SunCoke Energy's Q4 2024: Discrepancies in Granite City GPI Progress and Coal Procurement Strategies
Earnings DecryptThursday, Jan 30, 2025 1:39 pm ET
4min read
These are the key contradictions discussed in SunCoke Energy's latest 2024Q4 earnings call, specifically including: Granite City GPI project progress and metallurgical coal procurement strategies:
Safety Performance and Financial Achievements:
- SunCoke Energy ended the year with a record setting total recordable incident rate of 0.5.
- The company delivered consolidated adjusted EBITDA of $272.8 million, exceeding the high end of increased guidance range of $270 million.
- SunCoke generated $96 million of free cash flow, exceeding the high end of guidance range of $90 million.
- The remarkable safety performance and financial achievements were driven by excellent performance in the Logistics segment and a onetime gain from the Department of Labor Agreement.
Domestic Coke Segment Performance:
- Domestic coke segment delivered full year adjusted EBITDA of $234.7 million, within the revised guidance range.
- Logistics segment adjusted EBITDA increased by $6.1 million year-over-year.
- Despite lower coal to coke yields, SunCoke successfully sold all non-contracted tons into the foundry and spot blast coke markets.
- The performance was impacted by lower coke deals on long term take or pay contracts and lower economics from contract extensions.
Capital Allocation and Shareholder Returns:
- SunCoke returned approximately $38 million to shareholders via a quarterly dividend, which was increased from $0.10 per share to $0.12 per share.
- The company ended the year with a gross leverage ratio of 1.83x on a last 12-months adjusted EBITDA basis.
- The capital allocation strategy focuses on shareholder returns, debt paydown, and strategic growth opportunities, including the Granite City GPI project.
Guidance for 2025 and Market Challenges:
- SunCoke expects consolidated adjusted EBITDA to be between $210 million and $225 million in 2025, reflecting a decrease from 2024's results.
- Domestic coke adjusted EBITDA is expected to be lower by $43 million to $50 million.
- The decrease is primarily driven by lower margins at Granite City and Haverhill, as well as soft spot coke market conditions.
- The company acknowledges broader challenges in the steel industry and plans to navigate 2025 with a focus on maintaining core business strength.
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Safety Performance and Financial Achievements:
- SunCoke Energy ended the year with a record setting total recordable incident rate of 0.5.
- The company delivered consolidated adjusted EBITDA of $272.8 million, exceeding the high end of increased guidance range of $270 million.
- SunCoke generated $96 million of free cash flow, exceeding the high end of guidance range of $90 million.
- The remarkable safety performance and financial achievements were driven by excellent performance in the Logistics segment and a onetime gain from the Department of Labor Agreement.
Domestic Coke Segment Performance:
- Domestic coke segment delivered full year adjusted EBITDA of $234.7 million, within the revised guidance range.
- Logistics segment adjusted EBITDA increased by $6.1 million year-over-year.
- Despite lower coal to coke yields, SunCoke successfully sold all non-contracted tons into the foundry and spot blast coke markets.
- The performance was impacted by lower coke deals on long term take or pay contracts and lower economics from contract extensions.
Capital Allocation and Shareholder Returns:
- SunCoke returned approximately $38 million to shareholders via a quarterly dividend, which was increased from $0.10 per share to $0.12 per share.
- The company ended the year with a gross leverage ratio of 1.83x on a last 12-months adjusted EBITDA basis.
- The capital allocation strategy focuses on shareholder returns, debt paydown, and strategic growth opportunities, including the Granite City GPI project.
Guidance for 2025 and Market Challenges:
- SunCoke expects consolidated adjusted EBITDA to be between $210 million and $225 million in 2025, reflecting a decrease from 2024's results.
- Domestic coke adjusted EBITDA is expected to be lower by $43 million to $50 million.
- The decrease is primarily driven by lower margins at Granite City and Haverhill, as well as soft spot coke market conditions.
- The company acknowledges broader challenges in the steel industry and plans to navigate 2025 with a focus on maintaining core business strength.
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