated adjusted EBITDA reached $75.3 million, benefiting from a one-time gain of $9.5 million from a regulatory waiver.
  • The company's leverage ratio was realized at 1.86 times based on adjusted EBITDA for the last 12 months.
  • The full-year consolidated adjusted EBITDA estimate was raised to $260 million to $270 million.
  • An agreement with the U.S. Department of Labor eliminated most of SunCoke's accrued coal miner obligations, resulting in a pre-tax gain of $9.5 million.
  • SunCoke extended its coke supply agreement with U.S. Steel and signed a three-year coal handling agreement at the KRT Logistics facility, which includes a $12 million expansion project.
  • Net income per share increased to $0.36 due to the gain from coal miner obligations and strong logistics performance.
  • The Domestic Coke segment's adjusted EBITDA estimate was revised downward for the full year due to lower yields from coal to coke conversions and the impacts of Hurricane Helene.

Company Outlook: SunCoke Energy is focused on maintaining strong safety and environmental performance. The company is committed to fully utilizing its coke production assets and has secured an extension of its coke supply agreement with U.S. Steel. SunCoke continues to work on the GPI project and is in pursuit of a final agreement.

Negative Aspects: Domestic Coke segment performance was negatively impacted by lower yields from coal to coke conversions in long-term contracts. The full-year domestic coke adjusted EBITDA estimate was revised downward due to these low yields and adverse weather effects.

Positive Aspects: The logistics business's EBITDA increased due to higher transshipment volumes and the benefit of API2 price adjustments. The company saw a robust increase in net income attributable to SunCoke owing to a one-time gain and strong logistics performance.

Shortcomings: The Domestic Coke segment's adjusted EBITDA decreased compared to the previous year primarily due to lower coal to coke conversion yields.

Q&A Highlights: The Granite City supply agreement extension is viewed as a bridge during delays in the GPI project due to government inaction. SunCoke Energy is actively seeking new business opportunities for logistics terminals and coke facilities, with significant expansion projects underway at the KRT facility.

SunCoke Energy, Inc. concluded the earnings call reiterating its commitment to safety, environmental standards, and value creation for stakeholders. The next earnings call is expected to occur in early 2025, discussing the full-year 2024 results and providing guidance for 2025.

InvestingPro Insights: SunCoke Energy's recent earnings call paints a picture of a company leveraging opportunities while facing challenges. To complement this information, InvestingPro data offers additional insights regarding SXC's financial health and market performance.

According to the latest data, SunCoke Energy has a market capitalization of $724.88 million. The company’s P/E ratio stands at 14.16, while its trailing twelve-month adjusted P/E ratio is 11.64 as of the second quarter of 2024. This relatively low P/E ratio suggests that the stock may be undervalued in relation to its earnings potential.

One notable InvestingPro tip emphasizes that SunCoke Energy "pays a significant dividend to shareholders," supported by a current dividend yield of 4.66%, which is particularly attractive in the current market environment. Additionally, the company has demonstrated a strong commitment to increasing shareholder value with a 50% dividend growth rate over the last twelve months.

Another relevant InvestingPro tip states that "liquid assets exceed short-term liabilities," indicating a solid financial position. This aligns with the reported leverage ratio of 1.86 times based on the trailing twelve months' adjusted EBITDA, showcasing prudent financial management.

The company's revenue for the last twelve months as of the second quarter of 2024 was $2000.3 million, and its adjusted EBITDA was reported at $258 million. Although there was a slight revenue decline of 2.57% during this period, the ability to raise the full-year consolidated adjusted EBITDA estimate demonstrates the company's resilience and operational efficiency.

It is important to note that InvestingPro has provided 8 additional tips for SunCoke Energy, offering a more comprehensive analysis for investors seeking deeper insights into the company’s prospects.